UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

October 9, 2007

Date of report (Date of earliest event reported)

 

ADVANCED BIOENERGY, LLC

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

000-52421

 

20-2281511

(State of Incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification

 

 

 

 

No.)

 

10201 Wayzata Boulevard, Suite 250

 

 

Minneapolis, Minnesota

 

55305

(Address of principal executive offices)

 

(Zip Code)

 

Telephone Number: (763) 226-2701

(Registrant’s Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

o

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

o

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

o

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

o

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


 

Item 1.01                Entry into a Material Definitive Agreement.

 

Senior Credit Agreement

 

On October 9, 2007, Heartland Grain Fuels, L.P. (“HGF”), a wholly-owned subsidiary of Advanced BioEnergy, LLC (the “Company”), entered into that certain Senior Credit Agreement dated as of October 1, 2007 (the “Senior Credit Agreement”) among HGF, the lenders from time to time party thereto (the “Lenders”), WestLB AG, New York Branch (“WestLB”) as Administrative Agent for the Lenders, WestLB as Collateral Agent for the Senior Secured Parties, WestLB as Issuing Bank, and WestLB as Lead Arranger, Sole Bookrunner and Syndication Agent. HGF received initial funding under the Senior Credit Agreement on October 11, 2007.

 

Commitments and Funding

 

The Senior Credit Agreement provides for (1) a construction loan facility in an aggregate amount of up to $90.7 million which matures on the earlier of March 31, 2008 and the date the construction loans made thereunder are converted into term loans (the “Conversion Date”), (2) a term loan facility in an aggregate amount of up to $90.7 million which matures on the earlier of that date which is six years after the Conversion Date or October 9, 2015 (the “Final Maturity Date”); and (3) a working capital and letter of credit facility in an aggregate amount of up to $8 million which matures on October 9, 2012. The primary purpose of the credit facility is to refinance HGF’s Aberdeen, South Dakota (the “Aberdeen Plant”) and Huron, South Dakota (“Huron Plant”) ethanol plants; fund an expansion of the Aberdeen Plant; and to pay for operating costs at both the Aberdeen and Huron Plants.

 

Payments, Interest, and Fees

 

During the term of the working capital and letter of credit facility, HGF may borrow, repay and re-borrow amounts available under the working capital and letter of credit facility. Loans made under the construction loan or the term loan facility may not be re-borrowed once repaid or prepaid. Except for required prepayments from cash flows (described below), construction loans do not amortize, and are fully due and payable on the Conversion Date. The term loan facility is intended to refinance the construction loans. The principal amount of the term loan facility is payable in equal quarterly payments from and after the Conversion Date, and the remaining principal amounts are fully due and payable on the Final Maturity Date. Loans made under the working capital and letter of credit facility are fully due and payable on October 9, 2012.

 

HGF has the option to select between two floating interest rate loans under the terms of the Senior Credit Agreement: Base Rate Loans bear interest at the Administrative Agent’s base rate (which is the higher of the federal funds effective rate plus 0.50% and the Administrative Agent’s prime rate) plus 2.50% per annum. Eurodollar Loans bear interest at LIBOR plus 3.50%.

 

Under the terms of the Senior Credit Agreement, HGF has agreed to pay a quarterly commitment fee equal to 0.50% per annum on the unused portion of the construction loan and working capital and letter of credit facilities. In addition to the quarterly commitment fee described above, HGF is also required to pay certain letter of credit and related fronting fees and other administrative fees on the terms set forth in the Senior Credit Agreement. HGF’s obligations under the Senior Credit Agreement are secured by a first-priority security interest in all of the partnership interests in HGF and substantially all of HGF’s assets.

 

Loans outstanding under the Senior Credit Agreement are subject to mandatory prepayment in certain circumstances, including, but not limited to, mandatory prepayments based upon receipt of certain proceeds of asset sales, casualty proceeds, termination payments, and cash flows. HGF must also prepay loans under the working capital and letter of credit facility to the extent that the prevailing borrowing base is less than the aggregate amount of such loans.

 

Conditions to Funding

 

Construction, term, working capital and letter of credit loans are subject to conditions precedent, including, among others, receipt of lien waiver statements; receipt of change orders; evidence that prior construction loans

 

2


 

were used in accordance with the Senior Credit Agreement; receipt of a legal opinion of counsel related to the permitting of the Aberdeen and Huron, South Dakota ethanol plants; the absence of a material adverse effect; the absence of defaults or events of defaults; the accuracy of certain representations and warranties; payment of fees and expenses; the contribution of all required equity; obtainment of required contracts, permits and insurance; and certain certifications from the Independent Engineer (as defined in the Senior Credit Agreement) in respect of construction progress. Additionally, HGF may not be able to fully utilize the credit facility if the Independent Engineer is not able to certify that the completed ethanol plants meet certain minimum performance standards.

 

Other Terms and Conditions

 

The Senior Credit Agreement and the related loan documentation include, among other terms and conditions, limitations (subject to specified exclusions) on HGF’s ability to make asset dispositions; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness; create, incur or allow liens on any property or assets; make investments; declare or make specified restricted payments or dividends; enter into new material agreements; modify or terminate material agreements; enter into transactions with affiliates; change their line of business; and establish bank accounts.

 

In addition, the Senior Credit Agreement and the related loan documentation, among other terms and conditions, require (subject to specified exclusions) HGF to maintain adequate and specified insurance; maintain its separate existence from its upstream affiliates (including the Company); provide the lenders’ with a first-priority security interest in the collateral; maintain an interest rate and commodity hedge protection program; and comply with laws and permits.

 

The Senior Credit Agreement contains customary events of default and also includes an event of default for failure to complete the expansion of the Aberdeen Plant by March 31, 2008; defaults on other indebtedness by HGF or its general partner; and certain changes of control.

 

The Senior Credit Agreement and the Subordinate Solid Waste Facilities Revenue Bonds further described below also required HGF to enter into an Accounts Agreement dated as of October 1, 2007 (the “Accounts Agreement”) among HGF, Amarillo National Bank, as the Accounts Bank and Securities Intermediary, WestLB as the Collateral Agent and Administrative Agent and Wells Fargo Bank, National Association, as trustee of the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds. Among other things, the Accounts Agreement establishes certain special, segregated project accounts and establishes procedures for the deposits and withdrawals of funds into these accounts. Substantially all cash of HGF is required to be deposited into the project accounts subject to security interests to secure obligations in connection with the Senior Credit Agreement and the Subordinate Solid Waste Facilities Revenue Bonds. Funds will be released from the project accounts in accordance with the terms of the Accounts Agreement.

 

The Company’s aggregate transaction expenses (including investment banking fees and legal costs) in connection with the negotiation, documentation and closing of the credit facility are estimated to be $5.83 million. In addition, HGF is responsible for certain of the agents’, the lenders’ and their consultants’ and legal counsel’s on-going costs and expenses related to the credit facility.

 

The descriptions of the Senior Credit Agreement and the Accounts Agreement do not purport to be complete and are qualified in their entirety by reference to these documents, which are filed as Exhibits 10.1 and 10.2 to this report and incorporated by reference herein.

 

Subordinate Solid Waste Facilities Revenue Bonds

 

On October 9, 2007, Brown County, South Dakota (the “County”) issued $19,000,000 of Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007 (the “Bonds”) for the benefit of HGF. The Bonds were issued pursuant to a Bond Trust Indenture dated as of October 1, 2007 (the “Indenture”) between the County and Wells Fargo Bank, National Association (the “Trustee”). The proceeds of the Bonds were loaned by the County to HGF pursuant to a Loan Agreement dated as of October 1, 2007 (the “Loan Agreement”) to (1) finance the acquisition and installation of certain improvements and equipment which constitute qualifying solid waste disposal facilities, as defined by the Internal Revenue Code of 1986, as amended, for the expansion of HGF’s existing ethanol production located in Aberdeen, South Dakota (the “Expansion”); (2) fund a debt service reserve fund in the amount of $1,900,000; (3) pay interest during the construction period of the

 

3


 

Expansion; and (4) pay a portion of the costs of issuance of the Bonds with the remainder of the costs of issuance to be paid from other sources. Payment of the Bonds is subordinate to the senior lenders under the Senior Credit Agreement under the terms of an Intercreditor Agreement.

 

The Bonds are secured by the terms of a Pledge and Security Agreement, dated as of October 1, 2007, between the Company, ABE Heartland, LLC and the Trustee, under which agreement the Company will collaterally assign, grant, and pledge to the Trustee a continuing security interest and lien in all the estate, right, title and interest of the Company in and to ABE Heartland, LLC. In addition, HGF has granted a subordinate mortgage lien and security interest in its existing facilities to the Trustee to secure the payment of the obligations of HGF under the Loan Agreement and the debt service on the Bonds.

 

The Bonds are dated as of October 9, 2007 and were issued as a single term bond maturing on January 1, 2018 with an interest rate of 8.25%. Interest on the Bonds is computed on the basis of a year of 360 days consisting of twelve months of thirty days each, payable on each January 1 and July 1 commencing January 1, 2008. In the event the Bonds become subject to federal income taxation (a “Determination of Taxability”), the interest rate on the Bonds will be converted to a taxable interest rate which is a fluctuating per annum interest rate adjusted on the first day of each calendar quarter and is equal to the sum of the interest rate published as the London Interbank Offered Rates with a term of three months as of each adjustment date plus 350 basis points.

 

The Bonds are subject to optional redemption by HGF, in whole or in part, beginning on January 1, 2015 at a redemption price equal to 106% of the principal amount of the Bonds plus accrued interest, which redemption price decreases by 2% per annum until maturity. The Bonds are also subject to mandatory redemption upon a Determination of Taxability at a price of 108% of the principal amount plus interest accrued to the redemption date.

 

Events of Default under the Indenture include, among other things (i) nonpayment of principal or interest when due and payable; (ii) any Event of Default as defined in the Loan Agreement or the violation of any covenant, condition, agreement or provision contained in the Bond, the Indenture or the other bond documents. Upon the happening and condition of any Event of Default, the Trustee may declare, or be required to declare based on the request of at least 25% of the bondholders, pursuant to the terms of the Indenture the entire principal amount of the Bonds then outstanding and interest accrued, immediately due and payable.

 

The descriptions of the Indenture and the Loan Agreement do not purport to be complete and are qualified in their entirety by reference to these documents, which are filed as Exhibit 10.3 and Exhibit 10.4 to this report and incorporated by reference herein.

 

 

4


 

Other Agreements

 

In connection with the transactions contemplated by the Senior Credit Agreement, HGF entered into certain other arrangements and amended certain material agreements.

 

On October 9, 2007, HGF amended its Grain Origination Agreement dated November 8, 2006 with the South Dakota Wheat Growers (“SDWG”). Among other things, the amendment provides that the SDWG cannot terminate the Grain Origination Agreement and makes certain other changes to the agreement. This amendment, which is effective as of October 1, 2007, is attached as Exhibit 10.5, and is incorporated herein by reference.

 

As a condition to the Senior Credit Agreement, HGF was also required to enter into an amendment to that certain Agreement Between Owner and Design/Builder on the Basis of a Stipulated Price dated as of July 14, 2006 between HGF and ICM, Inc. (the “Design-Build Agreement”). Among other things, the amendment to the Design-Build Agreement modifies certain provisions related to equipment warranties, changes certain general conditions of the contract and revises the section related to substantial completion. The amendment was entered into on October 9, 2007.

 

Item 1.02.               Termination of a Material Definitive Agreement.

 

On October 11, 2007, in connection with the funding of the Senior Credit Agreement described above under Item 1.01, HGF terminated that certain Master Loan Agreement by and between Dakota Fuels, Inc. and CoBank, ACB, dated October 27, 2005; (ii) that certain Revolving Term Loan Revolver by and between Dakota Fuels, Inc. and CoBank, ACB dated October 27, 2005; (iii) that certain Multiple Advance Term Loan Supplement by and between Dakota Fuels, Inc. and CoBank, ACB dated October 27, 2005; (iv) that certain Master Loan Agreement by and between HGF and Dakota Fuels, Inc. dated October 27, 2005; (v) that certain Revolving Term Loan Revolver by and between HGF and Dakota Fuels, Inc. dated October 27, 2005; (vi) that certain Multiple Advance Term Loan Supplement by and between HGF and Dakota Fuels, Inc. dated October 27, 2005; (vii) that certain Credit Agreement by and between ABE Heartland, LLC (“ABE Heartland”), a Delaware limited liability company and wholly-owned subsidiary of the Company, and Kruse Investment Company, Inc. dated February 12, 2007 and (viii) that certain Subordinated Promissory Note, dated February 12, 2007, of HGF payable to the order of ABE Heartland.

 

Item 2.03.                                        Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

 

The information described above under “Item 1.01. Entry into a Material Definitive Agreement” with respect to the Senior Credit Agreement, the Subordinate Solid Waste Facilities Revenue Bonds and the amendments to the Fairmont Loan Agreement is hereby incorporated by reference.

 

Item 8.01.               Other Events.

 

On October 15, 2007, the Company issued a press release announcing the Senior Credit Agreement and the Subordinate Solid Waste Revenue Bonds.

 

The press release is attached as Exhibit 99.1.

 

Item 9.01                Financial Statements and Exhibits.

 

(d)            Exhibits

 

5


 

10.1

 

Senior Credit Agreement dated as of October 1, 2007 among Heartland Grain Fuels, L.P., the lenders referred to therein and WestLB AG, New York Branch, as Administrative Agent, Collateral Agent, Issuing Bank, Lead Arranger, Sole Bookrunner and Syndication Agent

 

 

 

10.2

 

Accounts Agreement dated as of October 1, 2007 among Heartland Grain Fuels, L.P., Amarillo National Bank, as the Accounts Bank and Securities Intermediary, WestLB AG, New York Branch, as Administrative Agent and Collateral Agent, and Wells Fargo Bank, National Association, as Trustee of the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A, as the Second Lien Agent for the Second Lien Claimholders

 

 

 

10.3

 

Bond Indenture dated as of October 1, 2007 between Brown County, South Dakota and Wells Fargo Bank, National Association as Bond Trustee

 

 

 

10.4

 

Loan Agreement dated as of October 1, 2007 between Heartland Grain Fuels, L.P. and Brown County, South Dakota

 

 

 

10.5

 

Amendment to Grain Origination Agreement dated as of October 1, 2007 between Heartland Grain Fuels, L.P. and South Dakota Wheat Growers Association

 

 

 

99.1

 

Press Release dated October 15, 2007

 

6


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Date:  October 15, 2007

ADVANCED BIOENERGY, LLC

 

 

 

 

 

By

 /s/ Richard Peterson

 

 

Richard Peterson

 

 

Chief Financial Officer

 

7


 

EXHIBIT INDEX

 

Exhibit
No.

 


Description

 

Manner of
Filing

 

 

 

 

 

10.1

 

Senior Credit Agreement dated as of October 1, 2007 among Heartland Grain Fuels, L.P., the lenders referred to therein and WestLB AG, New York Branch, as Administrative Agent, Collateral Agent, Issuing Bank, Lead Arranger, Sole Bookrunner and Syndication Agent

 

Filed Electronically

 

 

 

 

 

10.2

 

Accounts Agreement dated as of October 1, 2007 among Heartland Grain Fuels, L.P., Amarillo National Bank, as the Accounts Bank and Securities Intermediary, WestLB AG, New York Branch, as Administrative Agent and Collateral Agent, and Wells Fargo Bank, National Association, as Trustee of the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A, as the Second Lien Agent for the Second Lien Claimholders

 

Filed Electronically

 

 

 

 

 

10.3

 

Bond Indenture dated as of October 1, 2007 between Brown County, South Dakota and Wells Fargo Bank, National Association as Bond Trustee

 

Filed Electronically

 

 

 

 

 

10.4

 

Loan Agreement dated as of October 1, 2007 between Heartland Grain Fuels, L.P. and Brown County, South Dakota

 

Filed Electronically

 

 

 

 

 

10.5

 

Amendment to Grain Origination Agreement dated as of October 1, 2007 between Heartland Grain Fuels, L.P. and South Dakota Wheat Growers Association

 

Filed Electronically

 

 

 

 

 

99.1

 

Press Release dated October 15, 2007

 

Filed Electronically

 

8

EXHIBIT 10.1

 

 

 

SENIOR CREDIT AGREEMENT

 

 

dated as of October 1, 2007

 

among

 

HEARTLAND GRAIN FUELS, L.P.,
as Borrower,

 

THE LENDERS REFERRED TO HEREIN,

 

WESTLB AG, NEW YORK BRANCH,
as Administrative Agent for the Lenders,

 

WESTLB AG, NEW YORK BRANCH ,
as Collateral Agent for the Senior Secured Parties,

 

WESTLB AG, NEW YORK BRANCH,
as Issuing Bank with respect to the Letters of Credit,

 

and

 

WESTLB AG, NEW YORK BRANCH,
as Lead Arranger, Sole Bookrunner and Syndication Agent

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS AND INTERPRETATION

1

 

 

 

Section 1.01

Defined Terms

1

Section 1.02

Principles of Interpretation

1

Section 1.03

UCC Terms

3

Section 1.04

Accounting and Financial Determinations

3

 

 

 

ARTICLE II COMMITMENTS AND FUNDING

3

 

 

 

Section 2.01

Construction Loans

3

Section 2.02

Term Loans

4

Section 2.03

Working Capital Loans

4

Section 2.04

Letters of Credit

5

Section 2.05

Notice of Fundings

7

Section 2.06

Funding of Loans

7

Section 2.07

Evidence of Indebtedness

10

Section 2.08

Termination or Reduction of Commitments

11

Section 2.09

Additional Plant

12

 

 

 

ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

13

 

 

 

Section 3.01

Repayment of Construction Loan Fundings

13

Section 3.02

Repayment of Term Loan Fundings

13

Section 3.03

Repayment of Working Capital Loan Fundings

14

Section 3.04

Interest Payment Dates

15

Section 3.05

Interest Rates

15

Section 3.06

Default Interest Rate

17

Section 3.07

Interest Rate Determination

17

Section 3.08

Computation of Interest and Fees

17

Section 3.09

Optional Prepayment

18

Section 3.10

Mandatory Prepayment

19

Section 3.11

Time and Place of Payments

21

Section 3.12

Fundings and Payments Generally

22

Section 3.13

Fees

22

Section 3.14

Pro Rata Treatment

23

Section 3.15

Sharing of Payments

24

Section 3.16

Termination of Interest Rate Protection Agreement in Connection with Any Prepayment

25

 

ii


 

ARTICLE IV EURODOLLAR RATE AND TAX PROVISIONS

25

 

 

 

Section 4.01

Eurodollar Rate Lending Unlawful

25

Section 4.02

Inability to Determine Eurodollar Rates

26

Section 4.03

Increased Eurodollar Loan Costs

26

Section 4.04

Obligation to Mitigate

27

Section 4.05

Funding Losses

28

Section 4.06

Increased Capital Costs

28

Section 4.07

Taxes

28

Section 4.08

Replacement of Lender

30

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES

31

 

 

 

Section 5.01

Organization; Power; Compliance with Law and Contractual Obligations

31

Section 5.02

Due Authorization; Non-Contravention

31

Section 5.03

Governmental Approvals

32

Section 5.04

Investment Company Act

33

Section 5.05

Validity

33

Section 5.06

Financial Information

34

Section 5.07

No Material Adverse Effect

34

Section 5.08

Project Compliance

34

Section 5.09

Litigation

34

Section 5.10

Sole Purpose Nature; Business

34

Section 5.11

Contracts

34

Section 5.12

Collateral

36

Section 5.13

Ownership of Properties

37

Section 5.14

Taxes

38

Section 5.15

Patents, Trademarks, Etc.

39

Section 5.16

ERISA Plans

39

Section 5.17

Property Rights, Utilities, Supplies Etc.

39

Section 5.18

No Defaults

39

Section 5.19

Environmental Warranties

40

Section 5.20

Regulations T, U and X

41

Section 5.21

Accuracy of Information

41

Section 5.22

Indebtedness

42

Section 5.23

Separateness

42

Section 5.24

Required LP and GP Provisions

42

Section 5.25

Subsidiaries

42

Section 5.26

Foreign Assets Control Regulations, Etc.

42

Section 5.27

Solvency

43

Section 5.28

Legal Name and Place of Business

43

Section 5.29

No Brokers

43

Section 5.30

Insurance

43

Section 5.31

Accounts

43

 

iii


 

ARTICLE VI CONDITIONS PRECEDENT

44

 

 

 

Section 6.01

Conditions to Closing and First Funding of Construction Loans

44

Section 6.02

Conditions to All Construction Loan Fundings

55

Section 6.03

Conditions to Term Loan Funding

58

Section 6.04

Conditions to Working Capital Loan Fundings

60

Section 6.05

Conditions to All Fundings and Issuances

60

 

 

 

ARTICLE VII COVENANTS

63

 

 

 

Section 7.01

Affirmative Covenants

63

Section 7.02

Negative Covenants

74

Section 7.03

Reporting Requirements

82

 

 

 

ARTICLE VIII DEFAULT AND ENFORCEMENT

88

 

 

 

Section 8.01

Events of Default

88

Section 8.02

Action Upon Bankruptcy

95

Section 8.03

Action Upon Other Event of Default

95

Section 8.04

Application of Proceeds

96

 

 

 

ARTICLE IX THE AGENTS

96

 

 

 

Section 9.01

Appointment and Authority

96

Section 9.02

Rights as a Lender or Interest Rate Protection Provider

98

Section 9.03

Exculpatory Provisions

98

Section 9.04

Reliance by Agents

100

Section 9.05

Delegation of Duties

101

Section 9.06

Resignation or Removal of Agent

101

Section 9.07

No Amendment to Duties of Agent Without Consent

102

Section 9.08

Non-Reliance on Agent and Other Lenders

102

Section 9.09

No Lead Arranger or Bookrunner Duties

103

Section 9.10

Collateral Agent May File Proofs of Claim

103

Section 9.11

Collateral Matters

104

Section 9.12

Copies

104

Section 9.13

No Liability for Clean-up of Hazardous Materials

105

 

 

 

ARTICLE X MISCELLANEOUS PROVISIONS

105

 

 

 

Section 10.01

Amendments, Etc.

105

Section 10.02

Applicable Law; Jurisdiction; Etc.

107

Section 10.03

Assignments

109

Section 10.04

Benefits of Agreement

113

Section 10.05

Consultants

113

Section 10.06

Costs and Expenses

114

Section 10.07

Counterparts; Effectiveness

114

 

iv


 

Section 10.08

Indemnification by the Borrower

114

Section 10.09

Interest Rate Limitation

116

Section 10.10

No Waiver; Cumulative Remedies

116

Section 10.11

Notices and Other Communications

117

Section 10.12

Patriot Act Notice

120

Section 10.13

Payments Set Aside

120

Section 10.14

Right of Setoff

120

Section 10.15

Severability

121

Section 10.16

Survival

121

Section 10.17

Treatment of Certain Information; Confidentiality

121

Section 10.18

Waiver of Consequential Damages, Etc.

123

Section 10.19

Waiver of Litigation Payments

123

 

SCHEDULES

 

 

 

 

 

Schedule 2.01

 

Commitments

Schedule 5.03

 

Necessary Project Approvals

Part A

 

First Funding Project Approvals

Part B

 

Deferred Approvals

Schedule 5.11

 

Existing Contracts

Part A

 

Necessary Project Contracts

Part B

 

Deferred Contracts

Schedule 5.12(c)

 

Schedule of Security Filings

Schedule 5.13

 

Description of Sites

Schedule 5.14

 

Tax Returns Not Filed or Taxes Not Paid

Schedule 5.16

 

Prior Plans or Multiemployer Plans of Borrower and its ERISA Affiliates

Schedule 5.24(a)

 

Required LP Provisions

Schedule 5.24(b)

 

Required GP Provisions

Schedule 5.24(c)

 

Required LP Pledgor LLC Provisions

Schedule 5.28

 

Prior Legal Names of Borrower

Schedule 5.29

 

Finder’s, Advisory, Broker’s or Investment Banking Fees

Schedule 6.01(w)(i)

 

Construction Budget

Schedule 6.01(w)(ii)

 

Construction Schedule for the Aberdeen II Plant

Schedule 6.01(w)(iii)

 

Operating Budget for Existing Plants

Schedule 6.02(a)(v)

 

Drawdown Schedule

Schedule 7.01(h)

 

Insurance

Schedule 10.11(a)

 

Notice Information

 

v


 

EXHIBITS

 

Exhibit A

 

Defined Terms

Exhibit B

 

Form of Construction Notes

Exhibit C

 

Form of Term Notes

Exhibit D

 

Form of Working Capital Notes

Exhibit E

 

Form of Construction Loan Funding Notice

Exhibit F

 

Form of Conversion Date Funding Notice

Exhibit G

 

Form of Working Capital Loan Funding Notice

Exhibit H

 

Lender Statement—Section 881(c)(3)(A) of the Code

Exhibit I

 

Form of Insurance Consultant’s Certificate

Exhibit J-1

 

Form of Independent Engineer’s Closing Certificate

Exhibit J-2

 

Form of Independent Engineer’s Certificate

Exhibit K

 

Financial Model

Exhibit L

 

Form of Operating Statement

Exhibit M

 

Form of Blocked Account Agreement

Exhibit N

 

Form of Borrowing Base Certificate

Exhibit O

 

Form of Interest Period Notice

Exhibit P

 

Form of Debt Service LC Waiver Letter

Exhibit Q-1

 

Form of Final Completion Certificate by Independent Engineer

Exhibit Q-2

 

Form of Final Completion Certificate by Borrower

Exhibit R

 

Form of Lender Assignment Agreement

Exhibit S

 

Form of Lien Waiver Statement

Exhibit T

 

Form of Issuance Request

 

vi


 

This SENIOR CREDIT AGREEMENT (this “ Agreement ”), dated as of October 1, 2007, is by and among HEARTLAND GRAIN FUELS, L.P., a Delaware limited partnership (“ Borrower ”), each of the Lenders from time to time party hereto, WESTLB AG, NEW YORK BRANCH, as administrative agent for the Lenders, WESTLB AG, NEW YORK BRANCH, as collateral agent for the Senior Secured Parties, WESTLB AG, NEW YORK BRANCH, as Issuing Bank with respect to the Letters of Credit and WESTLB AG, NEW YORK BRANCH, as lead arranger, sole bookrunner and syndication agent.

 

RECITALS

 

WHEREAS, the Borrower has requested that the Lenders establish a credit facility the proceeds of which are to be used to (a) pay in full existing debt secured by the Borrower’s two (2) operating ethanol plants, one such plant being located in Huron, South Dakota, producing approximately thirty (30) million gallons-per-year of denatured ethanol, together with distillers grains, and the other such plant being located in Aberdeen, South Dakota, producing approximately nine (9) million gallons-per-year of denatured ethanol, together with distillers grains, (b) finance the ownership, development, engineering, construction, testing and operation of an expansion plant located on the same site as the existing plant in Aberdeen, South Dakota, designed to produce an additional approximately forty (40) million gallons-per-year of denatured ethanol, together with distillers grains, (c) fund certain reserves, (d) pay interest during construction and certain fees and expenses associated with this Agreement and the Loans, in each case as further described herein and (e) provide working capital to the Borrower; and

 

WHEREAS, the Lenders are willing to make such a credit facility available to the Borrower upon and subject to the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.01    Defined Terms . Capitalized terms used in this Agreement, including its preamble and recitals, shall, except as otherwise defined herein or where the context otherwise requires, have the meanings provided in Exhibit A .

 

Section 1.02    Principles of Interpretation . (a)  Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement

 


 

shall have the same meanings when used in each other Financing Document and each other notice or other communication delivered from time to time in connection with any Financing Document.

 

(b)   Unless the context requires otherwise, any reference in this Agreement to any Transaction Document shall mean such Transaction Document and all schedules, exhibits and attachments thereto.

 

(c)   All agreements, contracts or documents defined or referred to herein shall mean such agreements, contracts or documents as the same may from time to time be supplemented, amended or replaced or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and this Agreement, and shall disregard any supplement, amendment, replacement, waiver or modification made in violation of this Agreement.

 

(d)   Any reference in any Financing Document relating to a Default or an Event of Default that has occurred and is continuing (or words of similar effect) shall be understood to mean that such Default or Event of Default, as the case may be, has not been cured or remedied to the satisfaction of, or has not been waived by, the Required Lenders.

 

(e)   The term “knowledge” in relation to the Borrower, and any other similar expression, shall mean knowledge of the Borrower after due inquiry.

 

(f)    Defined terms in this Agreement shall include in the singular number the plural and in the plural number the singular.

 

(g)   The words “herein,” “hereof” and “hereunder” and words of similar import when used in this Agreement shall, unless otherwise expressly specified, refer to this Agreement as a whole and not to any particular provision of this Agreement and all references to Articles, Sections, Exhibits and Schedules shall be references to Articles, Sections, Exhibits and Schedules of this Agreement, unless otherwise specified.

 

(h)   The words “include,” “includes” and “including” are not limiting.

 

(i)    The word “or” is not exclusive.

 

(j)    Any reference to any Person shall include its permitted successors and permitted assigns in the capacity indicated, and in the case of any Governmental Authority, any Person succeeding to its functions and capacities.

 

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Section 1.03    UCC Terms . Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the respective meanings given to those terms in the UCC.

 

Section 1.04    Accounting and Financial Determinations . Unless otherwise specified, all accounting terms used in any Financing Document shall be interpreted, all accounting determinations and computations hereunder or thereunder shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared, in accordance with GAAP.

 

ARTICLE II

 

COMMITMENTS AND FUNDING

 

On the terms, subject to the conditions and relying upon the representations and warranties herein set forth:

 

Section 2.01    Construction Loans .

 

(a)   Each Construction/Term Lender agrees, severally and not jointly, on the terms and conditions of this Agreement, to make loans (each such loan, a “ Construction Loan ”) to the Borrower for Project Costs and for the purposes set forth in Section 4.01(b)(ii) of the Accounts Agreement, from time to time but not more frequently than once each calendar month (except for Loans made on the Conversion Date), until the Construction Loan Maturity Date in an aggregate principal amount not in excess of the Construction Loan Commitment of such Construction/Term Lender; provided , that the aggregate principal amount of the Construction Loans shall not exceed the Aggregate Construction Loan Commitment.

 

(b)   The aggregate principal amount of the Construction Loans shall not exceed the Aggregate Construction Loan Commitment. The aggregate principal amount of the Construction Loans made by each Lender shall not exceed the Construction Loan Commitment of such Lender.

 

(c)   Proceeds of each Construction Loan shall be deposited into the Construction Account (except as set forth in Section 4.01(a)(iii) of the Accounts Agreement), applied solely in accordance with this Agreement and the Accounts Agreement and used solely for the payment of Project Costs and for the purposes set forth in Sections 4.01(b)(ii).

 

(d)   Construction Loans repaid or prepaid may not be reborrowed.

 

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Section 2.02    Term Loans . (a)  Each Construction/Term Lender agrees, severally and not jointly, on the terms and conditions of this Agreement, to make loans (each such loan, a “ Term Loan ”) to the Borrower for the repayment of the Construction Loans, on the Conversion Date, in an aggregate principal amount not in excess of such Construction/Term Lender’s Term Loan Commitment; provided , however , that the aggregate principal amount of the Term Loans shall not exceed the Aggregate Term Loan Commitment or the aggregate outstanding Construction Loans (including each Construction Loan made on the Conversion Date).

 

(b)   Proceeds of the Term Loans shall be used solely for the payment of amounts due in respect of the Construction Loans (including all Construction Loans made on the Conversion Date).

 

(c)   Term Loans repaid or prepaid may not be reborrowed.

 

Section 2.03    Working Capital Loans . (a)  Each Working Capital Lender agrees, severally and not jointly, on the terms and conditions of this Agreement, to make loans (each such loan, a “ Working Capital Loan ”) to the Borrower for Working Capital Expenses, from time to time but not more frequently than two (2) times each calendar month, until the last Business Day immediately preceding the Working Capital Loan Maturity Date in an aggregate principal amount from time to time outstanding, together with all participations in Letters of Credit acquired by such Working Capital Lender pursuant to Section 2.04(c) , not in excess of the Working Capital Loan Commitment of such Lender or of such Lender’s Working Capital Loan Commitment Percentage of the Working Capital Available Amount; provided , however , that the aggregate principal amount of the Working Capital Loans at any one time outstanding, plus the aggregate Maximum Available Amounts of all issued and outstanding Letters of Credit, shall not exceed the Working Capital Available Amount.

 

(b)   Each Funding of Working Capital Loans shall be in the minimum amount of five hundred thousand Dollars ($500,000) and in integral multiples of one hundred thousand Dollars ($100,000) in excess thereof.

 

(c)   Proceeds of each Working Capital Loan (other than those resulting from a draw on a Letter of Credit) for (i) Project Costs relating to the initial start-up and testing of the Aberdeen II Plant shall be deposited into the Construction Account, (ii) Operation and Maintenance Expenses shall be deposited into the Operating Account, and (iii) Maintenance Capital Expenses shall be deposited into the Maintenance Capital Expense Account, and in each such case shall be applied solely in accordance with this Agreement and the Accounts Agreement and shall be used solely for the payment of Working Capital Expenses. Fundings of Working Capital Loans for Operation and Maintenance Expenses and for Maintenance Capital Expenses shall be subject to the

 

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restrictions with respect to such expenses set forth in this Agreement and the Accounts Agreement.

 

(d)   Within the limits set forth in Section 2.03(a) , the Borrower may pay or prepay and reborrow Working Capital Loans.

 

Section 2.04    Letters of Credit . (a) The Issuing Bank agrees at any time on or after the Closing Date, and from time to time on the terms and conditions of this Agreement, upon receipt from the Borrower of an Issuance Request, to issue a Letter of Credit on behalf of the Borrower on the date and in the amount set forth in such Issuance Request; provided , that (i) Letters of Credit may only be issued for security for utilities and railcar leases, in each case related to the Project, (ii) the aggregate Maximum Available Amounts of all issued and outstanding Letters of Credit shall not exceed the LC Cap and (iii) the aggregate of, at any time, the aggregate Maximum Available Amounts of all issued and outstanding Letters of Credit plus the aggregate outstanding principal amount of all Working Capital Loans shall not exceed the lesser of the Aggregate Working Capital Loan Commitment and the Working Capital Available Amount.

 

(b)   The Borrower shall give the Administrative Agent at least five (5) Business Days irrevocable prior written notice (such notice, in substantially the form of Exhibit T , an “ Issuance Request ”) (effective upon receipt) specifying the date (which shall be a day that is no later than thirty (30) days preceding the Working Capital Loan Maturity Date) a Letter of Credit is requested to be issued, describing in reasonable detail the nature of the transactions or obligations proposed to be supported thereby (which shall be of the nature described in Section 2.04(a)(i) ) and the Maximum Available Amount of such Letter of Credit, which shall be no less than two hundred fifty thousand Dollars ($250,000)). Upon receipt of an Issuance Request, the Administrative Agent shall promptly advise the Issuing Bank of the contents thereof.

 

(c)   Each Working Capital Lender (other than the Issuing Bank) agrees that, upon the issuance of any Letter of Credit hereunder, it shall automatically acquire a participation in the Issuing Bank’s liability thereunder in an amount equal to such Lender’s Working Capital Loan Commitment Percentage of such liability, and each Working Capital Lender (other than the Issuing Bank) thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to the Issuing Bank to pay and discharge when due, its Working Capital Loan Commitment Percentage of the Issuing Bank’s liability under each Letter of Credit.

 

(d)   Upon receipt from a beneficiary under a Letter of Credit of a demand for payment thereunder, in proper form to accomplish a draw in accordance with the terms

 

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thereof, the Issuing Bank (through the Administrative Agent) shall promptly notify each other Working Capital Lender and the Borrower of the amount to be paid by the Issuing Bank as a result of such demand and the date on which payment is to be made by the Issuing Bank to such beneficiary in respect of such demand. Immediately following such demand by a beneficiary of payment under a Letter of Credit, the Administrative Agent shall give each Working Capital Lender prompt notice of the amount of the actual demand for payment, specifying such Lender’s Working Capital Loan Commitment Percentage of the amount of such demand.

 

(e)   Upon receipt of the notice described in Section 2.04(d) , each Working Capital Lender (other than the Issuing Bank) shall pay, on the proposed funding date of a draw under the Letter of Credit, the amount of such Lender’s Working Capital Loan Commitment Percentage of any payment under the Letter of Credit by wire transfer of immediately available funds to the Administrative Agent for the account of the Issuing Bank, not later than 11:00 a.m. New York City time. Each Working Capital Lender’s obligation to make such payments to the Administrative Agent for the account of the Issuing Bank under this Section 2.04(e) , and the Issuing Bank’s right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (i) the failure of any other Working Capital Lender to make its payment under this Section 2.04(e) , (ii) the financial condition of the Borrower, (iii) the existence of any Default or Event of Default or (iv) the termination of any Commitments. Each such payment to the Issuing Bank shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(f)    To the extent that any Working Capital Lender fails to pay any amount required to be paid pursuant to Section 2.04(e) on the date such amounts are due to be paid, such Working Capital Lender shall pay interest to the Issuing Bank (through the Administrative Agent) on such amount from and including such due date to but excluding the date such payment is made at a rate per annum equal to the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation plus (in either such case) two percent (2%).

 

(g)   Each drawing honored by the Issuing Bank under a Letter of Credit shall reduce the Maximum Available Amount under such Letter of Credit by the amount of such drawing.

 

(h)   Notwithstanding anything herein to the contrary (including Section 6.05 ( Conditions to All Fundings and Issuances ) ), any payments by the Issuing Bank under any Letter of Credit shall automatically be considered to be a Working Capital Loan to the Borrowers from the Issuing Bank and the other Working Capital Lenders making payments to the Issuing Bank in accordance with Section 2.04(e) in an

 

6


 

amount equal to such Issuing Bank’s and each such other Working Capital Lenders’ Working Capital Loan Commitment Percentage of the amount of the drawing on the Letter of Credit. All such Working Capital Loans shall be repaid or prepaid by the Borrower in accordance with the provisions of ARTICLE III ( Repayments, Prepayments, Interest and Fees ) . Such Working Capital Loan shall initially be made as a Base Rate Loan.

 

(i)    The issuance of each Letter of Credit shall be subject to, in addition to the conditions precedent set forth in Section 6.05 ( Conditions to All Fundings and Issuances ) , the conditions precedent that (i) such Letter of Credit shall be in such form and contain such terms as shall be satisfactory to the Issuing Bank consistent with its then-current practices and procedures with respect to letters of credit of the same type; (ii) such Letter of Credit shall be issued solely for the purposes set forth in Section 2.04(a)(i) ; (iii) the term of each Letter of Credit shall expire no later than the Working Capital Loan Maturity Date; and (iv) the Borrower shall have executed and delivered such other instruments and agreements relating to such Letter of Credit as the Issuing Bank shall have reasonably requested consistent with its then-current practices and procedures with Letters of Credit of the same type.

 

Section 2.05    Notice of Fundings . (a) From time to time, but not more frequently than (i) in the case of Construction Loans (except for Construction Loans made on the Conversion Date), once per calendar month, (ii) in the case of Working Capital Loans, two (2) times per calendar month and (iii) once with respect to Term Loans to be made on the Conversion Date, the Borrower may propose a Funding by delivering to the Administrative Agent a properly completed Funding Notice not later than 11:00 a.m., New York City time, three (3) Business Days prior to the proposed Funding Date. Each Funding Notice delivered pursuant to this Section 2.05 shall be irrevocable and shall refer to this Agreement and specify (v) whether such Funding is requested to be of Eurodollar Loans and/or Base Rate Loans, (w) the requested Funding Date (which shall be a Business Day), (x) the amount of such requested Funding, (y) the type(s) of Loan(s) with respect to which such Funding is requested (and, in the case of Funding on the Conversion Date, may include Construction Loans, Term Loans and Working Capital Loans) and (z) the initial Interest Period for the Loans requested.

 

(b)   The Administrative Agent shall promptly advise (i) each Construction/Term Lender of any Construction Loan Funding Notice or the Conversion Date Funding Notice as applicable and (ii) each Working Capital Lender of any Working Capital Loan Funding Notice, in each case given pursuant to this Section 2.05 , and of each such Lender’s portion of the requested Funding.

 

Section 2.06    Funding of Loans . (a)  Subject to Section 2.06(d) , each Funding shall consist of Loans made by the Lenders ratably in accordance with their

 

7


 

respective applicable Commitment Percentages and shall consist of Eurodollar Loans or Base Rate Loans as the Borrower may request, or as otherwise provided, pursuant to Section 2.05 ( Notice of Fundings ) ; provided , however , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).

 

(b)   Subject to Section 4.04 ( Obligation to Mitigate ) , each Lender may (without relieving the Borrower of its obligation to repay a Loan in accordance with the terms of this Agreement and the Notes) at its option fulfill its Commitment with respect to any such Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan.

 

(c)   Subject to Section 2.06(d) , (i) each Construction/Term Lender shall make a Loan in the amount of its applicable Commitment Percentage of each Construction Loan Funding or Term Loan Funding, as applicable, hereunder on the proposed Funding Date by (in the case of each Construction Loan Funding) wire transfer of immediately available funds to the Administrative Agent, not later than 11:00 a.m., New York City time, and (A) the Administrative Agent shall in the case of Construction Loans, deposit the amounts so received (except to the extent applied directly to the payment of Debt Service) into the Construction Account, (B) in the case of Term Loans, the proceeds of such Term Loan shall be applied solely to repay outstanding Construction Loans (and the Lenders shall not be obligated to pay the proceeds of any Term Loan to, or upon the direction of, the Borrower, and the Borrower shall not be entitled to receive such proceeds) and (ii) each Working Capital Lender shall make a Loan in the amount of its applicable Commitment Percentage of each Working Capital Loan Funding hereunder on the proposed Funding Date by wire transfer of immediately available funds to the Administrative Agent, not later than 11:00 a.m. New York City time, and the Administrative Agent shall deposit the amounts so received into the Account specified in the relevant Funding Notice; provided , in the case of (i) or (ii) above, that if a Funding does not occur on the proposed Funding Date because any condition precedent to such requested Funding herein specified has not been met, the Administrative Agent shall return the amounts so received to the respective Lenders without interest.

 

(d)   Unless the Administrative Agent has been notified in writing by any Lender prior to a proposed Funding Date that such Lender will not make available to the Administrative Agent its portion of the Funding proposed to be made on such date, the Administrative Agent may assume that such Lender has made such amounts available to the Administrative Agent on such date and the Administrative Agent in its sole discretion may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made such

 

8


 

amount available to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender and, if such Lender pays such amount (together with the interest noted below), then the amount so paid shall constitute such Lender’s Loan included in such Funding. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand, the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately repay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at an interest rate per annum equal to (i) in the case of a payment made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment made by the Borrower, the Base Rate plus the Applicable Margin. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitment hereunder. Notwithstanding anything to the contrary in this Agreement or any other Financing Document, the Administrative Agent may, subject to the rights of the other Senior Secured Parties under the Security Documents, apply all funds and proceeds of Collateral available for the payment of any Obligation to repay any amount owing by any Lender to the Administrative Agent as a result of such Lender’s failure to fund its applicable share of any Funding. A notice by the Administrative Agent to any Lender or the Borrower with respect to any amounts owing under this Section 2.06(d) shall be conclusive, absent manifest error.

 

(e)   On the Conversion Date, to the extent required to pay the amounts specified below (and in accordance with the Conversion Date Funding Notice), and in the following order of priority, the Administrative Agent shall (x) first, apply any amounts on deposit in or standing to the credit of the Construction Account (other than amounts in the Bond Proceeds Sub-Account), and (y) second, (A) in the case of any prepayment of the Construction Loans, reduce any unused portion of the Aggregate Construction Loan Commitment (with a corresponding reduction in the Term Loan Commitments in accordance with Section 2.08(e) ( Termination or Reduction of Commitments ) ), or (B) in all other cases, disburse to the Administrative Agent any unused portion of the Aggregate Construction Loan Commitment for application as specified below:

 

(i)                         first , for deposit into the Debt Service Reserve Account in an amount which, when taken together with all other amounts then on deposit in or credited to the Debt Service Reserve Account, equals fifty percent (50%) of the then-current Debt Service Reserve Required Amount;

 

9


 

(ii)                      second , to the Borrower for the payment of any remaining Project Costs;

 

(iii)                   third , for deposit into the Contingency Reserve Account in an amount such that the amounts on deposit therein are equal to the Contingency Reserve Required Amount;

 

(iv)                  fourth , as a distribution to the Sponsor in an amount not to exceed two million seven hundred fifty thousand Dollars ($2,750,000) to repay the loan (including accrued interest) from the Design-Build Contractor to the Sponsor;

 

(v)                     fifth , upon written notice of either the Borrower or the Administrative Agent, for deposit into the Debt Service Reserve Account in an amount such that the total amount on deposit therein is equal to the then-current Debt Service Reserve Required Amount;

 

(vi)                  sixth , if the Pre-Conversion Prepayment Target has not been achieved, as a prepayment of the Construction Loans in accordance with Section 3.10(d)(i) ( Mandatory Prepayment ) to the extent required to achieve the Pre-Conversion Prepayment Target; and

 

(vii)               seventh , as a prepayment of the Construction Loans in accordance with Section 3.10(d)(ii) ( Mandatory Prepayment ) and, provided that no Default or Event of Default has occurred and is continuing, for distribution to the Pledgor, in amounts such that the ratio of Aggregate Pre-Conversion Distributions to Aggregate Pre-Conversion Cash Sweeps is equal to 40:60, provided , that if sufficient amounts are not available at this priority for prepayment of the Construction Loans in order for such ratio to be achieved, then all such amounts shall be applied as a prepayment of the Construction Loans in accordance with Section 3.10(d)(ii) ( Mandatory Prepayment ) .

 

Section 2.07    Evidence of Indebtedness . (a) Each Loan made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business, including the Register for the recordation of the Loans maintained by the Administrative Agent in accordance with the provisions of Section 10.03(c) ( Assignments ) . The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive

 

10


 

evidence, absent manifest error, of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control, absent manifest error.

 

(b)   The Borrower agrees that in addition to the Register and any other accounts and records maintained pursuant to Section 2.07(a) ( Evidence of Indebtedness ) , the Loans made by each Lender shall be evidenced by a Note or Notes duly executed on behalf of the Borrower. Construction Notes and Working Capital Notes shall be dated the Closing Date (or, if later, the date of any request therefor by a Lender). Term Notes shall be dated the Conversion Date (or, if later, the date of any request therefor by a Lender). Each such Note shall be payable to the order of such Lender in a principal amount equal to such Lender’s Construction Loan Commitment, Term Loan Commitment or Working Capital Loan Commitment, as applicable. Each Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loan and payments with respect thereto.

 

Section 2.08    Termination or Reduction of Commitments . (a)  Unless all of the Construction/Term Lenders agree otherwise in writing, any unused Construction Loan Commitments shall be terminated on the earlier to occur of the Conversion Date and the Conversion Date Certain, in each case after giving effect to all Construction Loans, if any, to be made on such day.

 

(b)   Unless all of the Construction/Term Lenders agree otherwise in writing, any unused Term Loan Commitments shall be terminated on the earlier to occur of the Conversion Date and the Conversion Date Certain, after giving effect to all Term Loans, if any, to be made on such day.

 

(c)   Unless all of the Working Capital Lenders agree otherwise in writing, if the Conversion Date does not occur on or prior to the Conversion Date Certain, all Working Capital Loan Commitments shall be automatically and permanently terminated on the Conversion Date Certain.

 

(d)   Upon any prepayment of the Construction Loans pursuant to Section 3.09 ( Optional Prepayment ) or Section 3.10 ( Mandatory Prepayment ) , or any reduction in Construction Loan Commitments, the Term Loan Commitments shall be automatically and permanently reduced in an amount equal to such prepayment or reduction.

 

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(e)   Any unused Construction Loan Commitments, Term Loan Commitments or Working Capital Loan Commitments shall be terminated upon the occurrence of an Event of Default if and to the extent required pursuant to Section 8.02 ( Action Upon Bankruptcy ) or Section 8.03 ( Action Upon Other Event of Default ) in accordance with the terms thereof.

 

(f)    Any Working Capital Loan Commitments shall be automatically and permanently terminated in full on the earlier of (i) the date that is ninety (90) days after the date on which all outstanding Construction Loans and Terms Loans have been paid in full and (ii) the Final Maturity Date.

 

(g)   Any Working Capital Loan Commitments may be terminated or reduced, in whole or in part (in integral multiples of one hundred thousand Dollars ($100,000)), by the Borrower upon no less than ten (10) days’ prior written notice to the Administrative Agent; provided , upon any such termination or reduction, the sum of (x) the amounts on deposit in or standing to the credit of the Working Capital Reserve Account (not including amounts in the LC Cash Collateral Sub-Account) plus (y) the Aggregate Working Capital Loan Commitment is equal to or greater than the Working Capital Reserve Required Amount.

 

(h)   The Aggregate Working Capital Loan Commitment and the Working Capital Available Amount shall be automatically reduced to the extent of, and in the amount of, any prepayment of the Working Capital Loans that is applied, at the Borrower’s option, to the Working Capital Reserve Account pursuant to Section 3.09(d)(ii)(C) ( Optional Prepayment ) .

 

(i)    The Aggregate Working Capital Loan Commitment and the Working Capital Available Amount shall be automatically reduced to the extent of, and in the amount of, any prepayment of the Working Capital Loans pursuant to Section 3.10(g)(ii) or (iv) ( Mandatory Prepayment ) .

 

Section 2.09    Additional Plant . (a)  The Borrower and the Lenders acknowledge that the Borrower or one of its affiliates may (but shall not be obligated to), in the future, request that the Lenders consider making available additional senior loans (i) to finance the ownership, development, engineering, construction, testing and operation of an expansion plant located on the same site as the Huron Plant and designed to produce an additional approximately thirty (30) million gallons-per-year of denatured ethanol, together with distillers grains, and (ii) to finance up to 65% of the total capital requirements of an additional ethanol facility to be located in Indiana, in each case owned and operated by a wholly-owned Subsidiary of Advanced BioEnergy, LLC, a Delaware limited liability company, and subject to (x) the satisfaction of all due diligence inquiries of each Lender, (y) the prior written approval of all of the Lenders, and (z) the execution

 

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and delivery of all amendments to the then-existing Financing Documents and all additional financing documents as the Lenders may require. The Borrower acknowledges and agrees that this Section 2.09 does not constitute a commitment or obligation on the part of any Lender to provide funding for any such additional ethanol facility.

 

ARTICLE III

 

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

 

Section 3.01    Repayment of Construction Loan Fundings . (a) The Borrower unconditionally and irrevocably promises to pay to the Administrative Agent for the ratable account of each Construction/Term Lender the aggregate outstanding principal amount of the Construction Loans in accordance with this Section 3.01 .

 

(b)   The Construction Loans shall be repaid in full on the Conversion Date with the proceeds of the Term Loans or, if earlier, on the Conversion Date Certain in accordance with Section 3.01(c) .

 

(c)   Unless all of the Construction/Term Lenders agree otherwise in writing, if the Conversion Date does not occur on or prior to the Conversion Date Certain, on the Conversion Date Certain, (1) each outstanding Construction Loan shall become due and payable, (2) all amounts in any Project Accounts (other than the Bond Proceeds Sub-Account) shall be promptly applied at the written instruction of the Administrative Agent to Obligations then outstanding in accordance with Section 4.2 ( Application of Proceeds ) of the Intercreditor Agreement, and (3) the Borrower shall pay all accrued interest on and repay the entire remaining principal amount of all outstanding Construction Loans to the Administrative Agent, for the pro rata account of the Lenders (based on their respective Construction Loan Commitment Percentages), together with any and all Fees and other Obligations owed to the Senior Secured Parties.

 

Section 3.02    Repayment of Term Loan Fundings . (a)  The Borrower unconditionally and irrevocably promises to pay to the Administrative Agent for the ratable account of each Construction/Term Lender the aggregate outstanding principal amount of the Term Loans, on the Initial Quarterly Payment Date and on each Quarterly Payment Date thereafter, in the respective amounts set forth below opposite each such Quarterly Payment Date (which amounts shall be reduced in inverse order of maturity as a result of any prepayments of the Term Loans made in accordance with Section 3.09 ( Optional Prepayment ) or Section 3.10 ( Mandatory Prepayment ) in accordance with the terms set forth therein or as a result of any reduction in the Term Loan Commitments pursuant to Section 2.08(b) or (e) ( Termination or Reduction of Commitments ) . The first Quarterly Payment Date in each table below corresponds to Initial Quarterly Payment Date.

 

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Term Loans

 

Quarterly Payment 
Date

 

Principal Amount

 

1

 

US$

1,360,500

 

2

 

US$

1,360,500

 

3

 

US$

1,360,500

 

4

 

US$

1,360,500

 

5

 

US$

1,360,500

 

6

 

US$

1,360,500

 

7

 

US$

1,360,500

 

8

 

US$

1,360,500

 

9

 

US$

1,360,500

 

10

 

US$

1,360,500

 

11

 

US$

1,360,500

 

12

 

US$

1,360,500

 

13

 

US$

1,360,500

 

14

 

US$

1,360,500

 

15

 

US$

1,360,500

 

16

 

US$

1,360,500

 

17

 

US$

1,360,500

 

18

 

US$

1,360,500

 

19

 

US$

1,360,500

 

20

 

US$

1,360,500

 

21

 

US$

1,360,500

 

22

 

US$

1,360,500

 

23

 

US$

1,360,500

 

Final Maturity Date

 

US$

59,408,500

 

 

(b)   Notwithstanding anything to the contrary set forth in Section 3.02(a) , the final principal repayment installment on the Final Maturity Date shall in any event be in an amount equal to the aggregate principal amount of all Term Loans outstanding on such date.

 

Section 3.03    Repayment of Working Capital Loan Fundings . (a) The Borrower unconditionally and irrevocably promises to pay to the Administrative Agent for the ratable account of each Working Capital Lender the aggregate outstanding principal amount of the Working Capital Loans in accordance with this Section 3.03 .

 

14


 

(b)   The Working Capital Loans shall be repaid in full on the Working Capital Loan Maturity Date.

 

(c)   Unless all of the Working Capital Lenders agree otherwise in writing, if the Conversion Date does not occur on or prior to the Conversion Date Certain, then on the Conversion Date Certain, (i) each outstanding Working Capital Loan shall become due and payable, (ii) all amounts in any Project Accounts shall be promptly applied to the Obligations then outstanding in accordance with Section 4.2 ( Application of Proceeds ) of the Intercreditor Agreement, and (iii) the Borrower shall pay all accrued interest on and repay the entire remaining principal amount of all outstanding Working Capital Loans to the Administrative Agent, for the pro rata account of the Lenders (based on their respective Working Capital Loan Commitment Percentages), together with any and all Fees and other Obligations owed to the Senior Secured Parties.

 

Section 3.04    Interest Payment Dates . (a) Interest accrued on each Loan shall be payable, without duplication:

 

(i)                         on the Maturity Date for such Loan;

 

(ii)                      on each Interest Payment Date for such Loan; and

 

(iii)                   with respect to any Loan, on any date when such Loan is prepaid hereunder on the portion so prepaid.

 

(b)   Interest accrued on the Loans or other monetary Obligations after the date such amount is due and payable (whether on the Maturity Date for such Loan, any Quarterly Payment Date, any Interest Payment Date, upon acceleration or otherwise) shall be payable upon demand.

 

(c)   Interest hereunder shall be due and payable in accordance with the terms hereof, before and after judgment, regardless of whether an Insolvency or Liquidation Proceeding exists in respect of the Borrower, and, to the fullest extent permitted by law, the Lenders shall be entitled to receive post-petition interest during the pendency of an Insolvency or Liquidation Proceeding.

 

Section 3.05    Interest Rates . (a) Pursuant to each properly delivered Funding Notice and Interest Period Notice, (i) each Eurodollar Loan shall accrue interest at a rate per annum during each Interest Period applicable thereto equal to the sum of the Eurodollar Rate for such Interest Period plus the Applicable Margin and (ii) each Base Rate Loan shall accrue interest at a rate per annum during each Quarterly Period equal to the sum of the Base Rate for such Quarterly Period plus the Applicable Margin.

 

15


 

(b)   On or before 11:00 a.m., New York City time, at least three (3) Business Days prior to the end of each Interest Period for each Eurodollar Loan, and at least three (3) Business Days prior to the end of any Quarterly Period for any Base Rate Loans, the Borrower shall deliver to the Administrative Agent an Interest Period Notice setting forth the Borrower’s election (i) to continue any such Eurodollar Loan as (or convert any such Base Rate Loan to) a Eurodollar Loan and setting forth the Borrower’s election with respect to the duration of the next Interest Period applicable to such continued or converted Eurodollar Loan, which Interest Period shall be one (1), two (2), three (3) or six (6) months in length or (ii) to convert any such Eurodollar Loan to a Base Rate Loan at the end of the then-current Interest Period; provided, that if an Event of Default has occurred and is continuing, all Eurodollar Loans shall automatically convert into Base Rate Loans at the end of the then-current Interest Periods. Upon the waiver or cure of such Event of Default, the Borrower shall have the option to continue such Loans as Base Rate Loans and/or to convert such Loans to Eurodollar Loans (by delivery of an Interest Period Notice), subject to the notice periods set forth above. Notwithstanding anything to the contrary, any portion of the Loans maturing in less than one month may not be continued as, or converted to, Eurodollar Loans and will automatically convert to Base Rate Loans at the end of the then-current Interest Period.

 

(c)   If the Borrower fails to deliver an Interest Period Notice in accordance with Section 3.05(b) , (i) with respect to any Eurodollar Loan, such Eurodollar Loan shall automatically continue as a Eurodollar Loan with an Interest Period of one (1) month or (ii) with respect to any Base Rate Loan, such Base Rate Loan shall automatically continue as a Base Rate Loan.

 

(d)   All Eurodollar Loans shall bear interest from and including the first day of the applicable Interest Period to (and excluding) the last day of such Interest Period at the interest rate determined as applicable to such Eurodollar Loan.

 

(e)   Notwithstanding anything to the contrary, the Borrower shall have, in the aggregate, no more than eight (8) separate Eurodollar Loans outstanding at any one time prior to the Conversion Date or five (5) separate Eurodollar Loans outstanding at any one time after the Conversion Date. For purposes of the foregoing, (i) Eurodollar Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Eurodollar Loans and (ii)  all Eurodollar Loans having the same Interest Period and commencing on the same date shall be considered to be a single Eurodollar Loan.

 

(f)    All Base Rate Loans shall bear interest from and including the first day of each Quarterly Period (or the day on which Eurodollar Loans are converted to Base Rate Loans as required under Section 3.05(b) or under ARTICLE IV ( Eurodollar Rate and

 

16


 

Tax Provisions ) ) to (and including) the next succeeding Quarterly Payment Date at the interest rate determined as applicable to such Base Rate Loan.

 

Section 3.06    Default Interest Rate .

 

(a)   If (i) all or a portion of the principal amount of any Loan is not paid when due (whether on the Maturity Date for such Loan, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto plus two percent (2%), or (ii) any Obligation (other than principal on the Loans) is not paid when due (whether on the due date thereof, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base Rate Loans plus two percent (2%), in each case, with respect to clauses (i) and (ii) above, from the date of such non-payment until such amount is paid in full (before as well as after judgment).

 

(b)   Upon the occurrence and during the continuance of any Event of Default (other than an Event of Default under Section 8.01(a) ( Events of Default - Nonpayment ) , for which provision is made in Section 3.06(a) ), the Borrower shall pay, in addition to the interest then payable on any Loan, additional interest (before as well as after judgment) on the Loans at two percent (2%) per annum (the rate in effect plus such two percent (2%) per annum, the “ Default Rate ”) until such Event of Default is cured or waived.

 

Section 3.07    Interest Rate Determination . The Administrative Agent shall determine the interest rate applicable to the Loans in accordance with the terms of this Agreement, and shall give prompt notice to the Borrower and the Lenders of such determination, and its determination thereof shall be conclusive, absent manifest error.

 

Section 3.08    Computation of Interest and Fees . (a)  All computations of interest for Base Rate Loans when the Base Rate is determined by WestLB’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All computations of interest for Eurodollar Loans and for Base Rate Loans when the Base Rate is determined by the Federal Funds Effective Rate shall be made on the basis of a 360-day year and actual days elapsed.

 

(b)   Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided , that any Loan that is repaid on the same day on which it is made shall bear interest for one (1) day.

 

(c)   Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

17


 

Section 3.09    Optional Prepayment . (a)  The Borrower shall have the right at any time, and from time to time, to prepay the Loans, in whole or in part, upon not fewer than five (5) Business Days’ prior written notice to the Administrative Agent.

 

(b)   Any partial prepayment of the Loans shall be in a minimum amount of five hundred thousand Dollars ($500,000) and in integral multiples of one hundred thousand Dollars ($100,000) in excess thereof.

 

(c)   Each notice of prepayment given by the Borrower under this Section 3.09 shall specify the prepayment date and the portion of the principal amount of Loans to be prepaid. All prepayments under this Section 3.09 shall be made by the Borrower to the Administrative Agent for the account of the Lenders and shall be accompanied by accrued interest on the principal amount being prepaid to but excluding the date of payment and by any additional amounts required to be paid under Section 4.05 ( Funding Losses ) .

 

(d)   Amounts of principal prepaid under this Section 3.09 shall be applied by the Administrative Agent:

 

(i)                         in the case of a prepayment of Construction Loans or Term Loans, to the Construction Loans or Term Loans, as the case may be, pro rata among the Construction/Term Lenders based on their respective outstanding principal amounts of Construction Loans or Term Loans, as the case may be, on the date of such prepayment (and then, in the case of the Term Loans, to the remaining outstanding installments of principal of the Term Loans under Section 3.02(a) in inverse order of maturity);

 

(ii)                      in the case of a prepayment of Working Capital Loans:

 

(A)                               first , to the Working Capital Loans, pro rata among the Working Capital Lenders in proportion to their respective principal amounts of outstanding Working Capital Loans;
 
(B)                                 second , to the LC Cash Collateral Sub-Account in an amount up to the Maximum Available Amounts under all Letters of Credit then outstanding as cash collateral to secure the repayment of any Working Capital Loans that may result from a draw on any such Letter of Credit; and
 
(C)                                 third , if all outstanding Working Capital Loans have been paid in full, and all Letters of Credit have been cash

 

18


 

                                                collateralized in full in accordance with priority second above, at Borrower’s option, to reduce the Working Capital Loan Commitment by depositing an amount equal to such reduction in the Working Capital Reserve Account.
 

(e)   Amounts of Construction Loans and Term Loans prepaid pursuant to this Section 3.09 may not be reborrowed.

 

Section 3.10    Mandatory Prepayment . (a)  The Borrower shall be required to prepay the Loans:

 

(i)                         upon receipt by the Borrower of Insurance Proceeds as required pursuant to Section 12.01(d)(ii) or Section 12.01(e) of the Accounts Agreement;

 

(ii)                      upon receipt by the Borrower of Condemnation Proceeds, as required pursuant to 12.01(d)(ii) or 12.01(e) of the Accounts Agreement;

 

(iii)                   upon receipt of any Project Document Termination Payments, as required pursuant to Section 13.01(b)(ii)(B) of the Accounts Agreement;

 

(iv)                  upon receipt of proceeds of any asset disposal (other than proceeds received from the sale of Products) that are not used for replacement in accordance with Section 13.01(b)(i)(B) of the Accounts Agreement; and

 

(v)                     upon payment in full of all outstanding Construction Loans or Term Loans, as the case may be, prepayment in full of all outstanding Working Capital Loans within ninety (90) days thereof;

 

(b)   The Borrower shall be required to prepay the Loans:

 

(i)                         on each Quarterly Payment Date prior to the Conversion Date as required pursuant to priorities eleventh and twelfth of Section 6.01(b) of the Accounts Agreement; and

 

(ii)                      on the Initial Quarterly Payment Date and each Quarterly Payment Date thereafter as required pursuant to priorities twelfth, fifteenth and sixteenth of Section 6.01(c) of the Accounts Agreement;

 

19


 

(c)   The Borrower shall be required to prepay the Loans on the Initial Quarterly Payment Date and any Quarterly Payment Date thereafter, if the Historical Debt Service Coverage Ratio on such Quarterly Payment Date is less than 1.5:1.0, as required pursuant to priority seventeenth of Section 6.01(c) of the Accounts Agreement;

 

(d)   The Borrower shall be required to prepay the Loans:

 

(i)                         on the Conversion Date as required pursuant to priority sixth of Section 2.06(e); and

 

(ii)                      on the Conversion Date, pursuant to priority seventh of Section 2.06(e);

 

(e)   The Borrower shall be required to prepay the Working Capital Loans:

 

(i)                         if a Borrowing Base Certificate demonstrates that the then-outstanding principal amount of the Working Capital Loans exceeds the then-effective Working Capital Commitment or the Working Capital Available Amount, within three (3) Business Days following the delivery of such Borrowing Base Certificate, prepay the Working Capital Loans in the amount of such excess; and

 

(ii)                      in order to ensure that there are no outstanding Working Capital Loans for a period of ten (10) consecutive Business Days in each calendar year;

 

(f)    All prepayments under this Section 3.10 shall be made by the Borrower to the Administrative Agent for the account of the applicable Lenders and shall be accompanied by accrued interest on the principal amount being prepaid to but excluding the date of payment and by any additional amounts required to be paid under Section 4.05 ( Funding Losses ) ;

 

(g)   Amounts of principal prepaid under this Section 3.10 (other than pursuant to Section 3.10(d)) shall be allocated by the Administrative Agent:

 

(i)                         first , to the Construction Loans or Term Loans, as the case may be, pro rata among the Construction/Term Lenders based on their respective outstanding principal amounts of Construction Loans or Term Loans, as the case may be, on the date of such prepayment (and then, in the case of the Term Loans, to the

 

20


 

                                                remaining outstanding installments of principal of the Term Loans under Section 3.02(a) in inverse order of maturity);

 

(ii)                      second , if all outstanding Construction Loans or Term Loans, as the case may be, have been paid in full, to the Working Capital Loans, pro rata among the Working Capital Lenders in proportion to their respective principal amounts of outstanding Working Capital Loans (and the Aggregate Working Capital Loan Commitment shall be reduced in each case by an amount equal to the amount so applied);

 

(iii)                   third , to the LC Cash Collateral Sub-Account in an amount up to the Maximum Available Amounts under all Letters of Credit then outstanding  as cash collateral to secure the repayment of any Working Capital Loans that may result from a draw on any such Letter of Credit; and

 

(iv)                  fourth , if all outstanding Working Capital Loans have been paid in full, and all Letters of Credit have been cash collateralized in full in accordance with priority third above, to the Working Capital Reserve Account (and the Aggregate Working Capital Loan Commitment shall be reduced by an amount equal to the amount so applied); and

 

(h)   Amounts of Construction Loans and Terms Loans prepaid pursuant to this Section 3.10 may not be reborrowed.

 

Section 3.11    Time and Place of Payments . (a)  The Borrower shall make each payment (including any payment of principal or interest on any Loan or any Fees or other Obligations) hereunder and under any other Financing Document without setoff, deduction or counterclaim not later than 11:00 a.m., New York City time on the date when due in Dollars in immediately available funds to the Administrative Agent at the following account:  JPMorgan Chase Bank (Swift ID:  CHASUS33XXX), Account Number:  920-1-060663, for the Account of WESTLB AG, NY Branch, ABA #021000021, Ref:  HEARTLAND GRAIN FUELS, L.P. or at such other office or account as may from time to time be specified by the Administrative Agent to the Borrower. Funds received after 11:00 a.m. New York City time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day.

 

(b)   The Administrative Agent shall promptly remit in immediately available funds to each Senior Secured Party its share, if any, of any payments received by the Administrative Agent for the account of such Senior Secured Party.

 

21


 

(c)   Whenever any payment (including any payment of principal of or interest on any Loan or any Fees or other Obligations) hereunder or under any other Financing Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment shall (except as otherwise required by the proviso to the definition of “Interest Period” with respect to Eurodollar Loans) be made on the immediately succeeding Business Day, and such increase of time shall in such case be included in the computation of interest or Fees, if applicable.

 

Section 3.12    Fundings and Payments Generally . (a) Unless the Administrative Agent has received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance with this Agreement and may, in reliance upon such assumption, distribute to the Lenders the amount due. If the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A notice by the Administrative Agent to any Lender with respect to any amount owing under this Section 3.12(a) shall be conclusive, absent manifest error.

 

(b)   Nothing herein shall be deemed to obligate any Lender to obtain funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain funds for any Loan in any particular place or manner.

 

(c)   The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due under this Agreement or under the Notes held by such Lender, to charge from time to time against any or all of the Borrower’s accounts with such Lender (other than, in the event that the Accounts Bank or any bank holding a Local Account is also a Lender, any Project Account or Local Account) any amount so due.

 

Section 3.13    Fees . (a)  From and including the date hereof until the Final Maturity Date, the Borrower agrees to pay to the Administrative Agent, for the account of the Lenders, on each Quarterly Payment Date, a commitment fee (a “ Commitment Fee ”) equal to one-half of one percent (0.50%) per annum on the average daily amount by which (i) the Aggregate Construction Loan Commitment exceeds the aggregate outstanding principal amount of Construction Loans and (ii) the Aggregate Working

 

22


 

Capital Loan Commitment exceeds the sum of (x) the aggregate outstanding principal amount of Working Capital Loans plus (y) the Maximum Available Amounts of all outstanding Letters of Credit, in each case, during the calendar quarter or portion thereof then ended. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as pro-rated for any partial quarter, as applicable.

 

(b)   Upon the issuance of each Letter of Credit pursuant to Section 2.04 (Letters of Credit) and until the termination, cancellation or expiration of such Letter of Credit, the Borrower agrees to pay to the Administrative Agent, on each Quarterly Payment Date and on the date on which such Letter of Credit expires, is cancelled or terminates, (i) for the account of the Working Capital Lenders, an availability fee (the “ Letter of Credit Availability Fee ”) at a rate per annum equal to the Working Capital Applicable Margin for Eurodollar Loans on the average daily Maximum Available Amount under such Letter of Credit during the calendar quarter or portion thereof then ended and (ii) only if the Working Capital Loan Commitment Percentage of the Issuing Bank is less than 100%, for the account of the Issuing Bank, a fronting fee (the “ Letter of Credit Fronting Fee ”) equal to an amount calculated at a rate per annum equal to two tenths of a percent (0.2%) of the average daily Maximum Available Amount under such Letter of Credit during the calendar quarter or portion thereof then ended. All Letter of Credit Availability Fees and Letter of Credit Fronting Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days, as pro-rated for any partial quarter, as applicable.

 

(c)   The Borrower agrees to pay to the Administrative Agent for the account of the Lead Arranger, the Lenders and the Agents additional fees in the amounts and at the times from time to time agreed in writing by the Borrower and the Agents, including pursuant to the Fee Letters.

 

(d)   All Fees shall be paid on the dates due, in immediately available funds. Once paid, none of the Fees shall be refundable under any circumstances.

 

Section 3.14    Pro Rata Treatment . (a) Except as otherwise expressly provided herein (including Section 4.01 ( Eurodollar Rate Lending Unlawful ) ) , each Funding of Loans and each reduction of commitments of any type shall be allocated by the Administrative Agent pro rata among the Lenders holding Loans of such type in accordance with their respective applicable Commitment Percentages.

 

(b)   Except as required under Section 3.09 ( Optional Prepayment ) , Section 3.10 ( Mandatory Prepayment ) or ARTICLE IV ( Eurodollar Rate and Tax Provisions ) , (i) each payment or prepayment of principal of the Loans shall be allocated by the Administrative Agent pro rata among the applicable Lenders in accordance with the

 

23


 

respective principal amounts of their outstanding Loans of the type being repaid, (ii) each payment of interest on the Loans shall be allocated by the Administrative Agent pro rata among the applicable Lenders in accordance with the respective interest amounts outstanding on their outstanding Loans of the type in respect of which interest is being paid, and (iii) each payment of fees on the Commitments and/or the Letters of Credit (other than the Letter of Credit Fronting Fee) shall be allocated by the Administrative Agent pro rata among the applicable Lenders in accordance with their respective Commitments of the type to which such fees relate.

 

(c)   Each Lender agrees that in computing such Lender’s portion of any Funding to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Funding to the next higher or lower whole Dollar amount in accordance with market convention.

 

Section 3.15    Sharing of Payments . (a)  If any Lender obtains any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of ARTICLE IV ( Eurodollar Rate and Tax Provisions ) ) in excess of its pro rata share of payments then or therewith obtained by all Lenders holding Loans of such type, such Lender shall purchase from the other Lenders holding Loans of such type such participations in Loans of such type made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided , however , that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender that has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender’s ratable share (according to the proportion of (x) the amount of such selling Lender’s required repayment to the purchasing Lender to (y) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 3.15 may, to the fullest extent permitted by law, exercise all of its rights of payment (including pursuant to Section 10.14 ( Right of Setoff ) ) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

 

(b)   If under any applicable bankruptcy, insolvency or other similar Law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.15 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 3.15 to share in the benefits of any recovery on such secured claim.

 

24


 

Section 3.16    Termination of Interest Rate Protection Agreement in Connection with Any Prepayment . The Borrower shall, in connection with any prepayment of Construction Loans or Terms Loans made by the Borrower pursuant to Section 3.09 ( Optional Prepayment ) or Section 3.10 ( Mandatory Prepayment ) , terminate an aggregate notional amount under the Interest Rate Protection Agreements equal to the amount (if any) by which the aggregate notional amount under the Interest Rate Protection Agreements would exceed the aggregate outstanding principal amount of the Construction Loans or Term Loans, as the case may be, immediately after giving effect to such prepayment; and in each case, such termination shall be made within five (5) Business Days of the date of such prepayment.

 

ARTICLE IV

 

EURODOLLAR RATE AND TAX PROVISIONS

 

Section 4.01    Eurodollar Rate Lending Unlawful . (a) If any Lender reasonably determines (which determination shall, upon notice thereof to the Borrower and the Administrative Agent, be conclusive and binding on the Borrower absent manifest error) that the introduction of or any change in or in the interpretation of any Law makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for such Lender to make, maintain or fund any Loan as a Eurodollar Loan, the obligations of such Lender to make, maintain or fund any Loan as a Eurodollar Loan shall, upon such determination, forthwith be suspended until such Lender notifies the Administrative Agent that the circumstances causing such suspension no longer exist, and all Eurodollar Loans of such Lender shall automatically convert into Base Rate Loans at the end of the then-current Interest Periods with respect thereto or sooner, if required by such Law or assertion. Upon any such conversion the Borrower shall pay any accrued interest on the amount so converted and, if such conversion occurs on a day other than the last day of the then-current Interest Period for such affected Eurodollar Loans, such Lender shall be entitled to make a request for, and the Borrower shall pay, compensation for breakage costs under Section 4.05 (Funding Losses ) .

 

(b)   If such Lender notifies the Borrower that the circumstances giving rise to the suspension described in Section 4.01(a) no longer apply, the Borrower may elect (by delivering an Interest Period Notice) to convert the principal amount of any such Base Rate Loan to a Eurodollar Loan in accordance with this Agreement.

 

(c)   Each Lender shall be entitled to fund and maintain all or any part of a Loan in any manner it deems fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained amounts bearing interest at a Eurodollar Rate through the purchase of deposits having a maturity corresponding to the applicable Interest

 

25


 

Periods and bearing an interest rate equal to the appropriate Eurodollar Rate for such Interest Periods.

 

Section 4.02    Inability to Determine Eurodollar Rates . (a) In the event, and on each occasion, the Administrative Agent shall have determined in good faith that for any Eurodollar Loan (i) Dollar deposits in the amount of such Loan and with an Interest Period similar to such Interest Period are not generally available in the London interbank market, or (ii) the rate at which such Dollar deposits are being offered will not adequately and fairly reflect the cost to any Lender of making, maintaining or funding the principal amount of such Loan during such Interest Period, or (iii) adequate and reasonable means do not exist for ascertaining LIBOR, the Administrative Agent shall forthwith notify the Borrower and the Lenders of such determination, whereupon each such Eurodollar Loan will automatically, on the last day of the then-existing Interest Period for such Eurodollar Loan, convert into a Base Rate Loan. In the event of any such determination pursuant to Section 4.02(a)(i) or (iii) , any Funding Notice delivered by the Borrower shall be deemed to be a request for a Base Rate Loan until the Administrative Agent determines that the circumstances giving rise to such notice no longer exist. In the event of any determination pursuant to Section 4.02(a)(ii) , each affected Lender shall, and is hereby authorized by the Borrower to, fund its portion of the Loans as a Base Rate Loan. Each determination by the Administrative Agent hereunder shall be conclusive, absent manifest error.

 

(b)   Upon the Administrative Agent’s determination that the condition that was the subject of a notice under Section 4.02(a) has ceased, the Administrative Agent shall forthwith notify the Borrower and the Lenders of such determination, whereupon the Borrower may elect (by delivering an Interest Period Notice) to convert any such Base Rate Loan to a Eurodollar Loan on the last day of the then-current Quarterly Period in accordance with this Agreement.

 

Section 4.03    Increased Eurodollar Loan Costs . If, after the date hereof, the adoption of any applicable Law or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or its Eurodollar Office) with any request or directive (whether or not having the force of law) of any Governmental Authority would increase the cost (other than with respect to Taxes, which are addressed in Section 4.07 ( Taxes ) ) to such Lender of, or result in any reduction in the amount of any sum receivable by such Lender (whether of principal, interest or any other amount) in respect of, making, maintaining or funding (or of its obligation to make, maintain or fund) the Loans as Eurodollar Loans, then the Borrower agrees to pay to the Administrative Agent for the account of such Lender the amount of any such increase or

 

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reduction. Such Lender shall promptly notify the Administrative Agent and the Borrower in writing of the occurrence of any such event, such notice to state the additional amount required to compensate fully such Lender for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower directly to such Lender within five (5) Business Days of delivery of such notice, and such notice and determination shall be binding on the Borrower, absent manifest error.

 

Section 4.04    Obligation to Mitigate . (a)  Each Lender agrees that, after it becomes aware of the occurrence of an event that would entitle it to give notice pursuant to Section 4.01 ( Eurodollar Rate Lending Unlawful ) , Section 4.03 ( Increased Eurodollar Loan Costs ) or Section 4.06 ( Increased Capital Costs ) or to receive additional amounts pursuant to Section 4.07 ( Taxes ) , such Lender shall use reasonable efforts to make, fund or maintain its affected Loan through another lending office (i) if as a result thereof the increased costs would be avoided or materially reduced or the illegality would thereby cease to exist and (ii) if, in the opinion of such Lender, the making, funding or maintaining of such Loan through such other lending office would not be disadvantageous to such Lender, contrary to such Lender’s normal banking practices or violate any applicable Law.

 

(b)   No change by a Lender in its Domestic Office or Eurodollar Office made for such Lender’s convenience shall result in any increased cost to the Borrower.

 

(c)   If any Lender demands compensation pursuant to Section 4.03 ( Increased Eurodollar Loan Costs ) or Section 4.06 ( Increased Capital Costs ) with respect to any Eurodollar Loan, the Borrower may, at any time upon at least three (3) Business Days’ prior notice to such Lender through the Administrative Agent, elect to convert such Loan to a Base Rate Loan. Thereafter, unless and until such Lender notifies the Borrower that the circumstances giving rise to such notice no longer apply, all such Eurodollar Loans by such Lender shall bear interest as Base Rate Loans. If such Lender notifies the Borrower that the circumstances giving rise to such notice no longer apply, the Borrower may elect (by delivering an Interest Period Notice) to convert the principal amount of each such Base Rate Loan to a Eurodollar Loan in accordance with this Agreement.

 

(d)   Notwithstanding anything to the contrary in this ARTICLE IV , no Lender shall be entitled to compensation under Section 4.03 ( Increased Eurodollar Loan Costs ) , Section 4.06 ( Increased Capital Costs ) or Section 4.07(a) ( Taxes - Payments Free of Taxes ) for any amounts incurred or accruing more than 180 days prior to the giving of notice by such Lender to the Borrower of additional costs of the type described in such Sections, provided , if the event giving rise to such compensation has retroactive effect, such 180-day period shall be extended to include the period of retroactive effect.

 

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Section 4.05    Funding Losses . In the event that any Lender incurs any loss or expense (including any loss or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as a Eurodollar Loan, and any customary administrative fees charged by such Lender in connection with the foregoing) as a result of (a) any conversion or repayment or prepayment of the principal amount of any Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.09 ( Optional Prepayment ) , Section 3.10 ( Mandatory Prepayment ) , Section 4.01(a) Eurodollar Rate Lending Unlawful ) or otherwise, or (b) the Borrower failing to make a Funding in accordance with any Funding Notice; then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five (5) Business Days of receipt thereof, pay to the Administrative Agent for the account of such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice and determination shall be binding on the Borrower, absent manifest error.

 

Section 4.06    Increased Capital Costs . If after the date hereof any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any applicable Law, guideline or request (whether or not having the force of law) of any Governmental Authority, affects the amount of capital required to be maintained by any Lender, and such Lender reasonably determines that the rate of return on its capital as a consequence of its Loan is reduced to a level below that which such Lender could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, the Borrower shall pay, within five (5) Business Days after such demand, directly to such Lender additional amounts sufficient to compensate such Lender for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts shall be binding on the Borrower, absent manifest error.

 

Section 4.07    Taxes .

 

(a)   Payments Free of Taxes . Any and all payments by or on account of any Obligations shall be made free and clear of, and without deduction for, any Taxes, unless required by Law; provided that if the Borrower shall be required to deduct any Indemnified Taxes from any such payment, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.07 ) the Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Law.

 

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(b)   Payment of Other Taxes by the Borrower . In addition, the Borrower shall timely pay any Indemnified Taxes arising from any payment made under any Financing Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Financing Document and not collected by withholding at the source as contemplated by Section 4.07(a) to the relevant Governmental Authority in accordance with applicable Law.

 

(c)   Indemnification by the Borrower . The Borrower shall indemnify each Agent and each Lender, within five (5) Business Days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.07 ) paid by such Agent or Lender, as the case may be, and any penalties, interest, additions to tax and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or Agent, as the case may be, shall be conclusive, absent manifest error.

 

(d)   Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)   Foreign Lenders . Each Lender (including any Participant and any other Person to which any Lender transfers its interests in this Agreement as provided under Section 10.03 ( Assignments ) ) that is not a United States Person (a “ Non-U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent two (2) copies of U.S. Internal Revenue Service Form W-8ECI, Form W-8BEN or Form W-8IMY (with supporting documentation), or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments of interest by the Borrower under the Financing Documents if such Lender is legally entitled to so claim, together with, in the case of a Non-U.S. Lender that is relying on an exemption pursuant to Section 871(h) or 881(c) of the Code, a statement substantially in the form of Exhibit H certifying that such Lender is not a bank described in Section 881(c)(3)(A) of the Code. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement. In addition, to the extent that it is in a position to legally do so, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower and

 

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the Administrative Agent at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by U.S. taxing authorities for such purpose). The Borrower shall not be obligated to pay any additional amounts in respect of U.S. federal income taxes pursuant to this Section 4.07 (or make an indemnification payment pursuant to this Section 4.07 ) to any Lender (or any Participant or other Person to which any Lender transfers its interests in this Agreement as provided under Section 10.03 ( Assignments ) ) if the obligation to pay such additional amounts (or such indemnification) would not have arisen but for a failure by such Lender to comply with this Section 4.07(e) .

 

Section 4.08    Replacement of Lender . The Borrower shall be permitted to replace (with one or more replacement Lenders) any Lender that requests reimbursement for amounts owing pursuant to Section 4.03 ( Increased Eurodollar Loan Costs ) , Section 4.06 ( Increased Capital Costs ) or Section 4.07(a) ( Taxes - Payments Free of Taxes ) ; provided , that (i) such replacement does not conflict with any Law or any determination of an arbitrator or a court or other Governmental Authority, in each case applicable to the Borrower or such Lender or to which the Borrower or such Lender or any of their respective property is subject, (ii) no Default or Event of Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, the Lender to be replaced shall not have withdrawn such request for reimbursement, or shall not have taken any action under Section 4.04 ( Obligation To Mitigate ) so as to eliminate the need for payment of amounts owing pursuant to Section 4.03 ( Increased Eurodollar Loan Costs ) , Section 4.06 ( Increased Capital Costs ) or Section 4.07(a) ( Taxes - Payments Free of Taxes ) , (iv) the replacement Lender shall purchase, at par, the Loans and all other amounts owing to such replaced Lender prior to the date of replacement, (v) the Borrower shall be liable to such replaced Lender under Section 4.05 ( Funding Losses ) if any Eurodollar Loan owing to such replaced Lender is be prepaid (or purchased) other than on the last day of the Interest Period relating thereto, (vi) the replacement Lender is an Eligible Assignee, (vii) such replacement is made in accordance with the provisions of Section 10.03(b) ( Assignments ) (provided, that the Borrower shall be obligated to pay the registration and processing fee), (viii) until such time as such replacement is consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 4.03 ( Increased Eurodollar Loan Costs ) , Section 4.06 ( Increased Capital Costs ) or Section 4.07(a) ( Taxes - Payments Free of Taxes ) , as the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, any Agent or any other Lender may have against the replaced Lender.

 

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ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

In order to induce each Agent, each Lender and each other party hereto (other than the Borrower) to enter into this Agreement and to induce each Lender to make the Loans hereunder, the Borrower represents and warrants to each Agent and each Lender as set forth in this ARTICLE V on the date hereof, on the Closing Date, on the date of each Funding Notice, on each Funding Date and on the Conversion Date (except with respect to representations and warranties that expressly refer to an earlier date).

 

Section 5.01    Organization; Power; Compliance with Law and Contractual Obligations . The Borrower (a) is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, (b) is duly qualified to do business as is now being conducted and as is proposed to be conducted and is in good standing as a foreign limited partnership in each jurisdiction where the nature of its business requires such qualification (other than any such failure to be so qualified or in good standing that could not reasonably be expected to have a Material Adverse Effect), (c) has all requisite limited partnership power and authority required as of the date this representation is made or deemed repeated to enter into and perform its obligations under each of the SNDAs and each Transaction Document to which it is a party and to conduct its business as currently conducted by it and (d) is in compliance with all Laws and Contractual Obligations applicable to except for any noncompliance that could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.02    Due Authorization; Non-Contravention . The execution, delivery and performance by the Borrower of each of the SNDAs and each Transaction Document to which it is a party are within the Borrower’s limited partnership powers, have been duly authorized by all necessary limited partnership action, and do not:

 

(a)   contravene the Borrower’s Organic Documents (including the Borrower LP Agreement);

 

(b)   contravene in any material respect any Law binding on or affecting the Borrower;

 

(c)   contravene any Contractual Obligation binding on or affecting the Borrower;

 

(d)   require any consent or approval under the Borrower’s Organic Documents that has not been obtained;

 

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(e)   require any consent or approval under any Contractual Obligation binding on or affecting the Borrower other than any approvals or consents which have been obtained; or

 

(f)    result in, or require the creation or imposition of, any Lien on any of the Borrower’s properties or Equity Interests other than Permitted Liens.

 

Section 5.03    Governmental Approvals .

 

(a)   As of the Closing Date:

 

(i)                         all Governmental Approvals that are required to be obtained by the Borrower in connection with (A) the due execution, delivery and performance by it of the Transaction Documents to which it is a party, (B) the ownership, use, construction and operation of the Project as contemplated by the Transaction Documents, and (C) the grant by the Borrower and the Pledgors of the Liens granted under the Security Documents and the validity, perfection and enforceability thereof (the “ Necessary Project Approvals ”) are listed in Schedule 5.03 ;

 

(ii)                      the Necessary Project Approvals listed in Part A of Schedule 5.03 have been obtained, are in full force and effect, are properly in the name of the appropriate Person, have been validly issued and are final and Non-Appealable;

 

(iii)                   the Necessary Project Approvals listed in Part B of Schedule 5.03   relate to the Aberdeen II Plant and are not required under applicable Laws to be obtained prior to the Closing Date (collectively, the “ Deferred Approvals ”) and are ministerial in nature or are of a type that can be obtained, as required, in the normal course of development and construction of the Aberdeen II Plant; and

 

(iv)                  Part B of Schedule 5.03 specifies the date by which, or stage of construction or operation for which, each Deferred Approval included therein is required to be obtained.

 

(b)   On each Funding Date, all Necessary Project Approvals (including all Deferred Approvals) which as of such Funding Date are required to be obtained have been obtained, are in full force and effect, are properly in the name of the appropriate Person, are validly issued and are final and Non-Appealable.

 

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(c)   The Borrower may update and correct, with approval of the Administrative Agent, any reference to a Necessary Project Approval on Schedule 5.03 that has been replaced in accordance with applicable Law.

 

(d)   The information set forth in each application (including any updates or supplements thereto) submitted by or on behalf of the Borrower in connection with each Necessary Project Approval that has been submitted as of the date this representation is made or deemed repeated, was accurate and complete at the time of submission and continues to be accurate and complete, in each case to the extent required for the issuance or continued effectiveness of such Necessary Project Approval (except, with respect to continued effectiveness, for Necessary Project Approvals that are subject to a supplemental filing shown on Part B of Schedule 5.03 that has not yet been filed), and the Borrower does not have any knowledge of any event, act, condition or state of facts inconsistent with such information.

 

(e)   The Borrower reasonably believes that each Necessary Project Approval that remains to be obtained will be obtained in a final and Non-Appealable form in the ordinary course without undue delay or material expense and without unanticipated expensive or burdensome conditions prior to the time it is required to be obtained under applicable Law. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened in writing that would reasonably be expected to result in the material modification, rescission, termination, or suspension of any Governmental Approval referred to in Schedule 5.03 obtained prior to the date this representation is made or deemed made.

 

Section 5.04    Investment Company Act . The Borrower is not, and after giving effect to the Loans and the application of the proceeds of the Loans as described herein will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 5.05    Validity . Each of the SNDAs and each Transaction Document to which the Borrower is a party has been duly authorized, validly executed and delivered, and constitutes the legal, valid and binding obligations of the Borrower enforceable against the Borrower and, to the Borrower’s actual knowledge, enforceable against each other party thereto (other than the Senior Secured Parties), in each case in accordance with its respective terms, except as the enforceability hereof or thereof may be limited by (a) bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).

 

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Section 5.06    Financial Information . Each of the financial statements of the Borrower delivered pursuant hereto has been prepared in accordance with GAAP, and fairly presents in all material respects the financial condition of the Borrower as at the dates thereof and the results of their operations for the period then ended (subject, in the case of unaudited financial statements, to changes resulting from audit and normal year-end adjustments and the absence of footnotes).

 

Section 5.07    No Material Adverse Effect . Since October 31, 2006, no Material Adverse Effect has occurred and is continuing.

 

Section 5.08    Project Compliance . (a) The Project is and will continue to be owned, developed, constructed and maintained in compliance in all material respects with all applicable Laws and the requirements of all Necessary Project Approvals (including all Deferred Approvals).

 

(b)   The Project is and will continue to be owned, developed, constructed and maintained in compliance in all material respects with all of the Borrower’s Contractual Obligations (including the Project Documents).

 

Section 5.09    Litigation . (a) No material action, suit, proceeding or investigation has been instituted or threatened in writing against any of the Borrower, the Pledgors or the Project (including in connection with any Necessary Project Approval); and

 

(b)   to the knowledge of the Borrower, no action, suit, proceeding or investigation has been instituted or threatened against any Project Party that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

 

Section 5.10    Sole Purpose Nature; Business . The Borrower has not conducted and is not conducting any business or activities other than businesses and activities relating to the ownership, development, testing, financing, construction, operation and maintenance of the Project as contemplated by the Transaction Documents.

 

Section 5.11    Contracts .

 

(a)   As of the Closing Date:

 

(i)                         all contracts, agreements, instruments, letter agreements, or other documents to which the Borrower is a party or by which it or any of its properties is bound as of the date hereof (other than the Financing Documents), including the Project Documents, and all

 

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                                                documents amending, supplementing, interpreting or otherwise modifying or clarifying such contracts, agreements, instruments, letter agreements, understandings and other documents are listed in Schedule 5.11 ;

 

(ii)                      all contracts, agreements, instruments, letter agreements, or other documents that are required to be obtained by the Borrower in connection with the construction and operation of the Project as contemplated by the Transaction Documents (collectively, the “ Necessary Project Contracts ”) are listed in Schedule 5.11 ;

 

(iii)                   the Necessary Project Contracts listed in Part A of Schedule 5.11 have been obtained and are in full force and effect;

 

(iv)                  the Necessary Project Contracts listed in Part B of Schedule 5.11 relate to the Aberdeen II Plant and are not required to be obtained prior to the Closing Date (collectively, the “ Deferred Contracts ”) and have not yet been obtained; and

 

(v)                     Part B of Schedule 5.11 specifies the date by which, or stage of construction or operation for which, each Deferred Contract included therein is required to be obtained.

 

(b)   As of each date this representation and warranty is made or deemed repeated:

 

(i)                         to the knowledge of the Borrower, all representations, warranties and other factual statements made by each Project Party in each of the Transaction Documents to which such Project Party is a party are true and correct as of the date(s) made or deemed repeated (except with respect to representations and warranties that expressly refer to an earlier date) other than any such inaccuracies that could not reasonably be expected to have a Material Adverse Effect;

 

(ii)                      there are no material contracts, agreements, instruments or documents between the Borrower and any other Person relating to the Borrower or the Project other than (i) the Transaction Documents, (ii) the agreements listed in Schedule 5.11 , and (iii) any other agreements permitted by this Agreement;

 

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(iii)                   there have been no Change Orders under the Design-Build Agreement, other than in accordance with Section 7.02(m) ( Negative Covenants - Project Documents ) ; and

 

(iv)                  all conditions precedent to the obligations of the respective parties under the Project Documents that have been executed as of the date this representation is made or deemed repeated have been satisfied or waived by the parties thereto, except for such conditions precedent that do not and cannot be satisfied until a later stage of development of the Project, and the Borrower has no reason to believe that any such condition precedent (other than any condition precedent that can be waived by the Borrower without any material adverse result) cannot be satisfied on or prior to the commencement of the appropriate stage of development of the Project.

 

(c)   On each Funding Date, all Necessary Project Contracts (including all Deferred Contracts) which as of such Funding Date are required to be in place, have been duly executed and delivered and are in full force and effect.

 

Section 5.12    Collateral . (a)  The Collateral includes all of the Equity Interests in, and all of the tangible and intangible assets of the Borrower (except for the Bond Funds and the Bond Proceeds Sub-Account).

 

(b)   The Liens and security interests granted to the Collateral Agent (for the benefit of the Senior Secured Parties) pursuant to the Security Documents in effect on each date this representation is made or deemed repeated (i) constitute, as to personal property included in the Collateral, a valid first-priority security interest in such personal property and (ii) constitute, as to the Mortgaged Property included in the Collateral, a valid first-priority Lien of record in the Mortgaged Property, in each case subject only to Permitted Liens.

 

(c)   The security interest granted to the Collateral Agent (for the benefit of the Senior Secured Parties) pursuant to the Security Documents in the Collateral consisting of personal property will be perfected (i) with respect to any property that can be perfected by filing, upon the filing of UCC financing statements in the filing offices identified in Schedule 5.12(c) , (ii) with respect to any Account Collateral or any Blocked Account Collateral that can be perfected solely by control, upon execution of the Accounts Agreement or a Blocked Account Agreement and (iii) with respect to any property (if any) that can be perfected solely by possession, upon the Collateral Agent receiving possession thereof, and in each case such security interest will be, as to Collateral perfected under the UCC or otherwise as aforesaid, superior and prior to the

 

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rights of all third Persons, and in each case subject only to Permitted Liens. After giving effect to the filings, registrations and giving of notice referred to in this sentence, all such action as is necessary has been taken to establish and perfect the Collateral Agent’s rights in and to the Collateral covered by the Security Documents in effect on the date this representation is made or deemed repeated to the extent the Collateral Agent’s security interest can be perfected by filing, including any recordation, filing, registration, giving of notice or other similar action. No filing, recordation, re-filing or re-recording other than those listed on Schedule 5.12(c) (as the same may be updated at the written request of the Borrower, with the written agreement of the Administrative Agent, following any change in applicable Law) is necessary to perfect (or maintain the perfection of) the interest, title or Liens of the Security Documents (to the extent the Collateral Agent’s security interest can be perfected by filing or recording), and on and as of each relevant date on which this representation and warranty is made or deemed repeated, all such filings or recordings have been made. The Borrower and the Pledgors have properly delivered or caused to be delivered to the Collateral Agent, or provided the Collateral Agent control of, all Collateral relating to assets of or equity in the Borrower that requires perfection of the Liens and security interests described above by possession or control. All or substantially all of the Collateral relating to assets of or equity in the Borrower (other than the Account Collateral, Blocked Account Collateral, certificates, securities, investments, chattel paper, books and records and general intangibles), including the Mortgaged Property, is or will (when acquired) be located on the Sites.

 

Section 5.13    Ownership of Properties . (a)  The Borrower (i) has a good and valid fee ownership interest in the Sites (except for the Leased Premises), (ii) has a good and valid leasehold interest in the Leased Premises and (iii) has good and valid easements necessary for the natural gas transmission pipeline that was constructed pursuant to the Pipeline Construction Agreement.

 

(b)   The Borrower has a good and valid ownership interest, leasehold interest, license interest or other right of use in all other property and assets (tangible and intangible) included in the Collateral relating to assets of or equity in the Borrower under each Security Document that has been executed as of the date this representation is made or deemed repeated. Such ownership interests, leasehold interest, license interest or other rights of use are and will be, together with any other assets or interests contemplated to be acquired pursuant to the Construction Budget, sufficient to permit construction and operation of the Aberdeen II Plant and operation of the Existing Plants, substantially in accordance with the Project Documents. To the knowledge of Borrower, none of said properties or assets of or equity in the Borrower are subject to any other claims of any Person, including any easements, rights of way or similar agreements affecting the use or occupancy of the Project or the Sites, except for Permitted Liens.

 

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(c)   All Equity Interests in the Borrower are owned by the Pledgors.

 

(d)   The properties and assets of the Borrower are separately identifiable and are not commingled with the properties and assets of any other Person and are readily distinguishable from the property and assets of other Persons.

 

(e)   The Borrower does not have any leasehold interest in, and is not lessee of, any real property other than the Leased Premises or other leasehold interests acquired by the Borrower with the prior written approval of the Administrative Agent.

 

(f)    There are no easements, rights of way or similar agreements affecting the use or occupancy of the Project, the Existing Plants, the Aberdeen II Plant or any Site other than Permitted Liens.

 

(g)   The Borrower has not provided any consent pursuant to Section 3 of the Huron Ground Lease to the creation of any Lien on the Leased Premises covered by such lease. To the Borrower’s knowledge, the lessor under the Huron Ground Lease has not created any Liens on the Leased Premises covered by such lease.

 

Section 5.14    Taxes . (a)  Except as disclosed on Schedule 5.14 , the Borrower has (i) filed all Tax Returns required by law to have been filed by it and (ii) has paid all Taxes thereby shown to be owing, as and when the same are due and payable, other than, in the case of this Section 5.14(a)(ii) , (A) Taxes that are subject to a Contest or (B) the nonpayment of immaterial Taxes in an aggregate amount not in excess of twenty-five thousand Dollars ($25,000) at any one time outstanding (taking into account any interest and penalties that could accrue or be applicable to such past-due Taxes), and provided that such Taxes are no more than forty-five (45) days past due.

 

(b)   The Borrower is not and will not be taxable as a corporation for federal, state or local tax purposes.

 

(c)   The Borrower is not a party to any tax sharing agreement with any Person (including any Pledgor or any other Affiliate of the Borrower).

 

(d)   The Borrower has not agreed to extend the statute of limitations period applicable to the assessment or collection of any Tax.

 

(e)   The Borrower is not currently under any governmental audit with respect to any Tax for any period, there are no claims for additional Tax being pursued by any Governmental Authority with respect to the business, income or activities of the Borrower, and the Borrower is not aware of any such claims that have not yet been asserted but are likely to be asserted by a Governmental Authority.

 

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Section 5.15    Patents, Trademarks, Etc . The Borrower has obtained and holds in full force and effect all patents, trademarks, copyrights and other such rights or adequate licenses therein, free from unduly burdensome restrictions, that are necessary for the ownership, construction, operation and maintenance of the Project. Without limiting the generality of the foregoing, the Borrower has obtained and holds in full force and effect all necessary licenses and other rights that are necessary for the operation and maintenance of the Aberdeen I Plant.

 

Section 5.16    ERISA Plans . (a) Neither the Borrower nor any of its ERISA Affiliates has (or, except as set forth on Schedule 5.16 , within the five year period immediately preceding the date hereof had) sponsored, maintained, participated in or incurred any liability in respect of any Plan or Multiemployer Plan. The Borrower does not have any contingent liability with respect to any post-retirement benefit under any “welfare plan” (as defined in Section 3(1) of ERISA), other than liability for continuation coverage under Part 6 of Title I of ERISA or similar state laws.

 

(b)   Neither the Borrower nor any ERISA Affiliate has any liability with respect to the terminated Co-op Retirement Plan (as further described on Schedule 5.16 ) and all liability of the Borrower and any ERISA Affiliate with respect to the Co-op Retirement Plan has been fully satisfied. After due inquiry, neither the Co-op Retirement Plan, the PBGC, any Plan participant or beneficiary nor any other Person has initiated any claim or other action against the Borrower or any ERISA Affiliate with respect to the Plan and, to the knowledge of the Borrower, no such claim or action is threatened or anticipated. Neither the Borrower nor any ERISA Affiliate has any intention to establish a Plan or Multiemployer Plan to replace the Co-op Retirement Plan.

 

Section 5.17    Property Rights, Utilities, Supplies Etc . (a) All material property interests, utility services, means of transportation, facilities and other materials necessary for the development, engineering, construction, testing, start-up, use and operation of the Project (including, as necessary, gas, roads, rail transport, electrical, water and sewage services and facilities) are, or will be when needed, available to the Project, and arrangements in respect thereof have been made on commercially reasonable terms.

 

(b)   There are no material supplies, materials or equipment necessary for operation or maintenance of the Project that are not expected to be available at the Sites on commercially reasonable terms consistent with the construction schedule and the Construction Budget, or the Operating Budget, as applicable.

 

Section 5.18    No Defaults . No Default or Event of Default has occurred and is continuing.

 

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Section 5.19    Environmental Warranties .

 

(a)   (i) The Borrower and its Environmental Affiliates are in compliance in all material respects with all applicable Environmental Laws, (ii) the Borrower and its Environmental Affiliates have all Environmental Approvals required to operate their businesses as presently conducted or as reasonably anticipated to be conducted and are in compliance in all material respects with the terms and conditions thereof, (iii)  neither the Borrower nor any of its Environmental Affiliates has received any written communication (other than any such communication that the Administrative Agent has agreed in writing is not materially adverse) from a Governmental Authority that alleges that the Borrower or any Environmental Affiliate is not in compliance in all material respects with all Environmental Laws and Environmental Approvals, and (iv) there are no circumstances that to the knowledge of the Borrower may prevent or interfere in the future with the Borrower’s compliance in all material respects with all applicable Environmental Laws and Environmental Approvals.

 

(b)   There is no Environmental Claim pending or, to the knowledge of the Borrower, threatened against the Borrower or the Project. To the knowledge of the Borrower, there is no Environmental Claim pending or threatened against any Environmental Affiliate.

 

(c)   There are no present or past actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that could reasonably be expected to form the basis of any Environmental Claim against the Borrower or any Environmental Affiliate or could otherwise reasonably be expected to interfere with the operation of the Existing Plants or construction or operation of the Aberdeen II Plant (as applicable).

 

(d)   Without in any way limiting the generality of the foregoing, (i) there are no on-site or off-site locations in which the Borrower or, to the knowledge of Borrower, any Environmental Affiliate has stored, disposed or arranged for the disposal of Materials of Environmental Concern that could reasonably be expected to form the basis of an Environmental Claim, (ii) there are no underground storage tanks located or to be located on property owned or leased by the Borrower, (iii) there is no asbestos or lead paint contained in or forming part of any building, building component, structure or office space owned or leased by the Borrower, and (iv) no polychlorinated biphenyls (PCBs) are or will be used or stored at any property owned or leased by the Borrower, except in such form, condition and quantity as could not reasonably be expected to result in an Environmental Claim.

 

(e)   The Borrower has not received any letter or request for information under Section 104 of the CERCLA, or comparable state laws, and to the knowledge of the

 

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Borrower, none of the operations of the Borrower is the subject of any investigation by a Governmental Authority evaluating whether any remedial action is needed to respond to a release or threatened release of any Material of Environmental Concern at the Project or at any other location, including any location to which the Borrower has transported, or arranged for the transportation of, any Material of Environmental Concern with respect to the Project.

 

Section 5.20    Regulations T, U and X . The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loan will be used for any purpose that violates, or would be inconsistent with, F.R.S. Board Regulation T, U or X. Terms for which meanings are provided in F.R.S. Board Regulation T, U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section 5.20 with such meanings.

 

Section 5.21    Accuracy of Information . (a)  All factual information heretofore or contemporaneously furnished by or on behalf of any of the Borrower or the Pledgors in this Agreement, in any other Transaction Document or otherwise in writing to any Senior Secured Party, any Consultant, or counsel for purposes of or in connection with this Agreement and the other Financing Documents or any transaction contemplated hereby or thereby (other than projections, budgets and other “forward-looking” information that have been prepared on a reasonable basis and in good faith by the Borrower) is, when taken as a whole, true and accurate in every material respect and such information is not, when taken as a whole, incomplete by omitting to state any material fact necessary to make such information not misleading in any material respect.

 

(b)   The assumptions constituting the basis on which the Borrower prepared the Construction Budget and the Financial Model that are in effect on each date this representation is made or deemed repeated, and the numbers set forth therein, were developed and consistently utilized in good faith and are reasonable and represent the Borrower’s best judgment as of the date prepared as to the matters contained therein, based on all information known to the Borrower.

 

(c)   The Borrower reasonably believes that (i) the Conversion Date will occur on or before the Conversion Date Certain and (ii) the cost to complete the Aberdeen II Plant will not exceed the funds available to the Borrower (including funds available under this Agreement, the Accounts Agreement, and the Subordinated Debt.

 

(d)   The Borrower reasonably believes that the development, engineering, construction, testing, start-up, use, ownership, operation and maintenance of the Aberdeen II Plant and the use, ownership, operation and maintenance of the Existing Plants are economically feasible and technically feasible.

 

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Section 5.22    Indebtedness . (a)  The Obligations are, after giving effect to the Financing Documents and the transactions contemplated thereby, the only outstanding Indebtedness of the Borrower other than Permitted Indebtedness. The Obligations rank at least pari passu with all other Indebtedness of the Borrower.

 

(b)   On the Closing Date, after giving effect to the Financing Documents and the transactions contemplated thereby, the Existing Plant Debt, including all principal, interest and other amounts (if any) outstanding in respect thereof, will have been repaid in full, and all Liens against assets of the Borrower in respect of such Existing Plant Debt will have been released.

 

Section 5.23    Separateness . (a)  The Borrower maintains separate bank accounts and separate books of account from the Pledgors. The separate liabilities of the Borrower are readily distinguishable from the liabilities of each Affiliate of the Borrower, including each of the Pledgors.

 

(b)   The Borrower conducts its business solely in its own name in a manner not misleading to other Persons as to its identity.

 

(c)   The Borrower is in compliance with the separateness provisions set forth on Schedule 5.24(a) .

 

Section 5.24    Required LP, GP and LLC Provisions . (a) The Borrower LP Agreement includes each of the terms (collectively, the “ Required LP Provisions ”) set forth in Schedule 5.24(a) , (b) the GP Agreement includes each of the terms (collectively, the “ Required GP Provisions ”) set forth in Schedule 5.24(b) and the LP Pledgor LLC Agreement includes each of the terms (collectively, the “ Required LP Pledgor LLC Provisions ”) set forth in Schedule 5.24(c) .

 

Section 5.25    Subsidiaries . The Borrower has no Subsidiaries.

 

Section 5.26    Foreign Assets Control Regulations, Etc . (a)  The use of the proceeds of the Loans by the Borrower will not violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

 

(b)   The Borrower:

 

(i)                         is not and will not become a Person or entity described by Section 1 of Executive Order 13224 of September 24, 2001 Blocking Property and Prohibiting Transactions With Persons

 

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                                                Who Commit, Threaten to Commit, or Support Terrorism (12 C.F.R. 595), and the Borrower does not engage in dealings or transactions with any such Persons or entities; and

 

(ii)                      is not in violation of the Patriot Act.

 

Section 5.27    Solvency . The Borrower is and, upon the incurrence of any Obligations by the Borrower and after giving effect to the transactions contemplated hereby, will be Solvent.

 

Section 5.28    Legal Name and Place of Business . (a) The exact legal name and jurisdiction of formation of the Borrower is:  Heartland Grain Fuels, L.P., a limited partnership organized and existing under the laws of the State of Delaware, and, except as set forth on Schedule 5.28 , the Borrower has not had any other legal names in the previous five (5) years.

 

(b)   The sole places of business of the Borrower are Aberdeen, South Dakota, Huron, South Dakota and Minneapolis, Minnesota, and the chief executive office of the Borrower is Minneapolis, Minnesota.

 

Section 5.29    No Brokers . The Borrower has no obligation to pay any finder’s, advisory, broker’s or investment banking fee, except for the fees payable pursuant to Section 3.13 ( Fees )  and the fees set forth in Schedule 5.29 .

 

Section 5.30    Insurance . All insurance required to be obtained and maintained pursuant to the Transaction Documents by the Borrower is in full force and effect as of each date this representation is made or deemed repeated and complies with the insurance requirements set forth on Schedule 7.01(h) . All premiums then due and payable on all such insurance have been paid. To the knowledge of the Borrower, all insurance required to be obtained and maintained by any Project Party with respect to the Project to protect, directly or indirectly, against loss or liability to the Borrower, the Project or any Senior Secured Party (including in connection with construction obligations of such Project Party), as of the date this representation is made or deemed repeated, pursuant to any Project Document has been obtained, is in full force and effect and complies with the insurance requirements set forth on Schedule 7.01(h) and is otherwise in all material respects in accordance with such Project Document.

 

Section 5.31    Accounts . (a) The Borrower does not have, and is not the beneficiary of, any bank account other than (i) the Project Accounts, (ii) Local Accounts in existence on the date hereof with respect to which Blocked Account Agreements have been duly executed and delivered within thirty (30) days after the Closing Date in accordance with Section 7.01(x) ( Blocked Account Agreements ) , (iii) other Local

 

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Accounts with respect to which Blocked Account Agreements have been duly executed and delivered, and (iv) the Bond Funds; and (b) as of the Closing Date and each subsequent date this representation is made or deemed repeated, the aggregate amount of funds on deposit in or standing to the credit of such Local Accounts does not exceed two hundred thousand Dollars ($200,000).

 

ARTICLE VI

 

CONDITIONS PRECEDENT

 

Section 6.01    Conditions to Closing and First Funding of Construction Loans . In addition to the conditions set forth in Section 6.02 ( Conditions to All Construction Loan Fundings ) and Section 6.05 ( Conditions to All Fundings and Issuances ) , the occurrence of the Closing Date and the initial release of Construction Loans are subject to the satisfaction of each of the following conditions precedent:

 

(a)   Delivery of Financing Documents . The Administrative Agent shall have received each of the following fully executed documents, each of which shall be originals, portable document format (“pdf”) or facsimiles (followed promptly by originals), duly executed and delivered by each party thereto and in form and substance reasonably satisfactory to each Lender:

 

(i)                         this Agreement;

 

(ii)                      the original Construction Notes, duly executed and delivered by an Authorized Officer of the Borrower in favor of each Construction/Term Lender;

 

(iii)                   the original Working Capital Notes, duly executed and delivered by an Authorized Officer of the Borrower in favor of each Working Capital Lender;

 

(iv)                  the Accounts Agreement;

 

(v)                     the Intercreditor Agreement;

 

(vi)                  the Security Agreement;

 

(vii)               the Pledge Agreement;

 

(viii)            the Mortgages; and

 

(ix)                    the Fee Letters.

 

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(b)   Project Documents; Contracts; Consents . (i) The Administrative Agent shall have received true, correct and complete copies of (A) the SNDAs and each Project Document, which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Independent Engineer, and (B) each other agreement reasonably requested by the Administrative Agent which, if requested, shall be in form and substance reasonably satisfactory to the Administrative Agent.

 

(ii)                      The Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying as true, correct and complete the list of all contracts, agreements, instruments, letter agreements, understandings or other documents to which the Borrower is a party set forth in Schedule 5.11 .

 

(iii)                   Unless the Administrative Agent agrees otherwise in writing, the Administrative Agent shall have received a Consent, in form and substance reasonably satisfactory to the Administrative Agent, with respect to each Project Document (other than the Administrative Services Agreement).

 

(c)   Delivery of Documents Evidencing Subordinated Debt Documents . The Administrative Agent shall have received true, correct and complete copies of all Subordinated Debt Documents, and such Subordinated Debt Documents shall be on terms and conditions satisfactory to the Administrative Agent.

 

(d)   Officer’s Certificates . The Administrative Agent shall have received the following certificates, dated as of the Closing Date, upon which the Administrative Agent and each Lender may conclusively rely:

 

(i)                         a duly executed certificate of an Authorized Officer of the Borrower certifying that (A) all conditions set forth in this Section 6.01 have been satisfied on and as of the Closing Date and (B) all representations and warranties made by each of the Borrower and the Pledgors in this Agreement and each other Financing Document to which the Borrower or such Pledgor is a party are true and correct on and as of the Closing Date (except with respect to representations and warranties that expressly refer to an earlier date);

 

(ii)                      a duly executed certificate of an Authorized Officer of the Borrower certifying that (A) the copies of each Project Document or other document delivered pursuant to Section 6.01(b) are true, correct and complete copies of such document, (B) each such

 

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                                                Project Document or other document is in full force and effect and no term or condition of any such Project Document or other document has been amended from the form thereof delivered to the Administrative Agent, (C) each of the conditions precedent set forth in each Project Document or other document delivered pursuant to Section 6.01(b) that is required to be satisfied on or before the Closing Date has been satisfied or waived by the parties thereto with the prior written consent of the Required Lenders, and with the approval of the Administrative Agent in the case of any material waiver, and (D) no material breach, material default or material violation by the Borrower, or to the knowledge of the Borrower, by any Project Party under any such Project Document or other document has occurred and is continuing;

 

(iii)                   a duly executed certificate of an Authorized Officer of the Borrower certifying that (A) the copies of each Subordinated Debt Document delivered pursuant to Section 6.01(c) are true, correct and complete copies of such document, (B) each such Subordinated Debt Document is in full force and effect and no term or condition thereof has been amended from the form thereof delivered to the Administrative Agent, (C) each of the conditions precedent set forth in each Subordinated Debt Document delivered pursuant to Section 6.01(b) that is required to be satisfied on or before the Closing Date has been satisfied or waived by the parties thereto with the prior written consent of the Required Lenders, and with the approval of the Administrative Agent in the case of any material waiver, and (D) no material breach, material default or material violation by the Borrower, or to the knowledge of the Borrower, by any party to any such Subordinated Debt Document has occurred and is continuing; and

 

(iv)                  a duly executed certificate of an Authorized Officer of each Pledgor certifying that all representations and warranties made by such Pledgor in the Pledge Agreement are true and correct on and as of the Closing Date (except with respect to representations and warranties that expressly refer to an earlier date).

 

(e)   Resolutions, Incumbency, Organic Documents . The Administrative Agent shall have received from each of the Borrower and the Pledgors a certificate of an Authorized Officer dated as of the Closing Date, upon which the Administrative Agent and each Lender may conclusively rely, as to:

 

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(i)                         satisfactory resolutions of its general partner, members, managers, shareholders or directors, as the case may be, then in full force and effect authorizing the execution, delivery and performance of (A) each Transaction Document to which it is party, (B) in the case of the Pledgors, the Borrower LP Agreement and (C) in the case of the Borrower, the SNDAs, and, in each case, the consummation of the transactions contemplated therein;

 

(ii)                      the incumbency and signatures of those of its officers and representatives duly authorized to execute and otherwise act with respect to each Financing Document to which it is party; and

 

(iii)                   such Person’s Organic Documents, which shall be in form and substance reasonably satisfactory to the Administrative Agent and shall include (x) in the case of the Borrower, the Required LP Provisions, (y) in the case of the GP Pledgor, the Required GP Provisions and (z) in the case of the LP Pledgor, the Required LP Pledgor LLC Provisions, and in every case certifying that (A) such documents are in full force and effect and no term or condition thereof has been amended from the form attached to such certificate and (B) no material breach, material default or material violation thereunder has occurred and is continuing.

 

(f)    Authority to Conduct Business . The Administrative Agent shall have received satisfactory evidence, including certificates of good standing from the Secretaries of State of each relevant jurisdiction, dated no more than fifteen (15) days (or such other time period reasonably acceptable to the Administrative Agent) prior to the Closing Date, that:

 

(i)                         the Borrower is duly authorized as a limited partnership to carry on its business, and is duly formed, validly existing and in good standing in each jurisdiction in which it is required to be so authorized;

 

(ii)                      the LP Pledgor is duly authorized as a limited liability company to carry on its business, and is duly organized, validly existing and in good standing in each jurisdiction in which it is required to be so authorized; and

 

(iii)                   the GP Pledgor is duly authorized as a corporation to carry on its business, and is duly organized, validly existing and in good

 

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                                                standing in each jurisdiction in which it is required to be so authorized.

 

(g)   Opinions of Counsel . Unless the Administrative Agent agrees otherwise in writing with respect to any of the items in this Section 6.01(g) , the Administrative Agent shall have received the following legal opinions, addressed to the Senior Secured Parties, and each in form and substance reasonably satisfactory to the Administrative Agent:

 

(i)                         the opinion of Faegre & Benson LLP, Delaware and New York counsel to the Loan Parties;

 

(ii)                      the opinion of South Dakota counsel satisfactory to WestLB;

 

(iii)                   the opinion of Stinson Morrison Hecker LLP, Kansas counsel to the Loan Parties;

 

(iv)                  the opinion of in-house counsel to the Bond Trustee;

 

(v)                     the opinion of Briggs and Morgan, P.A., bond counsel to Brown County, South Dakota;

 

(vi)                  the opinion of in-house counsel to the Design-Build Contractor and the Technology License Provider;

 

(vii)               the opinion of counsel to South Dakota Wheat Growers Association;

 

(viii)            the opinion of Carlyle E. Richards, P.C. , counsel to Dakotaland Feeds, LLC;

 

(ix)                    the opinion of in-house counsel to Northern Border Pipeline Company;

 

(h)   Lien Search; Perfection of Security . The Collateral Agent shall have been granted a first priority perfected security interest in all Collateral relating to the Borrower and the Project, and the Administrative Agent shall have received satisfactory copies or evidence, as the case may be, of the following actions in connection with the perfection of the Security:

 

(i)                         completed requests for information or lien search reports, dated no more than five (5) days (or such other time period reasonably acceptable to the Administrative Agent) before the Closing Date,

 

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                                                listing all effective UCC financing statements, fixture filings or other filings evidencing a security interest filed in Delaware, South Dakota and any other jurisdictions reasonably requested by the Administrative Agent that name the Borrower or any Pledgor as a debtor, together with copies of each such UCC financing statement, fixture filing or other filings, which shall show no Liens other than Permitted Liens;

 

(ii)                      UCC financing statements and other filings and recordations (including fixture filings), in proper form for filing in all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first priority Liens and security interests created under the Security Documents covering the Collateral with respect to the Project described therein, and each such UCC financing statement and other filing or recordation shall be duly filed on or prior to the Closing Date;

 

(iii)                   mortgage release and UCC termination statements, in proper form for filing in all jurisdictions that the Administrative Agent may deem necessary or desirable, terminating the existing mortgage and all existing UCC financing statements and fixture filings covering the Collateral relating to the Existing Plant Debt, and such mortgage release and each such UCC termination statement shall be duly filed on the Closing Date;

 

(iv)                  the original certificates representing all Equity Interests in the Borrower shall have been delivered to the Collateral Agent, in each case together with a duly executed irrevocable proxy and a duly executed transfer power in the forms attached to the Pledge Agreement relating to such Equity Interests; and

 

(v)                     with respect to the Borrower and the Project, evidence of the making (which may be on the Closing Date) of all other actions, recordings and filings of or with respect to the Security Documents delivered pursuant to Section 6.01(a) ( Conditions to Closing and First Funding of Construction Loans - Delivery of Financing Documents ) that the Administrative Agent may deem necessary or desirable in order to perfect and protect the first-priority Liens created thereunder.

 

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(i)    Financial Statements . The Administrative Agent shall have received accurate and complete copies of the unaudited annual financial statements of the Borrower for the Fiscal Year ended October 31, 2006.

 

(j)    Base Case Projections . The Administrative Agent shall have received base case projections with mutually agreed assumptions, demonstrating certain agreed minimum coverage levels, as certified by the Independent Engineer.

 

(k)   Financing Documents and Project Documents . The SNDAs, the Borrower LLC Agreement, the Financing Documents and the Project Documents shall be in full force and effect.

 

(l)    Governmental Approvals . The Borrower shall have obtained all Necessary Project Approvals listed on Part A of Schedule 5.03 , and the Administrative Agent shall have received a duly executed certificate of an Authorized Officer of the Borrower certifying that (i) attached to such certificate are true, correct and complete copies of each such Necessary Project Approval, (ii) each such Necessary Project Approval was duly obtained, is validly issued, is in full force and effect and is final and Non-Appealable, (iii) all Necessary Project Approvals required for the Project at a later date will be obtained in due course prior to the time when needed and without conditions that would impose material expense on the Project, and (iv)  Schedule 5.03 accurately identifies all Necessary Project Approvals necessary for the Project.

 

(m)  Equator Principles . The Administrative Agent shall have received all documentation requested by the Administrative Agent that is necessary to evidence compliance with, and otherwise required in connection with, the Equator Principles.

 

(n)   Third Party Approvals . The Administrative Agent shall have received reasonably satisfactory documentation of any approval by any Person required in connection with any transaction contemplated by this Agreement or any other Financing Document that the Administrative Agent has reasonably requested in connection herewith.

 

(o)   Fees; Expenses . The Administrative Agent shall have received for its own account, or for the account of each Senior Secured Party entitled thereto, all fees due and payable on the Closing Date pursuant to Section 3.13 ( Fees ) , and all costs and expenses (including costs, fees and expenses of legal counsel and Consultants) for which invoices have been presented.

 

(p)   Establishment of Project Accounts . Each of the Project Accounts shall have been established to the reasonable satisfaction of the Administrative Agent.

 

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(q)   Insurance . The Administrative Agent shall have received:

 

(i)                         satisfactory evidence that the insurance requirements set forth on Schedule 7.01(h) with respect to the Borrower and the Project have been satisfied, including binders or certificates evidencing the commitment of insurers to provide each insurance policy required by Schedule 7.01(h) , evidence of the payment of all premiums then due and owing in respect of such insurance policies and a certificate of the Insurance Consultant and the Borrower’s insurance broker (or insurance carrier) certifying that all such insurance policies are in full force and effect; and

 

(ii)                      a report of the Insurance Consultant in form and substance reasonably satisfactory to the Administrative Agent discussing, among other matters that the Administrative Agent may require, the adequacy of the insurance coverage for the Project, together with a duly executed certificate of the Insurance Consultant in the form of Exhibit I , appropriately completed to the satisfaction of the Administrative Agent.

 

(r)    Independent Engineer’s Report . The Administrative Agent shall have received a report of the Independent Engineer with respect to the Project, accompanied by a duly executed certificate of the Independent Engineer in the form of Exhibit J-1 , each in form and substance reasonably satisfactory to each Lender:

 

(i)                         discussing the technical and economic viability of the Project (including the Project’s capability to conform with all air permit limits) and the technical inputs used in the Financial Model;

 

(ii)                      discussing the reasonableness of the Construction Budget and the Operating Budget for the Existing Plants and the feasibility of the Borrower’s approach to construction and start-up of the Aberdeen II Plant;

 

(iii)                   discussing the appropriateness of the various Performance Tests and completion undertakings;

 

(iv)                  discussing operating performance and costs assumptions;

 

(v)                     confirming that the Environmental Site Assessment Reports comply with the requirements of this Agreement and that no further Environmental Site Assessment Reports are required;

 

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(vi)                  confirming that the Borrower is in compliance in all material respects with all Environmental Laws and all Environmental Approvals applicable to the Project and does not have any known present or contingent liability relating to any Environmental Approval, Environmental Claim or Environmental Law regarding the Project; and

 

(vii)               confirming that all Environmental Approvals necessary to construct the Aberdeen II Plant and operate the Project (other than Environmental Approvals that are Deferred Approvals) have been obtained, and are validly issued, in full force and effect, and final and Non-Appealable.

 

(s)   Environmental Site Assessment Report . The Administrative Agent shall have received an Environmental Site Assessment Report with respect to the Sites for the Existing Plants and the Aberdeen II Plant, accompanied by a corresponding reliance letter (to the extent such report does not permit reliance thereon by the Senior Secured Parties), each in form and substance satisfactory to the Administrative Agent.

 

(t)    Ethanol Market Report . The Administrative Agent shall have received a report of the Borrower’s Ethanol Market Consultant, in form and substance reasonably satisfactory to each Lender.

 

(u)   Agricultural Market Report . The Administrative Agent shall have received a report of the Agricultural Market Consultant, in form and substance reasonably satisfactory to each Lender.

 

(v)   Appraisal . The Administrative Agent shall have received an appraisal with respect to the Project, in form and substance reasonably satisfactory to the Required Lenders.

 

(w)  Construction Budget, Construction Schedule and Operating Budget . The Administrative Agent shall have received (i) the Construction Budget in form and substance reasonably satisfactory to the Required Lenders, (ii) the construction schedule in form and substance reasonably satisfactory to the Required Lenders, (iii) the Operating Budget for the Existing Plants in form and substance satisfactory to the Required Lenders, and (iv) a certificate of a Financial Officer of the Borrower certifying as to the reasonableness of the underlying assumptions and the conclusions on which such budget is based and demonstrating aggregate Project Costs equal to or less than the amount provided for in such Construction Budget and Operating Budget.

 

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(x)    Survey . The Administrative Agent shall have received a current survey conforming with ALTA/ACSM 2005 survey standards, including Table A, items 6, 8, 10 and 11(a), and otherwise acceptable to the Lenders (a “ Survey ”), of the Sites for the Existing Plants and the Aberdeen II Plant and for the Leased Premises, prepared by Helms & Associates, or other registered or licensed surveyor acceptable to the Lenders and the Title Insurance Company, certified to the Collateral Agent, the Administrative Agent, the Lenders and such Title Insurance Company.

 

(y)   Title Insurance .

 

(i)                         The Administrative Agent shall have received a paid policy or policies of mortgage title insurance (the “ Title Insurance Policy ”), in an aggregate amount equal to the Aggregate Loan Commitment on a Form 2006 extended coverage lender’s policy, containing such endorsements (including an endorsement deleting the creditor’s rights exception) as the Administrative Agent may request and otherwise in form and substance reasonably satisfactory to the Administrative Agent, from the Title Insurance Company (with co-insurance or reinsurance in such amounts and with such title insurance companies as may be required and approved by the Required Lenders), containing no exception for mechanics’ or materialmen’s Liens and no other exceptions (printed or otherwise) other than those approved by the Required Lenders, and insuring that the Collateral Agent has a good, valid and enforceable first Lien of record on the Mortgaged Property free and clear of all defects and encumbrances (other than Permitted Liens).

 

(ii)                      The Title Insurance Policy shall confirm that the Borrower has good, marketable title to the Sites, and good and valid leasehold interests in the Leased Premises, in each case subject to no Liens (other than Liens in favor of the Collateral Agent or other Permitted Liens).

 

(z)    Confidential Information Memorandum . An Authorized Officer of the Borrower shall have certified that the information provided by the Company in the Confidential Information Memorandum, taken as a whole over the life of the Project, is, to the best knowledge of the Borrower, true, complete, and accurate in all material respects, as of the date thereof, including the reasonableness of the underlying assumptions upon which the financial projections contained therein are based.

 

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(aa)     Bank Regulatory Requirements . The Administrative Agent shall have received at least five (5) Business Days prior to the Closing Date (or such shorter period as is satisfactory to the Administrative Agent) all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the Patriot Act.

 

(bb)    Process Agent . The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, acceptances from the Process Agent for each of the Borrower and the Pledgors appointed under Section 10.02(d) ( Applicable Law; Jurisdiction; Etc. – Appointment of Process Agent and Service of Process ) and as required under each other Financing Document in effect on the Closing Date.

 

(cc)     Financial Model . The Administrative Agent shall have received a certificate of a Financial Officer of the Borrower, dated as of the Closing Date, certifying that the Financial Model attached as Exhibit K has not been amended or modified and certifying as to the reasonableness of the underlying assumptions and the conclusions on which the Financial Model is based.

 

(dd)    Auditors . The Administrative Agent shall have received reasonably satisfactory evidence of the appointment of the Auditors.

 

(ee)     Equity; Subordinated Debt . The Administrative Agent shall have received reasonably satisfactory evidence that (i) an equity contribution in the amount of thirty-nine million eight thousand six hundred twenty-seven Dollars ($39,008,627) has been fully funded prior to the Closing Date, (ii) an equity contribution in the amount of three hundred sixty-six thousand Dollars ($366,000) for payments with respect to the Subordinated Debt has been fully funded, (iii) the Subordinated Debt in an amount of nineteen million Dollars ($19,000,000) has been funded, and fifteen million five hundred eighty-three thousand five hundred sixty-two Dollars and fifty cents ($15,583,562.50) of such amount has been deposited into the Bond Proceeds Sub-Account.

 

(ff)      Notice to Proceed . The duly executed Notice to Proceed in respect of the Aberdeen II Plant shall have been validly issued and delivered by the Borrower to the Design-Build Contractor, and validly accepted by the Design-Build Contractor, to the satisfaction of the Independent Engineer.

 

(gg)    Existing Plant Debt Payoff . The Existing Plant Debt shall have been or shall simultaneously be repaid in full ( provided that to the extent the amount necessary to repay the Existing Plant Debt (including accrued interest) in full exceeds forty-seven million Dollars ($47,000,000), the LP Pledgor shall have contributed additional equity to pay the amount of such excess), and the Administrative Agent shall

 

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have received (i) a payoff statement from the lenders of such debt, in form and substance satisfactory to the Administrative Agent, confirming such repayment and (ii) evidence satisfactory to the Administrative Agent that all Liens against assets of the Borrower in respect of such debt have been released.

 

(hh)    Existing Plants Complete . Each of the Existing Plants shall be operational and achieving the guaranteed performance levels in a manner satisfactory to the Independent Engineer.

 

(ii)   Construction Notes . Each Construction/Term Lender shall have received a Construction Note payable to such Lender in the amount of such Lender’s Construction Loan Commitment, duly executed by the Borrower and otherwise Complying with the provisions of Section 2.07 ( Evidence of Indebtedness ) .

 

(jj)   Commodity Risk Management Plan . The Administrative Agent shall have received the approved Commodity Risk Management Plan.

 

(kk)     Huron Ground Lease Estoppel Certificate . The Administrative Agent shall have received from the Borrower an estoppel certificate of the lessor under the Huron Ground Lease, pursuant to Section 20 thereof, in form and substance satisfactory to the Administrative Agent.

 

Section 6.02    Conditions to All Construction Loan Fundings . In addition to the conditions set forth in Section 6.01 ( Conditions to Closing and First Funding of Construction Loans ) and Section 6.05 ( Conditions to All Fundings and Issuances ) , the obligation of each Construction/Term Lender to make available each Funding of its Construction Loans shall be subject to the fulfillment of the following conditions precedent:

 

(a)   Funding Notice . The Administrative Agent shall have received a duly executed Funding Notice, as required by and in accordance with Section 2.05 ( Notice of Fundings ) , together with each of the documents described below, which shall certify that:

 

(i)                         the Application for Payment with respect to which such Funding is requested, together with the corresponding Informational Report(s) covering the period since the preceding Funding (or, in the case of the initial Funding of Construction Loans, since the date of the Design-Build Agreement), each of which shall be certified as true and complete by the Borrower and substantiated by the Independent Engineer;

 

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(ii)                      absolute and unconditional sworn Lien Waiver Statements; provided that in the case of the initial Funding, such Lien Waiver Statements shall evidence receipt of all payments paid or due and payable by the Borrower to the Design-Build Contractor, all subcontractors and all other Persons since the date of the Design-Build Agreement. Such Lien Waiver Statements shall (A) be dated on or about the date of the Funding Notice and (B) cover all work done and all sums received through the date of the then last preceding Funding (or, in the case of the initial Funding, the date of the Design-Build Agreement). Each such Lien Waiver Statement shall be certified as true and correct and complete by the Borrower and the Design-Build Contractor and shall be verified by the Independent Engineer;

 

(iii)                   a list of all Change Orders not theretofore submitted to the Administrative Agent, together with a statement by the Borrower that copies of the same have been submitted to the Independent Engineer prior to the date of such Funding Notice and a list of all Change Orders to the date of such Funding Notice and a list of all contemplated Change Orders, together with confirmation that each such Change Order is in compliance with Section 7.02(m)(iii) ( Negative Covenants – Project Documents ) ;

 

(iv)                  evidence (which shall include the waiver of Liens required under Section 6.02(a)(ii) ( Conditions to All Construction Loan Fundings – Funding Notice ) and a detailed receipt for payment itemized by Line Item in the Construction Budget) reasonably satisfactory to the Independent Engineer that the full amount of the proceeds of the then last preceding Funding has been paid out by the Borrower or the Design-Build Contractor to the Persons with respect to whom such Funding proceeds were disbursed and otherwise in accordance with this Agreement; provided that if there has been no such preceding Funding, such evidence shall confirm receipt of all payments due and payable by the Borrower to the Design-Build Contractor, all subcontractors and all other Persons since the date of the Design-Build Agreement;

 

(v)                     a certification of a Financial Officer of the Borrower confirming that the requested Funding, when considered on its own and when considered on an aggregate basis with the cumulative amount of all prior Fundings for the Aberdeen II Plant, is in compliance with the Drawdown Schedule (or, if such Funding would be in excess

 

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of the Drawdown Schedule, such deviation from the Drawdown Schedule has been approved by the Independent Engineer and the Administrative Agent);

 

(vi)                  the Borrower is in compliance with all conditions set forth in this Section 6.02 , and each other applicable Section of this ARTICLE VI , on and as of the proposed Funding Date, before and after giving effect to such Funding and to the application of the proceeds therefrom;

 

(vii)               all representations and warranties made by each of the Borrower and the Pledgors in this Agreement and each of the Financing Documents to which it is a party are true and correct on and as of such Funding Date (except with respect to representations and warranties that expressly refer to an earlier date), before and after giving effect to such Funding and to the application of the proceeds therefrom; and

 

(viii)            since October 31, 2006, no Material Adverse Effect has occurred and is continuing.

 

(b)   Independent Engineer’s Certification . The Administrative Agent shall have received an Independent Engineer’s Certificate in respect of such Funding Notice duly executed by the Independent Engineer and in the form attached as Exhibit J-2 .

 

(c)   Title Insurance . The Administrative Agent shall have received Lien Waiver Statements for the Aberdeen II Plant, and the Administrative Agent shall have received a Title Continuation and an endorsement to the Title Insurance Policy, which endorsement shall have the effect of (i) updating the date of the Title Insurance Policy to the date of the requested Funding and (ii) providing full mechanics’ lien coverage.

 

(d)   Updated Survey . If the Borrower owns or acquires any land (leasehold, fee or easement) not shown on the then-current Survey, the Administrative Agent shall have received an updated Survey of the Site including such new leasehold, fee or easement areas.

 

(e)   Mechanic’s Liens . There are no mechanic’s, workmen’s, materialmen’s, construction or other like Liens encumbering the Collateral (other than Permitted Liens), regardless of whether such Liens appear as an exception to the Title Insurance Policy or the Title Continuation.

 

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(f)    Additional Project Documents . An Authorized Officer of the Borrower shall have certified that the Borrower has provided to the Administrative Agent copies of any Additional Project Document entered into by the Borrower since the date of this Agreement, together with all amendments, supplements, schedules and exhibits thereto and the Ancillary Documents relating thereto, each of which (i) shall have been duly authorized, executed and delivered by each Person party thereto, and (ii) shall be in full force and effect.

 

Section 6.03    Conditions to Term Loan Funding . In addition to the conditions set forth in Section 6.05 ( Conditions to All Fundings and Issuances ) , the obligation of each Construction/Term Lender to make its Term Loans shall be subject to the fulfillment of the following conditions precedent.

 

(a)   Term Notes . Each Construction/Term Lender shall have received a Term Note, payable to such Lender in the amount of such Lender’s Term Loan Commitment, duly executed by the Borrower and otherwise complying with the provisions of Section 2.07 ( Evidence of Indebtedness ) .

 

(b)   Construction Loan Payoff . All of the Construction Loans shall have been or shall simultaneously be repaid with the proceeds of such Term Loans.

 

(c)   Final Completion Date . The Final Completion Date for the Aberdeen II Plant shall have occurred.

 

(d)   Final Completion Certificate . The Administrative Agent shall have received a Final Completion Certificate for the Aberdeen II Plant, in the form of Exhibit Q-1 duly executed by the Independent Engineer and a Final Completion Certificate in the form of Exhibit Q-2 duly executed by the Borrower.

 

(e)   Insurance . The Administrative Agent shall have received binders or certificates evidencing the commitment of insurers to provide the insurance policies required by Section 7.01(h) ( Affirmative Covenants - Insurance ) , together with evidence of the payment of all premiums then due and payable in respect of such insurance policies and a certificate of the Borrower’s insurance broker (or insurance carrier) certifying that all such insurance policies are in full force and effect, and the Administrative Agent shall have received a certificate of the Insurance Consultant in substantially the form of Exhibit I with respect thereto.

 

(f)    Security . The Administrative Agent shall have received evidence that (i) the Collateral Agent continues to have a perfected first priority security interest in all right, title and interest of each of the Borrower and the Pledgors in and to the Collateral prior to all other Liens thereon and subject only to Permitted Liens, and (ii) all

 

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Governmental Approvals that are necessary or desirable in order to establish, protect, preserve and perfect the Collateral Agent’s Liens have been duly made or taken and are in full force and effect.

 

(g)   Updated Operating Budget and Plan . The Administrative Agent shall have received a copy of the updated Operating Budget which shall include the Existing Plants and the Aberdeen II Plant, in form and substance reasonably satisfactory to the Administrative Agent.

 

(h)   Project Accounts . The Project Accounts shall continue to be maintained in accordance with this Agreement and the Accounts Agreement and shall contain all amounts, if any, required to be deposited therein as of the Conversion Date, including the amounts on deposit in or standing to the credit of each of the Debt Service Reserve Account, the Working Capital Reserve Account and the Contingency Reserve Account, which shall be at, or shall be funded on the Conversion Date up to, a level no less than (i) fifty percent (50%) of the Debt Service Reserve Required Amount, (ii) the Working Capital Reserve Required Amount and (iii) the Contingency Reserve Required Amount, respectively.

 

(i)    Legal Opinions . The Administrative Agent shall have received legal opinions from counsel to the Loan Parties, each in form and substance reasonably satisfactory to the Administrative Agent, addressing those matters relating to the Project, the Transaction Documents and the transactions contemplated therein, and the Collateral, as the Administrative Agent may reasonably request.

 

(j)    Title Insurance . The Administrative Agent shall have received Lien Waiver Statements for the Aberdeen II Plant, and the Administrative Agent shall have received a Title Continuation and an endorsement to the Title Insurance Policy, which endorsement shall have the effect of (i) updating the date of the Title Insurance Policy to the date of the requested Funding and (ii) providing full mechanics’ lien coverage.

 

(k)   Final Survey . The Administrative Agent shall have received a satisfactory final as-built Survey of the Project demonstrating that the Project has all real property interests required by the Financing Documents and showing no Liens other than Permitted Liens.

 

(l)    Mechanic’s Liens . There are no mechanic’s, workmen’s, materialmen’s, construction or other like Liens encumbering the Collateral (other than Permitted Liens), regardless of whether such Liens appear as exceptions to the Title Insurance Policy or the Title Continuations.

 

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(m)             Additional Project Documents . An Authorized Officer of the Borrower shall have certified that the Borrower has provided to the Administrative Agent copies of any Additional Project Document entered into by the Borrower since the date of this Agreement, together with all amendments, supplements, schedules and exhibits thereto and the Ancillary Documents relating thereto, each of which (i) shall have been duly authorized, executed and delivered by each Person party thereto, and (ii) shall be in full force and effect.

 

Section 6.04              Conditions to Working Capital Loan Fundings . In addition to the conditions set forth in Section 6.05 ( Conditions to All Fundings and Issuances ) , the obligation of each Working Capital Lender to make available each Funding of its Working Capital Loans shall be subject to the fulfillment of the following conditions precedent:

 

(a)           Timing . The initial Funding of the Construction Loans shall have occurred or shall occur simultaneously with such Funding of Working Capital Loans.

 

(b)          Funding Notice . The Administrative Agent shall have received (i) a Working Capital Loan Funding Notice, as required by and in accordance with Section 2.05 ( Notice of Fundings ) , together with certified evidence of the Working Capital Expenses then due and payable with respect to which such Funding has been requested, and (ii) the most recent Borrowing Base Certificate required to be delivered pursuant to Section 7.03(n) ( Reporting Requirements – Borrowing Base Certificate ) , executed by an Authorized Officer of the Borrower, together with supporting schedules, which certificate shall be in form and substance satisfactory to the Administrative Agent.

 

Section 6.05              Conditions to All Fundings and Issuances . The obligation of each Lender to make available each Funding of its Loans and the issuance of any Letter of Credit shall be subject to the fulfillment of the following conditions precedent:

 

(a)           Borrower’s Certifications . The Administrative Agent shall have received a duly executed certificate of an Authorized Officer of the Borrower certifying that:

 

(i)                         the Borrower is in compliance with all conditions set forth in this Section 6.05 on and as of the proposed Funding Date and/or Proposed Letter of Credit Issuance Date, before and after giving effect to such (x) Funding and to the application of the proceeds therefrom and/or (y) Letter of Credit issuance;

 

(ii)                      all representations and warranties made by each of the Borrower and the Pledgors in this Agreement and each of the Financing Documents to which it is a party are true and correct on and as of

 

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such Funding Date and/or Proposed Letter of Credit Issuance Date (except with respect to representations and warranties that expressly refer to an earlier date), before and after giving effect to such (x) Funding and to the application of the proceeds therefrom and/or (y) Letter of Credit issuance;

 

(iii)                   no Default or Event of Default has occurred and is continuing, or would result from such Funding and/or Letter of Credit issuance;

 

(iv)                  since October 31, 2006, there has been no event or occurrence that has had, or would reasonably be expected to have, a Material Adverse Effect; and

 

(v)                     the Borrower has no reason to believe that the Conversion Date will not occur on or prior to the Conversion Date Certain.

 

(b)          Government Approvals . The Administrative Agent shall have received evidence reasonably satisfactory to it that:

 

(i)                         all Governmental Approvals required by the proposed Funding Date and/or Proposed Letter of Credit Issuance Date for operation or development of the Project have been duly obtained, validly issued, and are in full force and effect, final and Non-Appealable;

 

(ii)                      all conditions in any Governmental Approval applicable to the Borrower that are required to have been satisfied by the date of the applicable Funding and/or Letter of Credit issuance have been satisfied;

 

(iii)                   such Governmental Approvals do not contain any condition that the Borrower has any reason to believe is not capable of being satisfied on or prior to the time required or that the Borrower has any reason to believe would limit or restrict the ability of the Project to perform consistently with the projections set forth in the Financial Model;

 

(iv)                  the Borrower is in compliance with all material respects with all Governmental Approvals that have been obtained by it;

 

(v)                     there is no proceeding pending or, to the knowledge of the Borrower, threatened in writing that seeks to appeal, rescind,

 

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terminate, modify, condition, suspend or otherwise alter in any material respect any such Governmental Approval;

 

(vi)                  to the Borrower’s knowledge, there exists no impediment that could reasonably be expected to prevent its obtaining in due course all other Governmental Approvals necessary for operation of the Existing Plants or development of the Project as and when the same may be required; and

 

(vii)               the Administrative Agent shall have received copies of all Governmental Approvals obtained since the last Borrowing certified by an Authorized Officer of the Borrower as true, correct, complete and in full force and effect.

 

(c)           No Default or Event of Default . No Event of Default or Default has occurred and is continuing, or would result from, such Funding and or Letter of Credit issuance.

 

(d)          No Litigation .

 

(i)                         No action, suit, proceeding or investigation shall have been instituted or, to the Borrower’s knowledge, threatened in writing against any of the Borrower, the Pledgors, or the Project; and

 

(ii)                      no action, suit, proceeding or investigation shall have been instituted or threatened in writing against any Project Party that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

 

(e)           Abandonment, Taking, Total Loss . (i) No Event of Abandonment or Event of Total Loss shall have occurred and be continuing with respect to the Project, (ii) no Event of Taking relating to any Equity Interests in the Borrower shall have occurred and be continuing, or (iii) no Event of Taking with respect to a material part of the Project shall have occurred.

 

(f)             Fees; Expenses . The Administrative Agent shall have received for its own account, or for the account of each Lender and Agent entitled thereto, all fees due and payable as of the date of such Funding and/or Letter of Credit issuance pursuant to Section 3.13 ( Fees ) , and all costs and expenses (including costs, fees and expenses of legal counsel) for which invoices have been presented.

 

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(g)          Satisfactory Legal Form . All documents executed or submitted in accordance with this Section 6.05 with respect to such Funding and/or Letter of Credit issuance by or one behalf of the Borrower or any other Project Party shall be reasonably satisfactory in form and substance to the Administrative Agent.

 

(h)          Material Adverse Effect . Since the Closing Date, no Material Adverse Effect has occurred and is continuing.

 

(i)              Initial Funding . The initial Funding of the Construction Loans shall have occurred or shall simultaneously occur.

 

(j)              Bond Proceeds . If a withdrawal of funds on deposit in or standing to the credit of the Bond Proceeds Sub-Account is being simultaneously requested, all of the conditions in the Accounts Agreement and the relevant Bond Proceeds Withdrawal Certificate (other than execution of such certificate by the Bond Trustee) to disbursement of such funds have been satisfied.

 

(k)           South Dakota Permitting Opinion . For any requested Funding Date after November 15, 2007, the Administrative Agent shall have received a legal opinion, covering permits required for the Project under South Dakota law, addressed to the Senior Secured Parties, and in form and substance reasonably satisfactory to the Administrative Agent.

 

ARTICLE VII

 

COVENANTS

 

Section 7.01              Affirmative Covenants . The Borrower agrees with each Senior Secured Party that, until the Security Discharge Date, the Borrower will perform the obligations set forth in this Section 7.01 .

 

(a)           Compliance with Laws . The Borrower shall comply in all material respects with all Laws (other than Environmental Laws) applicable to it or to its business or property.

 

(b)          Environmental Matters .

 

(i)                         The Borrower shall (A) comply in all material respects with all Environmental Laws, (B) keep the Project free of any Lien imposed pursuant to any Environmental Law, (C) pay or cause to be paid when due and payable by the Borrower any and all costs required in connection with any Environmental Laws, including

 

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the cost of identifying the nature and extent of the presence of any Materials of Environmental Concern in, on or about the Project or on any real property owned or leased by the Borrower or on the Mortgaged Property, and the cost of delineation, management, remediation, removal, treatment and disposal of any such Materials of Environmental Concern, and (D) use its best efforts to ensure that no Environmental Affiliate takes any action or violates any Environmental Law that could reasonably be expected to result in an Environmental Claim.

 

(ii)                      The Borrower shall not use or allow the Project to generate, manufacture, refine, produce, treat, store, handle, dispose of, transfer, process or transport Materials of Environmental Concern other than in compliance in all material respects with Environmental Laws.

 

(c)           Operations and Maintenance . The Borrower shall own, construct, operate and maintain (or cause to be operated and maintained) the Aberdeen II Plant, and shall own, operate and maintain (or cause to be operated and maintained) the Existing Plants in all material respects in accordance with (i) the terms and provisions of the Transaction Documents, (ii) all applicable Governmental Approvals and Laws and (iii) Prudent Ethanol Operating Practice.

 

(d)          Construction and Completion of Aberdeen II Plant; Maintenance of Properties . (i) The Borrower shall apply the proceeds of the Loans to the purposes specified in Section 7.01(g) ( Affirmative Covenants - Use of Proceeds and Cash Flow ) and in each Funding Notice and shall duly construct and complete, or cause the construction and completion of, the Aberdeen II Plant, and shall cause the Final Completion Date to occur, substantially in accordance with (A) the scope of work and other specifications set forth in the Design-Build Agreement (including any Change Orders permitted under this Agreement), (B) the Construction Budget, and (C) exercise of that degree of skill, diligence, prudence, foresight and care reasonably to be expected of skilled and experienced contractors in the ethanol industry in the United States of America, in order to accomplish the desired result consistent with reliability, safety, performance and expedition taking into account the provisions of the Project Documents and any relevant manufacturer’s or licensor’s recommendations or guidelines.

 

(ii)                      The Borrower shall keep, or cause to be kept, in good working order and condition, ordinary wear and tear excepted, all of its properties and equipment related to the Project that are necessary or useful in the proper conduct of its business.

 

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(iii)                   Except as required in connection with the construction of the Aberdeen II Plant, the Borrower shall not permit the Project or any material portion thereof to be removed, demolished or materially altered, unless such material portion that has been removed, demolished or materially altered has been replaced or repaired as permitted under this Agreement.

 

(iv)                  The Borrower shall continue to engage in business of the same type as now conducted by it and do or cause to be done all things necessary to preserve and keep in full force and effect (A) its limited partnership existence and good standing in the State of Delaware and (B) its material patents, trademarks, trade names, copyrights, franchises and similar rights.

 

(v)                     The Borrower shall cause all applicable air emissions tests for the Aberdeen II Plant to be completed to the satisfaction of the Independent Engineer within the time periods specified for such tests in the air permit.

 

(e)           Payment of Obligations . The Borrower shall pay and discharge as the same shall become due and payable all of its obligations and liabilities, including (i) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same (A) are subject to a Contest or (B) are immaterial Taxes in an aggregate amount not in excess of twenty-five thousand Dollars ($25,000) at any one time outstanding (taking into account any interest and penalties that could accrue or be applicable to such past-due Taxes), and provided that such Taxes are no more than forty-five (45) days past due, (ii) all of its obligations and liabilities under its Contractual Obligations, except as are subject to a Contest and (iii) all lawful claims that, if unpaid, would by law become a Lien upon its properties (other than Permitted Liens), unless the same are subject to a Contest.

 

(f)             Governmental Approvals . The Borrower shall maintain in full force and effect, in the name of the Borrower, each Necessary Project Approval and obtain each Deferred Approval (each of which shall be reasonably satisfactory to the Administrative Agent) prior to the time it is required to be obtained hereunder, including as set forth on Part B of Schedule 5.03 , but in any event no later than the date it is required to be obtained under applicable Law (other than any such failure to maintain or obtain that could not reasonably be expected to have a Material Adverse Effect on the Borrower).

 

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(g)          Use of Proceeds and Cash Flow .

 

(i)                         All proceeds of the Construction Loans shall be applied to pay Project Costs and for the purposes set forth in Sections 4.01(b)(ii) of the Accounts Agreement. All Loans proceeds shall be applied in accordance with the Funding Notice pursuant to which such Loans were funded.

 

(ii)                      All proceeds of the Term Loans shall be applied to repay the Construction Loans.

 

(iii)                   All proceeds of the Working Capital Loans (other than those resulting from a draw on a Letter of Credit) shall be applied to pay Working Capital Expenses.

 

(iv)                  All Subordinated Debt shall be applied in accordance with the “Costs of the Project” (as defined in the Bond Indenture).

 

(v)                     The Borrower shall cause all Cash Flow, Insurance Proceeds and Condemnation Proceeds to be applied in accordance with the Accounts Agreement.

 

(h)          Insurance . Without cost to any Senior Secured Party, the Borrower shall at all times obtain and maintain, or cause to be obtained and maintained, the types and amounts of insurance listed and described on Schedule 7.01(h) , in accordance with the terms and provisions set forth therein for the Project and the Borrower, and shall obtain and maintain such other insurance as may be required pursuant to the terms of any Transaction Document. The Borrower shall cause each such insurance to be in place no less than ten (10) days prior to the date required, and each required insurance policy shall be renewed or replaced no less than thirty (30) days prior to the expiration thereof. In the event the Borrower fails to take out or maintain the full insurance coverage required by this Section 7.01(h) , the Administrative Agent may (but shall not be obligated to) take out the required policies of insurance and pay the premiums on the same. All amounts so advanced by the Administrative Agent shall become an Obligation, and the Borrower shall forthwith pay such amounts to the Administrative Agent, together with interest from the date of payment by the Administrative Agent at the Default Rate.

 

(i)              Books and Records; Inspections . The Borrower shall keep proper books of record and account in which complete, true and accurate entries in conformity with GAAP and all requirements of Law shall be made of all financial transactions and matters involving the assets and business of the Borrower, and shall maintain such books

 

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of record and account in material conformity with applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower. The Borrower shall keep books and records separate from the books and records of any other Person (including any Affiliates of the Borrower) that accurately reflect all of its business affairs, transactions and the documents and other instruments that underlie or authorize all of its limited partnership actions. The Borrower shall permit officers and designated representatives of the Agents, Lenders and Consultants to visit and inspect any of the properties of the Borrower (including the Project), to examine its limited partnership, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its partners, directors, officers and independent public accountants, and with the GP Pledgor and its directors, officers and independent public accountants, in each case at the expense of the Borrower (provided that so long as no Default or Event of Default has occurred and is continuing, such visits or inspections shall be at the expense of the Borrower only once per fiscal quarter) and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided that if a Default or Event of Default has occurred and is continuing, any Agent, Lender or Consultant (or any of their respective officers or designated representatives) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

 

(j)              Operating Budget .

 

(i)                         The Borrower shall, with respect to the Existing Plants, not later than the Closing Date, and, with respect to the Aberdeen II Plant, not later than thirty (30) days before the Final Completion Date, adopt an operating plan and a budget setting forth in reasonable detail the projected requirements for Operation and Maintenance Expenses and Maintenance Capital Expenses for such plant(s) for the period from such date to the conclusion of the then-current Fiscal Year and provide a copy of such operating plan and budget at such time to the Administrative Agent. No less than forty-five (45) days in advance of the beginning of each Fiscal Year thereafter, the Borrower shall similarly adopt an operating plan and a budget for the Existing Plants (or, if after the Conversion Date, the entire Project) setting forth in reasonable detail the projected requirements for Operation and Maintenance Expenses and Maintenance Capital Expenses for the ensuing Fiscal Year and provide a copy of such operating plan and budget at such time to the Administrative Agent. (Each such operating plan and budget is herein called an “ Operating Budget ”.)  Each Operating Budget shall be prepared in accordance with a form approved by

 

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the Independent Engineer and shall become effective upon approval, which shall not be unreasonably withheld, conditioned or delayed, of the Administrative Agent (acting in consultation with the Consultants). If the Borrower shall not have adopted an annual Operating Budget before the beginning of any Fiscal Year or any Operating Budget adopted by the Borrower shall not have been accepted by the Administrative Agent before the beginning of any upcoming Fiscal Year, the Operating Budget for the preceding Fiscal Year shall, until the adoption of an annual Operating Budget, by the Borrower and acceptance of such Operating Budget, by the Administrative Agent, be deemed to be in force and effective as the annual Operating Budget for such upcoming Fiscal Year.

 

(ii)                      Each Operating Budget delivered to the Administrative Agent pursuant to this Section 7.01(j) shall be accompanied by a memorandum detailing all material assumptions used in the preparation of such Operating Budget, shall contain a line item for each Operating Budget Category, shall specify for each month and for each such Operating Budget Category the amount budgeted for such category for such month, and shall clearly distinguish Operation and Maintenance Expenses and Maintenance Capital Expenses.

 

(k)           Performance Tests .

 

(i)                         The Administrative Agent and the Independent Engineer have the right to witness and verify the Performance Tests. The Borrower shall give the Administrative Agent and the Independent Engineer notice regarding each proposed Performance Test within twenty-four (24) hours of the Borrower’s receipt of notice of such Performance Test from the Design-Build Contractor. If, upon completion of any Performance Tests, the Borrower believes that such Performance Tests have been satisfied, the Borrower shall so notify the Administrative Agent and the Independent Engineer and shall deliver a copy of all test results supporting such conclusion, accompanied by supporting data and calculations, evidencing the Borrower’s belief that the Borrower and the Design-Build Contractor have satisfied their respective obligations with respect to such Performance Tests. If any such Performance Tests have been satisfactorily completed, the Borrower shall deliver to the Administrative Agent a report that

 

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indicates the preliminary opinions as to the satisfactory achievement of the Performance Tests (each, a “ Performance Test Report ”), and the Independent Engineer will, upon a thorough review of such Performance Test Report, certify in writing to the Administrative Agent, within five (5) Business Days of the receipt of such Performance Test Report, the satisfactory achievement of the Performance Tests or deliver a report to the Administrative Agent and the Borrower setting forth in reasonable detail any objections of the Independent Engineer to such Performance Test Report. If any such valid objections are made, then the Borrower shall be permitted to address such objections to the reasonable satisfaction of the Independent Engineer or conduct additional Performance Tests in accordance with this Section 7.01(k) .

 

(ii)                      The Borrower will not approve any performance testing plan under the Design-Build Agreement, approve the results of any Performance Tests or declare that the Final Completion Date has occurred without the prior written consent of the Administrative Agent and the Independent Engineer, which consent will not be unreasonably withheld, conditioned or delayed.

 

(l)              Project Documents .

 

(i)                         The Borrower shall maintain in full force and effect, preserve, protect and defend its material rights under, and take all actions necessary to prevent termination or cancellation (except by expiration in accordance with its terms) of, the SNDAs and each Project Document. The Borrower shall exercise all material rights, discretion and remedies under each SNDA and each Project Document, if any, in accordance with its terms and in a manner consistent with (and subject to) the Borrower’s obligations under the Financing Documents.

 

(ii)                      Promptly upon execution of any Project Document by the Borrower, the Borrower shall deliver to the Administrative Agent certified copies of such Project Document and, if reasonably requested by the Administrative Agent, any Ancillary Documents related thereto.

 

(iii)                   If any of the SNDAs and the Project Documents provides that such document will expire prior to the Final Maturity Date, then, on or

 

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prior to the date that is forty-five (45) days (or such shorter period as shall be satisfactory to the Administrative Agent) prior to the expiration date of such document, the Borrower shall enter into an agreement replacing such document, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders.

 

(m)        Preservation of Title; Acquisition of Additional Property .

 

(i)                         The Borrower shall preserve and maintain (A) good, marketable and insurable fee interest in the Sites (except for the Leased Premises) and valid easement interest to its easement interest in the Sites, (B) good and valid leasehold interest in the Leased Premises and (C) good, legal and valid title to all of its other respective material properties and assets, in each case free and clear of all Liens other than Permitted Liens. If the Borrower at any time acquires any real property or leasehold or other interest in real property (including, to the extent reasonably requested by the Administrative Agent, with respect to any material easement or right-of-way not covered by the Mortgages), the Borrower shall, promptly upon such acquisition, execute, deliver and record a supplement to the Mortgage relating to the Plant(s) with respect to which such real property or leasehold or other interest in real property relates, reasonably satisfactory in form and substance to the Administrative Agent, subjecting such real property or leasehold or other interest to the Lien and security interest created by such Mortgage. If reasonably requested by the Administrative Agent, the Borrower shall obtain an appropriate endorsement or supplement to any Title Insurance Policy insuring the Lien of the Security Documents in such additional property, subject only to Permitted Liens.

 

(ii)                      Prior to the acquisition or lease of any such additional real property interests (other than easements that do not involve soil disturbance), the Borrower shall deliver to the Administrative Agent an Environmental Site Assessment Report(s) with respect to such real property (if, in the reasonable determination of the Administrative Agent, acting in consultation with the Independent Engineer, such Environmental Site Assessment Report(s) with respect to such real property interests is warranted), in each case along with a corresponding reliance letter from the consultant issuing such report(s) (to the extent such report(s) does not permit

 

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reliance thereon by the Senior Secured Parties). Each such Environmental Site Assessment Report(s) shall be in form and substance reasonably satisfactory to the Administrative Agent and shall not identify any material liability associated with the condition of such real property.

 

(n)          Maintenance of Liens; Creation of Liens on Newly Acquired Property .

 

(i)                         The Borrower shall take or cause to be taken all action necessary or desirable to maintain and preserve the Lien of the Security Documents and the first-ranking priority thereof.

 

(ii)                      The Borrower shall take all actions required to cause each Additional Project Document to be or become subject to the Lien of the Security Documents (whether by amendment to any Security Agreement or otherwise) and shall deliver or cause to be delivered to the Administrative Agent all Ancillary Documents related thereto.

 

(iii)                   Simultaneously with the making of any investment in Cash Equivalents, the Borrower shall take or cause to be taken all actions to require such Cash Equivalent in the Project Accounts to be or become subject to a first priority perfected Lien in favor of the Senior Secured Parties.

 

(o)          Certificate of Formation . The Borrower shall observe all of the separateness and other provisions and procedures of its certificate of limited partnership and the Borrower LP Agreement.

 

(p)          Separateness . The Borrower shall comply at all times with the separateness provisions set forth on Schedule 5.24(a) .

 

(q)          Further Assurances . Upon written request of the Administrative Agent or the Required Lenders, the Borrower shall promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including UCC financing statements and UCC continuation statements):

 

(i)                         that are necessary or advisable for compliance with Section 7.01(n)(i) ( Affirmative Covenants - Maintenance of Liens; Creation of Liens on Newly Acquired Property ) ;

 

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(ii)                      for the purposes of ensuring the validity and legality of this Agreement or any other Financing Document and the rights of the Senior Secured Parties hereunder or thereunder; and

 

(iii)                   for the purposes of facilitating the proper exercise of rights and powers granted to the Senior Secured Parties under this Agreement or any other Financing Document.

 

(r)             First Priority Ranking . The Borrower shall cause its payment obligations with respect to the Loans to constitute direct senior secured obligations of the Borrower and to rank no less than pari passu in priority of payment, in right of security and in all other respects to all other Indebtedness of the Borrower.

 

(s)           Quarterly Calculations .

 

(i)                         Not more than three (3) Business Days prior to each Quarterly Payment Date, the Borrower shall provide to the Administrative Agent a calculation of the Debt Service Reserve Required Amount, certified by a Financial Officer of the Borrower.

 

(ii)                      Not more than three (3) Business Days prior to each Quarterly Payment Date, the Borrower shall calculate the Historical Debt Service Coverage Ratio and the Prospective Debt Service Coverage Ratio, and shall provide written evidence to the Accounts Bank of such calculations certified by a Financial Officer of the Borrower. Each such calculation shall be subject to review by the Administrative Agent.

 

(t)             Financial Model .

 

(i)                         No less than forty-five (45) days prior to the end of each Fiscal Year (commencing with the Fiscal Year ended September 30, 2008), the Borrower shall deliver to the Lenders, the Administrative Agent and the Consultants a proposed updated Financial Model, together with the underlying assumptions, containing projections of Cash Flow, Operation and Maintenance Expenses (including each Operating Budget Category), Maintenance Capital Expenses and Cash Flow Available for Debt Service, in each case on a quarterly basis, with respect to the Project for the immediately succeeding Fiscal Year. If the Administrative Agent does not approve the updated Financial Model proposed by the Borrower within thirty (30) days

 

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following receipt thereof (and, so long as no Default or Event of Default has occurred and is continuing, after consultation and no less than ten (10) days of good faith negotiations with the Borrower), the Administrative Agent may instruct the Consultants to prepare an updated Financial Model based on the reasonable professional judgment of the Consultants (and such updated Financial Model prepared by the Consultants shall be binding on the Lenders and the Borrower).

 

(ii)                      If in any Fiscal Year (A) the actual Cash Flow for the completed Fiscal Quarters in such Fiscal Year (or, in the case of the Fiscal Year in which the Closing Date occurs, the period from the Closing Date to the end of the most recent completed Fiscal Quarter) (such period, the “ Specified Period ”) is ninety percent (90%) or less of the projections for such period set forth in the then-current Financial Model, or (B) Operation and Maintenance Expenses and Maintenance Capital Expenses for the Specified Period are, in the aggregate, ten percent (10%) or more above the projections for such period set forth in the then-current Financial Model, the Borrower shall, no less than thirty (30) days prior to the end of the immediately following Fiscal Quarter, deliver to the Administrative Agent, the Lenders and the Consultants a proposed updated Financial Model, together with the underlying assumptions, containing projections of Cash Flow, Operation and Maintenance Expenses (including each Operating Budget Category), Maintenance Capital Expenses and Cash Flow Available for Debt Service, in each case on a quarterly basis, with respect to the Project through the end of the immediately following Fiscal Year; provided that if (x) the Historical Debt Service Coverage Ratio calculated as of the most recent Quarterly Payment Date exceeds 4.0x and (y) the Borrower delivers to the Administrative Agent a certificate certifying that the Prospective Debt Service Coverage Ratio calculated as of such most recent Quarterly Payment Date exceeds 4.0x notwithstanding the deviation from the Financial Model described in item (A) or (B) above, as applicable, the Borrower shall not be required to deliver an updated Financial Model pursuant to this Section 7.01(t) .

 

(iii)                   If the Administrative Agent does not approve the updated Financial Model proposed by the Borrower pursuant to Section 7.01(t)(ii)  above within fifteen (15) days following receipt thereof (and, so long as no Default or Event of Default has occurred and

 

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is continuing, after consultation with the Borrower), the Administrative Agent may instruct the Consultants to prepare an updated Financial Model based on the reasonable professional judgment of the Consultants (and such updated Financial Model prepared by the Consultants shall be binding on the Lenders and the Borrower).

 

(iv)                  All costs incurred in connection with the preparation and review of updated Financial Models under this Section 7.01(t) shall be for the account of the Borrower.

 

(u)          Interest Rate Protection Agreement . Within ten (10) Business Days after the Closing Date, and at all times thereafter, the Borrower shall have in place Interest Rate Protection Agreements with respect to at least fifty percent (50%) of the aggregate principal amount of all Loans projected to be outstanding from time to time; provided , that the Borrower may not enter into Interest Rate Protection Agreements for notional amounts, in the aggregate at the time of the execution thereof, in excess of the aggregate principal amount of Loans outstanding on the date of such transaction.

 

(v)          Commodity Hedging Programs . On or before the Closing Date, the Borrower shall have proposed a Commodity Risk Management Plan which shall have been approved by the Administrative Agent. The Borrower may, from time to time, amend the Commodity Risk Management Plan; provided that any material changes thereto shall require the prior written approval of the Administrative Agent, which approval shall not be unreasonably withheld, conditioned or delayed. The Borrower at all times shall comply with, and shall ensure that all Commodity Hedging Arrangements comply with, the Commodity Risk Management Plan.

 

(w)        Debt Service Reserve . The Borrower shall ensure that the Debt Service Reserve Account is fully funded to the Debt Service Reserve Required Amount within one (1) year following the Conversion Date, and thereafter remains fully funded at the Debt Service Reserve Required Amount.

 

(x)            Blocked Account Agreements . Within thirty (30) days after the Closing Date, the Borrower shall duly execute and deliver a Blocked Account Agreement with respect to each Local Account in existence at such time.

 

Section 7.02              Negative Covenants . The Borrower agrees with each Senior Secured Party that, until the Security Discharge Date, the Borrower will perform the obligations set forth in this Section 7.02 .

 

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(a)           Restrictions on Indebtedness of the Borrower . The Borrower will not create, incur, assume or suffer to exist any Indebtedness except:

 

(i)                            the Obligations;

 

(ii)                                 Indebtedness under the Subordinated Loan Agreement in an aggregate principal amount not to exceed nineteen million Dollars ($19,000,000), provided that (A) such Indebtedness is subject to the terms of the Intercreditor Agreement and (B) the Bond Trustee or any successor or permitted assignee thereof shall have become a party to the Intercreditor Agreement as, and shall have the obligations of, a Second Lien Claimholder (as defined in the Intercreditor Agreement) thereunder;

 

(iii)                              Indebtedness under the Permitted Commodity Hedging Arrangements;

 

(iv)                             accounts payable to trade creditors incurred in the ordinary course of business and not more than forty-five (45) days past due; and

 

(v)                                obligations as lessee under operating leases or leases for the rental of any real or personal property which are required by GAAP to be capitalized where all such leases (other than railcar leases) under this Section 7.02(a)(v)  do not, in the aggregate, require the Borrower to make scheduled payments to the lessors in any Fiscal Year in excess of two hundred thousand Dollars ($200,000) in the aggregate.

 

(b)          Liens . The Borrower shall not create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets (including its Equity Interests), whether now owned or hereafter acquired, except:

 

(i)                         Liens in favor, or for the benefit, of the Collateral Agent pursuant to the Security Documents;

 

(ii)                      Liens created under the Bond Collateral Documents; provided that (A) such Liens only secure Indebtedness permitted under Section 7.02(a)(ii) ( Negative Covenants – Restrictions on Indebtedness of the Borrower ) , (B) such Liens are subject to the terms of the Intercreditor Agreement, and (C) the Bond Trustee or any successor or permitted assignee thereof shall have become a party to the Intercreditor Agreement as, and shall have the

 

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obligations of, a Second Lien Claimholder (as defined in the Intercreditor Agreement) thereunder;

 

(iii)                   Liens for taxes, assessments and other governmental charges that are not yet due or the payment of which is the subject of a Contest;

 

(iv)                  Liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is the subject of a Contest;

 

(v)                     any Liens reflected on the Title Insurance Policy or any Title Continuation;

 

(vi)                  Liens arising by reason of judgments that are subject to a Contest; and

 

(vii)               Until the Construction Loan Maturity Date, Liens in respect of personal property leases existing on the Closing Date under which the liability of the Borrower does not exceed two hundred thousand Dollars ($200,000) in the aggregate.

 

(c)           Permitted Investments . The Borrower shall not make any investments, loans or advances (whether by purchase of stocks, bonds, notes or other securities, loans, extensions of credit, advances or otherwise) except for investments in Cash Equivalents.

 

(d)          Change in Business . The Borrower shall not (i) enter into or engage in any business other than the ownership, operation, maintenance, development, start-up, testing, use and financing of the Aberdeen II Plant, the ownership, operation, maintenance, use and financing of the Existing Plants and all activities reasonably related thereto or (ii) change in any material respect the scope of the Project from that which is contemplated as of the date hereof.

 

(e)           Equity Issuances . The Borrower shall not issue any Equity Interests unless such Equity Interests are immediately pledged to the Collateral Agent (for the benefit of the Senior Secured Parties) on a first-priority perfected basis pursuant to the Pledge Agreement or, if necessary, a supplement thereto or a pledge and security agreement in substantially the form of the Pledge Agreement.

 

(f)             Asset Dispositions . The Borrower shall not sell, lease, assign, transfer or otherwise dispose of assets of the Project or the Borrower (other than Products), whether now owned or hereafter acquired, except:

 

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(i)                         disposal of assets that are promptly replaced in accordance with the then current Operating Budget;

 

(ii)                      to the extent that such assets are uneconomical, obsolete or no longer useful or no longer usable in connection with the operation or maintenance of the Project; and

 

(iii)                   disposal of assets with a fair market value, or at a disposal price, of less than one million Dollars ($1,000,000) in the aggregate during any Fiscal Year; provided , that such disposal does not, and would not reasonably be expected to, adversely affect the construction, operation or maintenance of the Project.

 

(g)          Consolidation, Merger . The Borrower will not (i) directly or indirectly liquidate, wind up, terminate, reorganize or dissolve itself (or suffer any liquidation, winding up, termination, reorganization or dissolution) or otherwise wind up; or (ii) acquire (in one transaction or a series of related transactions) all or any substantial part of the assets, property or business of, or any assets that constitute a division or operating unit of, the business of any Person or otherwise merge or consolidate with or into any other Person.

 

(h)          Transactions with Affiliates . The Borrower shall not enter into or cause, suffer or permit to exist any arrangement or contract with any of its Affiliates or any other Person that owns, directly or indirectly, any Equity Interest in the Borrower unless such arrangement or contract (i) is fair and reasonable to the Borrower and (ii) is an arrangement or contract that is on an arm’s-length basis and contains terms no less favorable than those that would be entered into by a prudent Person in the position of the Borrower with a Person that is not one of its Affiliates.

 

(i)              Accounts . (i) The Borrower shall not maintain, establish or use any deposit account, securities account (as each such term is defined in the UCC) or other banking account other than the Project Accounts and any Local Account with respect to which a Blocked Account Agreement has been duly executed and delivered within thiry (30) days after the Closing Date in accordance with Section 7.01(x) ( Blocked Account Agreement ) .

 

(ii)                      The Borrower shall not change the name or account number of any of the Project Accounts or Local Accounts without the prior written consent of the Administrative Agent.

 

(j)              Subsidiaries . The Borrower shall not create or acquire any Subsidiary or enter into any partnership or joint venture.

 

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(k)           ERISA . The Borrower will not engage in any prohibited transactions under Section 406 of ERISA or under Section 4975 of the Code with respect to any Plan or any other employee benefit plan subject to ERISA that could reasonably result in a material liability to the Borrower. The Borrower will not incur any obligation or liability in respect of any Plan, Multiemployer Plan or employee welfare benefit plan providing post-retirement welfare benefits (other than a plan providing continue coverage under Part 6 of Title I of ERISA or similar state law).

 

(l)              Taxes . The Borrower shall not make any election to be treated as an association taxable as a corporation for federal, state or local tax purposes.

 

(m)        Project Documents .

 

(i)                         Subject to Section 7.02(m)(iii) , the Borrower shall not direct or consent or agree to any amendment, modification, supplement, waiver or consent in respect of any provision of any of the SNDAs, the Organic Documents of the Borrower and the Project Documents (other than any immaterial amendment or modification, in which case a true, correct and complete copy shall be delivered to the Administrative Agent) without the prior written consent of the Administrative Agent, and in the case of any amendment to a Project Document due to the removal or replacement of a Project Party, the prior written consent of the Required Lenders.

 

(ii)                      Except for collateral assignments under the Security Documents and the Bond Collateral Documents, the Borrower shall not assign any of its rights under any of the SNDAs and the Project Documents to which it is a party to any Person, or consent to the assignment of any obligations under any such document by any other party thereto, without the prior written approval of the Administrative Agent, and in the case of any assignment of any obligations under any Project Document by a Project Party, without the prior written approval of the Required Lenders.

 

(iii)                   The Borrower shall not enter into or approve any Change Orders without the approval of the Administrative Agent (acting in consultation with the Independent Engineer), unless each of the following conditions is satisfied:

 

(A)                               the amount of such Change Order does not exceed (1) five hundred thousand Dollars ($500,000) individually, or

 

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(2) two million Dollars ($2,000,000) together with all prior Change Orders that have not been approved by the Administrative Agent (for purposes of this clause (A), the amount of any Change Order shall be the aggregate amount by which the related Line Items are increased as a result of such Change Order);
 
(B)                                 such Change Order would not cause the funds available under the Contingency Line Item (and not yet expended) and the Contingency Reserve Account to be reduced to less than zero;
 
(C)                                 such Change Order could not reasonably be expected to delay the Contract Times beyond the Conversion Date Certain;
 
(D)                                such Change Order will not alter in any adverse respect any guaranty, liquidated damages provision or the standards for any of the Performance Tests;
 
(E)                                  such Change Order could not reasonably be expected to permit or result in any adverse modification or impair the enforceability of any warranty under the Design-Build Agreement;
 
(F)                                  such Change Order could not reasonably be expected to impair or reduce the value of the Project or the value of the Collateral or decrease Cash Flow Available for Debt Service;
 
(G)                                 such Change Order could not reasonably be expected to present a material risk of revocation or material modification of any Governmental Approval;
 
(H)                                such Change Order could not reasonably be expected to cause the Borrower or the Project not to comply or lessen in any material respect the ability of the Borrower or the Project to comply with any applicable Law; and
 
(I)                                     the Administrative Agent has received a certificate, duly executed by an Authorized Officer of the Borrower, confirming that the proposed Change Order will comply
 

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with each of the conditions set forth in clauses (A)-(H) above and, in the case of the condition set forth in clause (A), setting forth (1) the amount of such proposed Change Order and (2) the amount of all prior Change Orders that have not been approved by the Administrative Agent.
 

(n)          Subordinated Debt Agreements . The Borrower shall not enter into any amendment, modification or supplement of any Subordinated Debt Document unless such amendment, modification or supplement does not require the consent of the Administrative Agent pursuant to the Intercreditor Agreement, and the Borrower shall not enter into any agreement or provide any undertaking or Guarantee with respect to the Subordinated Debt other than the Subordinated Debt Documents.

 

(o)          Additional Project Documents . The Borrower shall not enter into any Additional Project Document except with the prior written approval of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed).

 

(p)          Suspension or Abandonment . The Borrower shall not (i) permit or suffer to exist an Event of Abandonment or (ii) order or consent to any suspension of work under any Project Document, in each case without the prior written approval of the Required Lenders.

 

(q)          Use of Proceeds; Margin Regulations . The Borrower shall not use any proceeds of any Loan other than in accordance with the provisions of ARTICLE II ( Commitments and Funding ) and Section 7.01(g) ( Affirmative Covenants - Use of Proceeds and Cash Flow ) . The Borrower shall not use any part of the proceeds of any Loan to purchase or carry any Margin Stock (as defined in Regulation U) or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. The Borrower shall not use the proceeds of any Loan in a manner that could violate or be inconsistent with the provisions of Regulations T, U or X.

 

(r)             Environmental Matters . The Borrower shall not permit (i) any underground storage tanks to be located on any property owned or leased by the Borrower, (ii) any asbestos to be contained in or form part of any building, building component, structure or office space owned or leased by the Borrower, (iii) any polychlorinated biphenyls (PCBs) to be used or stored at any property owned or leased by the Borrower or (iv) any other Materials of Environmental Concern to be used, stored or otherwise be present at any property owned or leased by the Borrower, other than Materials of Environmental Concern necessary for the operation of the Project and used in accordance with all Laws and Prudent Ethanol Operating Practice.

 

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(s)           Restricted Payments . Except as otherwise permitted under Section 2.06(e) ( Funding of Loans ) the Borrower shall not make any Restricted Payments unless each of the conditions set forth below has been satisfied:

 

(i)                         the Conversion Date shall have occurred;

 

(ii)                      such Restricted Payment is made on, or within thirty (30) days following, a Quarterly Payment Date (provided that such Restricted Payment is made only from funds on deposit in or standing to the credit of the Revenue Account or the Prepayment Holding Account, as the case may be, on such Quarterly Payment Date);

 

(iii)                   no Default or Event of Default has occurred and is continuing or would occur as a result of such Restricted Payment;

 

(iv)                  each of the Debt Service Reserve Account and the Working Capital Reserve Account is fully funded to any applicable required level;

 

(v)                     each of the Historical Debt Service Coverage Ratio and the Prospective Debt Service Coverage Ratio, calculated as of such Quarterly Payment Date, is greater than or equal to 1.5:1.0; and

 

(vi)                  the Administrative Agent has received a Restricted Payment Certificate, duly executed by an Authorized Officer of the Borrower, confirming that each of the conditions set forth in clauses (i) through (vi) of this Section 7.02(s) have been satisfied on and as of the date such Restricted Payment is requested to be made, and setting forth a detailed calculation of each of the Historical Debt Service Coverage Ratio and Prospective Debt Service Coverage Ratio;

 

provided that notwithstanding the foregoing, Restricted Payments shall be permitted to the extent set forth in priority twelfth of Section 6.01(b) of the Accounts Agreement.

 

(t)             Construction Budget . The Borrower, without the prior written approval of the Administrative Agent and the Independent Engineer, may not reallocate any portion of any Line Item except that the Borrower may (i) reallocate the Contingency Line Item to pay for Change Orders permitted under this Agreement, or to pay for fees and expenses of advisors and consultants (including legal counsel) incurred as contemplated by the Transaction Documents in excess of the amounts then budgeted, up to two

 

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hundred thousand Dollars ($200,000), (ii)  apply cost-savings from any completed Line Item  (which completion has been confirmed by the Independent Engineer) to one or more other Line Items, (iii) with the prior written consent of the Independent Engineer (such consent not to be unreasonably withheld, conditioned or delayed), reallocate cost savings from a fixed price line item (based upon an executed contract for that fixed price item) to one or more other Line Items, or (iv) in addition to the reallocation permitted pursuant to items (i), (ii), and (iii) above, reallocate amounts from the Contingency Line Item to other Line Items with the prior written consent of the Independent Engineer.

 

(u)          Commodity Hedging Arrangements . The Borrower shall not enter into any Commodity Hedging Arrangements that:

 

(i)                         are not in accordance with the Commodity Risk Management Plan; or

 

(ii)                      are for speculative purposes.

 

(v)          Accounting Changes . The Borrower shall not make any change in (i) its accounting policies or reporting practices or (ii) its Fiscal Year without the prior written consent of the Administrative Agent.

 

(w)        Huron Expansion Contracts . The Borrower shall not enter or be a party to any agreement or contract relating to the expansion of the Huron Plant without the prior written consent of the Administrative Agent.

 

Section 7.03              Reporting Requirements . The Borrower will furnish to the Administrative Agent, who shall distribute copies of the following to each Lender:

 

(a)           Quarterly Financial Statements . As soon as available and in any event within forty-five (45)   days after the end of the first three Fiscal Quarters of each Fiscal Year, balance sheets and statements of income and cash flows of the Borrower for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, prepared in accordance with GAAP.

 

(b)          Annual Financial Statements . As soon as available and in any event within ninety (90) days after the end of each Fiscal Year, a copy of the annual audit report for such Fiscal Year for the Borrower including therein balance sheets as of the end of such Fiscal Year and statements of income and cash flows of the Borrower for such Fiscal Year, and accompanied by an unqualified opinion of the Auditors stating that such financial statements present fairly in all material respects the financial position of the Borrower for the periods indicated in conformity with GAAP applied on a basis consistent with prior periods, which report and opinion shall not be subject to any “ going

 

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concern ” or like qualification or exception or any qualification or exception as to the scope of such audit.

 

(c)           Certificate of Financial Officer . Concurrently with the delivery of the financial statements referred to in Section 7.03(a)  and (b) , a certificate executed by a Financial Officer of the applicable Loan Party stating that:

 

(i)                         such financial statements fairly present in all material respects the financial condition and results of operations of such Person on the dates and for the periods indicated in accordance with GAAP subject, in the case of interim financial statements, to the absence of notes and normally recurring year-end adjustments;

 

(ii)                      such Financial Officer has reviewed the terms of the Financing Documents and has made, or caused to be made under his or her supervision, a review in reasonable detail of the business and financial condition of such Person during the accounting period covered by such financial statements; and

 

(iii)                   as a result of such review such Financial Officer has concluded that no Default or Event of Default has occurred during the period covered by such financial statements through and including the date of such certificate or, if any Default or Event of Default has occurred, specifying the nature and extent thereof and, if continuing, the action that such Loan Party has taken and proposes to take in respect thereof.

 

(d)          Auditor’s Letters . Promptly upon receipt, copies of any detailed audit reports, management letters or recommendations submitted to the Borrower (or the audit or finance committee of the Borrower) by the Auditors in connection with the accounts or books of the Borrower, or any audit of the Borrower.

 

(e)           Notice of Default or Event of Default . As soon as possible and in any event within five (5) days after the Borrower obtains or should have obtained knowledge of any Default or Event of Default, a statement of an Authorized Officer of the Borrower setting forth details of such Default or Event of Default and the action that the Borrower has taken and proposes to take with respect thereto.

 

(f)             Notice of Other Events . Within five (5) days after the Borrower obtains knowledge thereof, a statement of an Authorized Officer of the Borrower setting forth details of:

 

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(i)                         any litigation or governmental proceeding pending or threatened in writing against any of the Borrower, the Project or the Pledgors;

 

(ii)                      any litigation or governmental proceeding pending or threatened in writing against any Project Party that has or could reasonably be expected to have a Material Adverse Effect;

 

(iii)                   any other event, act or condition that has or could reasonably be expected to have a Material Adverse Effect;

 

(iv)                  notification of any event of force majeure or similar event under a Project Document; or

 

(v)                     notification of any other change in circumstances that could reasonably be expected to result in an increase of more than five hundred thousand Dollars ($500,000) in Project Costs.

 

(g)          Project Document or Additional Project Document Notice . Promptly after delivery or receipt thereof, copies of all material notices or documents given or received by the Borrower, pursuant to any of the SNDAs, the Borrower LP Agreement, the Project Documents and any Additional Project Document or any documentation evidencing the Subordinated Debt including:

 

(i)                         any Change Orders or any written notices or communications related thereto;

 

(ii)                      any written notice alleging any breach or default thereunder; and

 

(iii)                   any written notice regarding, or request for consent to, any assignment, termination, modification, waiver or variation thereof.

 

(h)          Design-Build Agreement Notice . Within two (2) days following receipt thereof, the Borrower shall deliver to the Administrative Agent any monthly or other periodic report provided to the Borrower under the Design-Build Agreement, which shall be subject to review by the Independent Engineer.

 

(i)              ERISA Event . As soon as possible and in any event within five (5) days after the Borrower knows, or has reason to know, that any of the events described below has occurred, a duly executed certificate of an Authorized Officer of the Borrower setting forth the details of each such event and the action that the Borrower proposes to take with respect thereto, together with a copy of any notice or filing from the PBGC,

 

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Internal Revenue Service or Department of Labor or that may be required by the PBGC or other U.S. Governmental Authority with respect to each such event:

 

(i)                         any Termination Event with respect to any Plan or a Multiemployer Plan has occurred or will occur that could reasonably be expected to result in any liability to the Borrower;

 

(ii)                      any condition exists with respect to a Plan that presents a material risk of termination of a Plan (other than a standard termination under Section 4041(b) of ERISA) or imposition of an excise tax or other material liability on the Borrower;

 

(iii)                   an application has been filed for a waiver of the minimum funding standard under Section 412 of the Code or Section 302 of ERISA under any Plan;

 

(iv)                  with respect to any Plan or any other employee benefit plan subject to ERISA, the Borrower or any Plan fiduciary has engaged in a “prohibited transaction,” as defined in Section 4975 of the Code or as described in Section 406 of ERISA, that is not exempt under Section 4975 of the Code and Section 408 of ERISA that could reasonably be expected to result in a material liability to the Borrower;

 

(v)                     there exists any Unfunded Benefit Liabilities under any Plan;

 

(vi)                  any condition exists with respect to a Multiemployer Plan that presents a risk of a partial or complete withdrawal (as described in Section 4203 or 4205 of ERISA) from a Multiemployer Plan that could reasonably be expected to result in any liability to the Borrower;

 

(vii)               a “default” (as defined in Section 4219(c)(5) of ERISA) occurs with respect to payments to a Multiemployer Plan and such default could reasonably be expected to result in any liability to the Borrower;

 

(viii)            a Multiemployer Plan is in “reorganization” (as defined in Section 418 of the Code or Section 4241 of ERISA) or is “insolvent” (as defined in Section 4245 of ERISA);

 

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(ix)                    the Borrower and/or any ERISA Affiliate has incurred any potential withdrawal liability (as defined in accordance with Title IV of ERISA); or

 

(x)                       there is an action brought against the Borrower or any ERISA Affiliate under Section 502 of ERISA with respect to its failure to comply with Section 515 of ERISA with respect to any Plan or any other employee benefit plan subject to ERISA.

 

(j)              Notice of PBGC Demand Letter . As soon as possible and in any event within five (5) days after the receipt by the Borrower of a demand letter from the PBGC notifying the Borrower of its final decision finding liability and the date by which such liability must be paid, a copy of such letter, together with a duly executed certificate of the president or chief financial officer of the Borrower setting forth the action the Borrower proposes to take with respect thereto.

 

(k)           Notice of Environmental Event . Promptly and in any event within five (5) days after the existence of any of the following conditions, a duly executed certificate of an Authorized Officer of the Borrower specifying in detail the nature of such condition and, if applicable, the Borrower’s proposed response thereto:

 

(i)                         receipt by the Borrower of any written communication from a Governmental Authority or any written communication from any other Person (other than a privileged communication from legal counsel to the Borrower) or other source of written information, including reports prepared by the Borrower, that alleges or indicates that the Borrower or an Environmental Affiliate is not in compliance in all material respects with applicable Environmental Laws or Environmental Approvals and such alleged noncompliance could reasonably be expected to form the basis of an Environmental Claim against the Borrower;

 

(ii)                      the Borrower obtains knowledge that there exists any Environmental Claim pending or threatened in writing against the Borrower or an Environmental Affiliate;

 

(iii)                   the Borrower obtains knowledge of any release, threatened release, emission, discharge or disposal of any Material of Environmental Concern or obtains knowledge of any material non-compliance with any Environmental Law that, in either case, could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any Environmental Affiliate; or

 

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(iv)                  any Removal, Remedial or Response action taken, or required to be taken, by the Borrower or any other person in response to any Material of Environmental Concern in, at, on or under, a part of or about the Borrower’s properties or any other property or any notice, claim or other information that the Borrower might be subject to an Environmental Claim.

 

(l)              Materials of Environmental Concern . The Borrower will maintain and make available for inspection by the Administrative Agent, the Consultants and, if an Event of Default has occurred and is continuing, the Lenders, and each of their respective agents and employees, on reasonable notice during regular business hours, accurate and complete records of all non-privileged correspondence, investigations, studies, sampling and testing conducted, and any and all remedial actions taken, by the Borrower or, to the best of the Borrower’s knowledge and to the extent obtained by the Borrower, by any Governmental Authority or other Person in respect of Materials of Environmental Concern that could reasonably be expected to form the basis of an Environmental Claim on or affecting the Project.

 

(m)        Deferred Approvals . Promptly after receipt thereof, copies of each Deferred Approval obtained by the Borrower, together with such documents relating thereto as any Lender may request through the Administrative Agent, certified as true, complete and correct by an Authorized Officer of the Borrower.

 

(n)          Borrowing Base Certificate . As soon as available, but not later than fifteen (15) days after the end of each calendar month, the Borrower shall deliver to the Administrative Agent a Borrowing Base Certificate as of the last Business Day of the immediately preceding calendar month.

 

(o)          Operating Statements . Within forty-five (45) days after the end of each Fiscal Quarter and concurrently with the delivery of the annual financial statements referred to in Section 7.03(b) ( Reporting Requirements – Annual Financial Statements ) , the Borrower shall furnish to the Administrative Agent an Operating Statement regarding the operation and performance of the Project for each monthly, quarterly and, in the case of the last quarterly Operating Statement for each year, annual period substantially in the form of Exhibit L . Such Operating Statements shall contain (i) line items corresponding to each Operating Budget Category of the then current Operating Budget showing in reasonable detail by Operating Budget Category all actual expenses related to the operation and maintenance of the Project compared to the budgeted expenses for each such Operating Budget Category for such period, (ii) information showing the amount of ethanol and other Products produced by the Project during such period and (iii) information showing (A) the amount of ethanol sold by the Borrower from the Project to pursuant to the Ethanol Marketing Agreement, (B) the amount of

 

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Distillers Grains sold by the Borrower from the Project pursuant to the Co-Product Marketing Agreement, and (C) the amount, if any, of other sales of ethanol and/or Distillers Grains sold by the Borrower from the Project, together with an explanation of any such sale and identification of the purchaser, and (D) the amount, if any, of other Products sold by the Borrower from the Project, together with an explanation of any such sale and identification of the purchaser. The Operating Statements shall be certified as complete and correct by an Authorized Officer of the Borrower, who also shall certify that, the expenses reflected therein for the year to date and for each month or quarter therein did not exceed the provision for such period contained in the Operating Budget then in effect by more than ten percent (10%) or, if any of such certifications cannot be given, stating in reasonable detail the necessary qualifications to such certifications.

 

(p)          Other Information . Other information reasonably requested by the Administrative Agent or any Lender (through the Administrative Agent).

 

ARTICLE VIII

 

DEFAULT AND ENFORCEMENT

 

Section 8.01              Events of Default . Each of the following events or occurrences described in this Section 8.01 shall constitute an Event of Default.

 

(a)           Nonpayment . (i) The Borrower fails to pay any amount of principal of any Loan when the same becomes due and payable or (ii) the Borrower fails to pay any interest on any Loan or any fee or other Obligation or amount payable hereunder or under any other Financing Document within three (3) Business Days after the same becomes due and payable.

 

(b)          Breach of Warranty . Any representation or warranty of any Loan Party, any Project Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement made or deemed to be repeated in any Financing Document is incorrect or misleading in any material respect when made or deemed made.

 

(c)           Non-Performance of Certain Covenants and Obligations . (i) The Borrower defaults in the due performance and observance of any of its obligations under Sections 7.01(d)(i), (ii), (iv)(A) and (v) ( Affirmative Covenants – Construction and Completion of Aberdeen II Plant ; Maintenance of Properties ), Section 7.01(g) ( Affirmative Covenants – Use of Proceeds and Cash Flow ), Section 7.01(h) ( Affirmative Covenants – Insurance ) , Section 7.01(r) ( Affirmative Covenants – First Priority Ranking ) , Section 7.01(w) ( Affirmative Covenants – Debt Service Reserve ) , Section 7.02

 

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( Negative Covenants ) , Section 7.03(e) ( Reporting Requirements – Notice of Default or Event of Default ) and Section 7.03(f) ( Reporting Requirements -Notice of Other Events ) of this Agreement, or Section 5.02 ( Limitation of Liens ) or Section 5.07 ( Name; Jurisdiction of Organization ) of the Security Agreement; (ii) the Borrower or any Pledgor defaults in the due performance and observance of any of its obligations under Section 5.02 ( Limitation of Liens ), Section 5.04 ( No Sale of Collateral ), Section 5.05 ( No Impairment of Security ), Section 5.06 ( Filing of Bankruptcy Proceedings ) or Section 5.09 ( Name; Jurisdiction of Organization ) of the Pledge Agreement; or (iii) any party (other than a Senior Secured Party) to the Accounts Agreement or the Intercreditor Agreement defaults in the due performance and observance of any of its obligations under such agreements.

 

(d)          Non-Performance of Other Covenants and Obligations . Any Loan Party, any Project Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement or the Accounts Agreement defaults in the due performance and observance of any covenant or agreement (other than covenants and agreements referred to in Section 8.01(a) ( Events of Default – Nonpayment ) or Section 8.01(c) ( Events of Default – Non-Performance of Certain Covenants and Obligations )) contained in any Financing Document, and such default continues unremedied for a period of thirty (30) days after the Borrower obtains, or should have obtained, knowledge thereof.

 

(e)           Conversion . The Conversion Date does not occur on or prior to the Conversion Date Certain.

 

(f)             Cross Defaults . Any one of the following occurs with respect to the Borrower, any Pledgor, or any Project Party with respect to Indebtedness (other than the Obligations and any Indebtedness of any Pledgor arising solely as a result of a Lien on its assets to secure the debt of any of its Subsidiaries other than the Borrower):

 

(i)                         a default occurs in the payment when due (subject to any applicable grace period and notice requirements), whether by acceleration or otherwise, of such Indebtedness; or

 

(ii)                      such Person fails to observe or perform (subject to any applicable grace periods and notice requirements) any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of any Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if

 

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required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; and

 

(A)                               in the case of Section 8.01(f)(i)  or Section 8.01(f)(ii)  with respect the Borrower or any Pledgor, with respect to Indebtedness in an amount greater than or equal to one million Dollars ($1,000,000) in the aggregate; or
 
(B)                                 in the case of Section 8.01(f)(i)  or Section 8.01(f)(ii)  with respect to any other Project Party, has resulted in or could reasonably be expected to result in a Material Adverse Effect; provided , that such occurrence shall not constitute an Event of Default with respect to any such other Project Party (other than a Project Party to the Design-Build Agreement, any License Agreement, the Interconnect Agreement, the Huron Ground Lease, the Huron Grain Elevator Lease or the Aberdeen Grain Elevator Lease) if an agreement replacing each Project Document to which such Project Party is a party, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within sixty (60) days thereof.
 

(g)          Judgments . (i) Any judgment or order that has or could reasonably be expected to have a Material Adverse Effect is rendered against any Loan Party or any Project Party; provided , that such occurrence shall not constitute an Event of Default with respect to any Project Party (other than a Project Party to the Design-Build Agreement, any License Agreement, the Interconnect Agreement, the Huron Ground Lease, the Huron Grain Elevator Lease or the Aberdeen Grain Elevator Lease) if an agreement replacing each Project Document to which such Project Party is a party, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within sixty (60) days thereof; or (ii) any judgment or order is rendered against the Borrower or any Pledgor in an amount in excess of one million Dollars ($1,000,000) in the aggregate.

 

(h)          ERISA Events . (i) Any Termination Event occurs, (ii) any Plan incurs an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), (iii) the Borrower engages in a transaction with respect to any Plan or any

 

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other employee benefit plan subject to ERISA that is prohibited under Section 4975 of the Code or Section 406 of ERISA, (iv) the Borrower or any of its ERISA Affiliates fails to pay when due any amount it has become liable to pay to the PBGC, any Plan or a trust established under Title IV of ERISA, (v) a condition exists by reason of which the PBGC would be entitled to obtain a decree adjudicating that a Plan must be terminated or have a trustee appointed to administer it, (vi) the Borrower or any of its ERISA Affiliates suffers a partial or complete withdrawal from a Multiemployer Plan or is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan, (vii) a proceeding is instituted against the Borrower to enforce Section 515 of ERISA, (viii) the aggregate amount of the then “current liability” (as defined in Section 412(l)(7) of the Code, as amended) of all accrued benefits under such Plan or Plans exceeds the then current value of the assets allocable to such benefits by more than five hundred thousand Dollars ($500,000) at such time, or (ix) any other event or condition occurs or exists with respect to any Plan that would subject the Borrower to any material tax, material penalty or other material liability.

 

(i)              Bankruptcy, Insolvency . The Borrower, any Pledgor or any Project Party:

 

(i)                            generally fails to pay, or admits in writing its inability or unwillingness to pay, debts as they become due;

 

(ii)                         applies for, consents to, or acquiesces in, the appointment of a trustee, receiver, sequestrator or other custodian for such Person or a substantial portion of its property, or makes a general assignment for the benefit of creditors;

 

(iii)                      in the absence of such application, consent or acquiescence, permits or suffers to exist the appointment of a trustee, receiver, sequestrator or other custodian for such Person or for a substantial part of its property, and such trustee, receiver, sequestrator or other custodian is not discharged within sixty (60) days; provided that nothing in the Financing Documents shall prohibit or restrict any right any Senior Secured Party may have under applicable Law to appear in any court conducting any relevant proceeding during such sixty (60) day period to preserve, protect and defend its rights under the Financing Documents (and such Person shall not object to any such appearance);

 

(iv)                     permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of such Person

 

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and, if any such case or proceeding is not commenced by such Person, such case or proceeding is consented to or acquiesced in by such Person or results in the entry of an order for relief or remains for sixty (60) days undismissed; provided that nothing in the Financing Documents shall prohibit or restrict any right any Senior Secured Party may have under applicable Law to appear in any court conducting any such case or proceeding during such sixty (60) day period to preserve, protect and defend its rights under the Financing Documents (and such Person shall not object to any such appearance);

 

(v)                        takes any action authorizing, or in furtherance of, any of the foregoing; or

 

(vi)                     ceases to be Solvent;

 

and with respect to any Project Party, such occurrence has resulted in or could reasonably be expected to result in a Material Adverse Effect; provided , that such occurrence shall not constitute an Event of Default with respect to any Project Party (other than a Project Party to the Design-Build Agreement, any License Agreement, the Interconnect Agreement, the Huron Ground Lease, the Huron Grain Elevator Lease or the Aberdeen Grain Elevator Lease) if an agreement replacing each Project Document to which such Project Party is a party, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within sixty (60) days thereof.

 

(j)              Project Document Defaults; Termination .

 

(i)                            The Borrower or any other Project Party shall be in material breach of or otherwise in material default under any Project Document, or the Borrower or any counterparty thereof to any SNDA shall be in material breach of or otherwise in material default under such SNDA, and such breach or default has continued (x) in the case of the Huron Ground Lease, for more than thirty (30) days, or (y) in the case of any other Project Document or any SNDA, beyond any applicable grace period expressly provided for in such Project Document (or, if no such cure period is provided, thirty (30) days); provided , that any such breach or default by any Project Party under any Project Document (other than the Design-Build Agreement, the License Agreements, the Interconnect Agreement, the Huron Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator Lease) shall not

 

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constitute an Event of Default if an agreement replacing such Project Document, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within sixty (60) days thereof.

 

(ii)                         Any Project Document ceases to be in full force and effect prior to its scheduled expiration, is repudiated, or its enforceability is challenged or disaffirmed by or on behalf of the Borrower or any Project Party thereto, or any SNDA ceases to be in full force and effect prior to its scheduled expiration, is repudiated, or its enforceability is challenged or disaffirmed by or on behalf of the Borrower or any counterparty thereof to such SNDA provided , that such occurrence shall not constitute an Event of Default with respect to any Project Document (other than the Design-Build Agreement, the License Agreements, the Interconnect Agreement, the Huron Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator Lease) if an agreement replacing such Project Document, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within sixty (60) days thereof.

 

(k)           Governmental Approvals . The Borrower fails to obtain, renew, maintain or comply in all material respects with any Necessary Project Approval or any Necessary Project Approval is revoked, canceled, terminated, withdrawn or otherwise ceases to be in full force and effect, or any Necessary Project Approval is adversely modified without the consent of the Required Lenders, or a proceeding is commenced which could reasonably produce any such result.

 

(l)              Unenforceability of Documentation . At any time after the execution and delivery thereof:

 

(i)                            any material provision of any Financing Document shall cease to be in full force and effect;

 

(ii)                         any Financing Document is revoked or terminated, becomes unlawful or is declared null and void by a Governmental Authority of competent jurisdiction;

 

(iii)                      any Financing Document becomes unenforceable, is repudiated or the enforceability thereof is contested or disaffirmed by or on

 

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behalf of any party thereto other than the Senior Secured Parties; and

 

(iv)                     any Liens against any of the Collateral cease to be a first-priority, perfected security interest in favor of the Collateral Agent, or the enforceability thereof is contested by any Loan Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement, or any of the Security Documents ceases to provide the security intended to be created thereby with the priority purported to be created thereby.

 

(m)        Environmental Matters . (i) (A) Any Environmental Claim has occurred with respect to the Borrower, the Project or any Environmental Affiliate, (B) any release, Threat of Release, emission, discharge or disposal of any Material of Environmental Concern occurs, and such event could reasonably be expected to form the basis of an Environmental Claim against the Borrower, the Project or any Environmental Affiliate, or (C) any violation or alleged violation of any Environmental Law or Environmental Approval occurs that would reasonably result in an Environmental Claim against the Borrower or the Project or, to the extent the Borrower may have liability, any Environmental Affiliate that, in the case of any of Section 8.01(m)(i)(A) , (B)  or (C) , could reasonably be expected to result in liability for the Borrower in an amount greater than two hundred fifty thousand Dollars ($250,000) for any single claim or five hundred fifty thousand Dollars ($500,000) for all such claims during any twelve (12) month period or could otherwise reasonably be expected to result in a Material Adverse Effect; provided that such an occurrence shall not constitute an Event of Default if (x) the estimated liability associated therewith is reasonably expected to be less than one million Dollars ($1,000,000) net of any Insurance Proceeds that have actually been paid to, and received by, the Borrower or the Collateral Agent as loss payee in connection therewith, or as reduced by taking into account any amounts that the Borrower demonstrates, to the reasonable satisfaction of the Administrative Agent, within ten (10) Business Days following such occurrence, will be available as and when needed, without conditions, from sources (including Insurance Proceeds and documented voluntary equity contributions made to the Borrower for the purpose of covering such costs) other than Cash Flow or Loan proceeds, to cover such costs (and such occurrence could not otherwise reasonably be expected to result in a Material Adverse Effect) and, within ninety (90) days of such occurrence, such liability is reduced below the threshold set forth above this proviso from sources other than Cash Flow or Loan proceeds, (y) there have been no more than two (2) occurrences of the nature described in this Section 8.01(m) during the immediately preceding twelve (12) month period and (z) during such cure period, the Borrower undertakes any remedial or responsive actions then required to be undertaken under applicable Law;

 

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(ii)                         the Borrower or any Environmental Affiliate fails to obtain any Environmental Approvals necessary for the management, use, control, ownership, or operation of its business, property or assets, and (A) the absence of such Environmental Approval could reasonably be expected to have a Material Adverse Effect or (B) any such Environmental Approval is the subject of an Environmental Claim, revoked, terminated, or otherwise ceases to be in full force and effect.

 

(n)          Loss of Collateral . Any portion of the Collateral (other than a portion that is immaterial) is damaged, seized or appropriated; provided that such an occurrence shall not constitute an Event of Default if the Borrower repairs, replaces, rebuilds or refurbishes such damaged, seized or appropriated Collateral (i) in accordance with Section 12.01(d) of the Accounts Agreement, or (ii) otherwise with the approval of the Required Lenders, in consultation with the Independent Engineer ( provided that such approval is obtained within sixty (60) days thereof).

 

(o)          Event of Abandonment . An Event of Abandonment occurs.

 

(p)          Taking or Total Loss . An Event of Taking with respect to all or a material portion of the Project or any Equity Interests in the Borrower occurs, or an Event of Total Loss occurs.

 

(q)          Change of Control . A Change of Control occurs.

 

Section 8.02              Action Upon Bankruptcy . If any Event of Default described in Section 8.01(i) ( Events of Default – Bankruptcy, Insolvency ) occurs with respect to the Borrower, any outstanding Construction Loan Commitments, Term Loan Commitments or Working Capital Loan Commitments (if not theretofore terminated) shall automatically terminate. The outstanding principal amount of the outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice, demand or further act of the Administrative Agent, the Collateral Agent or any other Senior Secured Party.

 

Section 8.03              Action Upon Other Event of Default . (a)  If any other Event of Default occurs and is continuing for any reason, whether voluntary or involuntary, the Administrative Agent may, or upon the direction of the Required Lenders shall, by written notice to the Borrower, declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or any outstanding Construction Loan Commitments, Term Loan Commitments or Working Capital Loan Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations that has been declared due and payable shall

 

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be and become immediately due and payable, without further notice, demand or presentment and/or, as the case may be, any outstanding Construction Loan Commitments or Term Loan Commitments shall terminate. During the continuance of an Event of Default, the Administrative Agent may, or upon the direction of the Required Lenders shall, instruct the Collateral Agent to exercise any or all remedies provided for under this Agreement or the other Financing Documents.

 

(b)          Any declaration made pursuant to Section 8.03(a)  may, should the Required Lenders in their sole and absolute discretion so elect, be rescinded by written notice to the Borrower at any time after the principal of the Loans has become due and payable, but before any judgment or decree for the payment of the monies so due, or any part thereof, has been entered; provided that no such rescission or annulment shall extend to or affect any subsequent Event of Default or impair any right consequent thereon.

 

Section 8.04              Application of Proceeds . Any moneys received by the Collateral Agent after the occurrence and during the continuance of an Event of Default may be held by the Collateral Agent as Collateral and/or, at the direction of the Administrative Agent, may be applied in accordance with Section 4.2 of the Intercreditor Agreement.

 

ARTICLE IX

THE AGENTS

 

Section 9.01              Appointment and Authority . (a) Each Lender (in its capacity as Lender and on behalf of itself and its Affiliates as a potential Interest Rate Protection Provider) hereby irrevocably appoints, designates and authorizes each Agent to take such action on its behalf under the provisions of this Agreement and each other Financing Document and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement or any other Financing Document, together with such actions as are reasonably incidental thereto. The provisions of this ARTICLE IX are solely for the benefit of the Agents and the Lenders, and neither the Borrower nor any other Person shall have rights as a third party beneficiary of any of such provisions.

 

(b)          Each Lender (in its capacity as Lender and on behalf of itself and its Affiliates as a potential Interest Rate Protection Provider) hereby appoints WestLB as its Administrative Agent under and for purposes of each Financing Document to which it is a party. WestLB hereby accepts this appointment and agrees to act as the Administrative Agent for the Lenders in accordance with the terms of this Agreement. Each Lender appoints and authorizes the Administrative Agent to act on behalf of such Lender under

 

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each Financing Document to which it is a party and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section 9.01 or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in any Financing Document, the Administrative Agent shall not have any duties or responsibilities except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into any Financing Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

(c)           Each Lender (in its capacity as Lender and on behalf of itself and its Affiliates as a potential Interest Rate Protection Provider) hereby appoints WestLB as its Collateral Agent under and for purposes of each Financing Document to which it is a party. WestLB hereby accepts this appointment and agrees to act as the Collateral Agent for the Senior Secured Parties in accordance with the terms of this Agreement. Each of the Lenders hereby irrevocably appoints and authorizes the Collateral Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Borrower or the Pledgors to the Collateral Agent in order to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral Agent pursuant to Section 9.05 ( Delegation of Duties ) for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Collateral Agent, as the case may be, shall be entitled to the benefits of all provisions of this ARTICLE IX and ARTICLE X ( Miscellaneous Provisions ) (including Section 10.08 ( Indemnification by the Borrower ) , as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Financing Documents. Notwithstanding any provision to the contrary contained elsewhere in any Financing Document, the Collateral Agent shall not have any duties or responsibilities except those expressly set forth herein or in the other Financing Documents to which the Collateral Agent is party, nor shall the Collateral Agent have or be deemed to have any fiduciary relationship with the Borrower or any Senior Secured

 

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Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into any Financing Document or otherwise exist against the Collateral Agent. Each of the Collateral Agent and the Administrative Agent shall have the right at any time to seek instructions from the Required Lenders or, in the case of the Collateral Agent, the Administrative Agent as to any discretionary actions contemplated hereby or in any other Financing Document or if this Agreement or any other Financing Document is silent as to any matter requiring action by the Collateral Agent and shall be fully protected in accordance with Section 9.03 ( Exculpatory Provisions ) and Section 9.04 ( Reliance by Agents ) when acting upon such instructions. Any action taken by the Collateral Agent or the Administrative Agent under or in relation to this Agreement and any other Financing Document to which it is party with requisite authority or on the basis of appropriate instructions received from the Lenders (or otherwise as duly authorized) shall be binding on each Lender and, in the case of the Collateral Agent, each Interest Rate Protection Provider. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

Section 9.02              Rights as a Lender or Interest Rate Protection Provider . Each Person serving as Agent hereunder or under any other Financing Document shall have the same rights and powers in its capacity as a Lender or Interest Rate Protection Provider, as the case may be, as any other Lender or Interest Rate Protection Provider, as the case may be, and may exercise the same as though it were not an Agent. Each such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor for or in any other advisory capacity for and generally engage in any kind of business with the Borrower or Affiliates of the Borrower as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders, any other Agent or the Interest Rate Protection Provider.

 

Section 9.03              Exculpatory Provisions . (a) No Agent nor any of its respective directors, officers, employees or agents shall have any duties or obligations except those expressly set forth herein and in the other Financing Documents to which it is party. Without limiting the generality of the foregoing, no Agent shall:

 

(i)                            be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

 

(ii)                         have any duty to take any discretionary action or exercise any discretionary powers except discretionary rights and powers

 

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expressly contemplated hereby or by the other Financing Documents to which it is party that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in such other Financing Documents); provided that such Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Financing Document or applicable Law; and provided further that no such direction given to such Agent that in the sole judgement of such Agent imposes, or purports to impose, or might reasonably be expected to impose upon such Agent any obligation or liability not set forth in this Agreement or arising under this Agreement or other Financing Documents to which it is party shall be binding upon such Agent unless such Agent, in its sole discretion, accepts such direction;

 

(iii)                      except as expressly set forth herein and in the other Financing Documents to which it is party, have any duty to disclose, or be liable for any failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as an Agent or any of its Affiliates in any capacity; or

 

(iv)                     be required to institute any legal proceedings arising out of or in connection with, or otherwise take steps to enforce, this Agreement or any other Financing Document other than on the instructions of the Lenders.

 

(b)          No Agent nor any of its respective directors, officers, employees or agents shall be liable for any action taken or not taken by it (i) with the prior written consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as may be necessary, or as such Agent may reasonably believe in good faith to be necessary, under the circumstances as provided in Section 9.01 ( Appointment and Authority ) ), (ii) in connection with any amendment, consent, approval or waiver which it is permitted under the Financing Documents to enter into, agree to or grant or (iii) in the absence of its own gross negligence or willful misconduct. Each Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to such Agent in writing by the Borrower or a Lender.

 

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(c)           No Agent nor any of its respective directors, officers, employees or agents shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Financing Document, (ii) the contents of any certificate, report, opinion or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein  (including the use of proceeds) or the occurrence or continuance of any Default or Event of Default, (iv) the execution, validity, enforceability, effectiveness, genuineness or admissibility into evidence of this Agreement, any other Financing Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien or security interest created or purported to be created by any Security Document (or title to or rights in any Collateral under any Security Document), or (v) the satisfaction of any condition set forth in ARTICLE VI ( Conditions Precedent ) or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to any such Agent.

 

(d)          Each Agent may, unless and until it shall have received directions from the Lenders, take such action or refrain from taking such action in respect of a Default or Event of Default of which such Agent has been advised in writing by the Lenders as it shall reasonably deem advisable in the best interests of the Lenders (but shall not be obligated to do so).

 

(e)           The Collateral Agent may refrain from acting in accordance with any instructions of the Lenders to institute any legal proceedings arising out of or in connection with this Agreement or any other Financing Document until it has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees and expenses) which it would or might reasonably be expected to incur as a result.

 

(f)             No Agent shall be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder or under any Financing Document to which it is party unless it has been provided with security or indemnity reasonably satisfactory to it against any and all liability or expense which may be incurred by it by reason of taking or continuing to take such action.

 

Section 9.04              Reliance by Agents . Each Agent shall be entitled to rely upon, and shall not (nor shall any of its directors, officers, employees or agents) incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely

 

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upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, each Agent may presume that such condition is satisfactory to such Lender unless such Agent shall have received written notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts reasonably selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Each Agent may at any time and from time to time solicit written instructions in the form of directions from the Required Lenders or an order of a court of competent jurisdiction as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Agreement or any other Financing Document to which it is party.

 

Section 9.05              Delegation of Duties . Each Agent may perform any and all of its duties and exercise any and all its rights and powers hereunder or under any other Financing Document by or through any one or more sub-agents appointed by such Agent. Absent gross negligence or willful misconduct in selecting a sub-agent, no Agent shall be responsible for any action of, or failure to act by, any sub-agent that has been approved by the Required Lenders. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this ARTICLE IX shall apply to any such sub-agent and to the Related Parties of such Agent and any such sub-agent, and shall apply to their respective activities in connection with their acting as Agent.

 

Section 9.06              Resignation or Removal of Agent . (a)  Any Agent may resign from the performance of all its functions and duties hereunder and/or under the other Financing Documents at any time by giving thirty (30)   days’ prior notice to the Borrower and the Lenders. Any Agent may be removed at any time by the Required Lenders. Such resignation or removal shall take effect upon the appointment of a successor Agent, in accordance with this Section 9.06 .

 

(b)          Upon any notice of resignation by any Agent or upon the removal of any Agent by the Required Lenders, the Required Lenders shall appoint a successor Agent hereunder and under each other Financing Document who shall be a commercial bank having a combined capital and surplus of at least two hundred fifty million Dollars ($250,000,000). So long as no Event of Default has occurred and is continuing, such appointment shall be subject to the Borrower’s approval (such approval not to be unreasonably withheld, conditioned or delayed).

 

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(c)           If no successor Agent has been appointed by the Required Lenders within thirty (30) days) after the date such notice of resignation was given by such Agent or the Required Lenders elected to remove such Agent, any Senior Secured Party may petition any court of competent jurisdiction for the appointment of a successor Agent. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor Agent, as applicable, who shall serve as Agent hereunder and under each other Financing Document until such time, if any, as the Required Lenders appoint a successor Agent, as provided above.

 

(d)          Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent, and the retiring (or removed) Agent shall be discharged from all of its duties and obligations hereunder and under the other Financing Documents. After the retirement or removal of any Agent hereunder and under the other Financing Documents, the provisions of this ARTICLE IX shall continue in effect for the benefit of such retiring (or removed) Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while such Agent was acting as Agent.

 

(e)           If a retiring (or removed) Agent is the Collateral Agent, such Collateral Agent will promptly transfer any Collateral in the possession or control of such Collateral Agent to the successor Collateral Agent and will, subject to payment of its reasonable costs and expenses (including counsel fees and expenses), execute and deliver such notices, instructions and assignments as may be reasonably necessary or desirable to transfer the rights of the Collateral Agent with respect to such Collateral property to the successor Collateral Agent.

 

Section 9.07              No Amendment to Duties of Agent Without Consent . No Agent shall be bound by any waiver, amendment, supplement or modification of this Agreement or any other Financing Document that affects its rights or duties hereunder or thereunder unless such Agent shall have given its prior written consent, in its capacity as Agent, thereto.

 

Section 9.08              Non-Reliance on Agent and Other Lenders . Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and make its Loans. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking

 

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action under or based upon this Agreement, any other Financing Document or any related agreement or any document furnished hereunder or thereunder.

 

Section 9.09              No Lead Arranger or Bookrunner Duties . Anything herein to the contrary notwithstanding, no lead arranger or bookrunner shall have any powers, duties or responsibilities under this Agreement or any of the other Financing Documents, except in its capacity, as applicable, as an Agent or a Lender hereunder.

 

Section 9.10              Collateral Agent May File Proofs of Claim . (a) In case of the pendency of any Insolvency or Liquidation Proceeding relative to the Borrower or the Pledgor (including any event described in Section 8.01(i) ( Events of Default – Bankruptcy, Insolvency ) , the Collateral Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Collateral Agent or any other Senior Secured Party shall have made any demand on the Borrower) shall be entitled and empowered, but shall not be obligated, by intervention in such proceeding or otherwise:

 

(i)                            to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Senior Secured Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Senior Secured Parties and their respective agents and counsel and all other amounts due the Senior Secured Parties under Section 3.13 ( Fees ) , Section 10.06 ( Costs and Expenses ) and Section 10.08 ( Indemnification by the Borrower ) ) allowed in such judicial proceeding; and

 

(ii)                         to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.

 

(b)          Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Collateral Agent and, in the event that the Collateral Agent consents to the making of such payments directly to the Lenders, to pay to the Collateral Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other amounts due the Agents under Section 3.13 ( Fees ) , Section 10.06 ( Costs and Expenses ) and Section 10.08 ( Indemnification by the Borrower ) .

 

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(c)           Nothing contained herein shall be deemed to authorize the Collateral Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Collateral Agent to vote in respect of the claim of any Lender in any such proceeding.

 

Section 9.11              Collateral Matters . (a)  The Lenders irrevocably authorize the Collateral Agent to release any Lien on any property granted to or held by the Collateral Agent under any Financing Document for the benefit of the Senior Secured Parties (i) upon the occurrence of the Security Discharge Date, (ii) if approved, authorized or ratified in writing in accordance with Section 10.01 ( Amendments, Etc. ) or (iii) as permitted pursuant to the terms of the Financing Documents (including as contemplated by Section 7.02(f) ( Negative Covenants — Asset Dispositions ) ).

 

(b)          Upon request by the Collateral Agent at any time and from time to time, the Lenders will confirm in writing the Collateral Agent’s authority to release its interest in particular types or items of property pursuant to this Section 9.11 . In each case as specified in this Section 9.11 , the Collateral Agent will, at the Borrower’s expense, execute and deliver to the Borrower or the Pledgor, as the case may be, such documents as such Person may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents in accordance with the terms of the Financing Documents and this Section 9.11 .

 

(c)           Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder or under any of the other Financing Documents to which it is party, the Collateral Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Collateral Agent is deemed to have knowledge of such matters, or as to taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral (including the filing of UCC continuation statements). The Collateral Agent shall be deemed to have exercised appropriate and due care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which other collateral agents accord similar property.

 

Section 9.12              Copies . Each Agent shall give prompt notice to each Lender of each material notice or request required or permitted to be given to such Agent by the Borrower pursuant to the terms of this Agreement or any other Financing Document (other than instructions for the transfer of funds from Project Accounts pursuant to the Accounts Agreement or if otherwise concurrently delivered to the Lenders by the Borrower). Each Agent will promptly distribute to each Lender each document or instrument (including each document or instrument delivered by the Borrower to such

 

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Agent pursuant to ARTICLE V ( Representations and Warranties ) , ARTICLE VI ( Conditions Precedent ) and ARTICLE VII ( Covenants ) ) received for its account and copies of all other communications received by such Agent from the Borrower for distribution to the Lenders by such Agent in accordance with the terms of this Agreement or any other Financing Document.

 

Section 9.13              No Liability for Clean-up of Hazardous Materials . If the Collateral Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any duty or obligation for the benefit of another, which in the Collateral Agent’s sole discretion may cause the Collateral Agent to be considered an “owner or operator” under any Environmental Laws or otherwise cause the Collateral Agent to incur, or be exposed to, any environmental liabilities or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court-appointed receiver. The Collateral Agent will not be liable to any Person for any environmental liabilities or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s action and conduct as authorized, empowered or directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any Materials of Environmental Concern into the environment.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

Section 10.01        Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Financing Document, and no consent to any departure by the Borrower, any Pledgor or any party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement therefrom, shall be effective unless in writing signed by the Required Lenders (or, if expressly contemplated hereby, the Administrative Agent) and, in the case of an amendment, the Borrower, such Pledgor or such party to the Intercreditor Agreement or Accounts Agreement, as the case may be, and in each such case acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall:

 

(a)           extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.03(a)  (Action Upon Other Event of Default) without the prior written consent of such Lender (other than any Non-Voting Lender) or extend or increase the Aggregate Loan Commitment;

 

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(b)          postpone any date scheduled for any payment of principal or interest under Section 3.01 ( Repayment of Construction Loan Fundings ) , Section 3.02 ( Repayment of Term Loan Fundings ) or Section 3.03 ( Repayment of Working Capital Loan Fundings ) or Section 3.04 ( Interest Payment Dates ) , or any date fixed by the Administrative Agent for the payment of fees or other amounts due to the Lenders (or any of them) hereunder or under any other Financing Document without the prior written consent of each Lender affected thereby (other than any Non-Voting Lender);

 

(c)           reduce the principal of, or the rate of interest specified herein on, any Loan, or any Fees or other amounts (including the Required Cash Sweep or any other mandatory prepayments under Section 3.10 ( Mandatory Prepayment ) ) payable hereunder or under any other Financing Document to any Lender without the prior written consent of each Lender directly affected thereby (other than any Non-Voting Lender); provided that only the prior written consent of the Required Lenders shall be necessary to amend the definition of Default Rate or to waive any obligation of the Borrower to pay interest at the Default Rate;

 

(d)          change the order of application of any reduction in the Commitments or any prepayment of Loans from the application thereof set forth in the applicable provisions of Section 2.08 ( Termination or Reduction of Commitments ) , Section 3.09 ( Optional Prepayment ) or Section 3.10 ( Mandatory Prepayment ) in any manner without the prior written consent of each Lender affected thereby (other than any Non-Voting Lender);

 

(e)           change any provision of this Section 10.01 , the definition of Required Lenders or any other provision of any Financing Document specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights under any Financing Document (including any such provision specifying the number or percentage of Lenders required to waive any Event of Default or forbear from taking any action or pursuing any remedy with respect to any Event of Default), or make any determination or grant any consent under any Financing Document, without the prior written consent of each Lender (other than any Non-Voting Lender);

 

(f)             release (i) the Borrower from all or substantially all of its obligations (except for obligations that are expressly covered in clauses (a) - (e) above or (g) – (j) below) under any Financing Document, (ii) Collateral with a fair market value, or a disposal price, of more than fifteen million Dollars ($15,000,000) in any transaction or series of related transactions, or (iii) the Collateral (as defined in the Pledge Agreement), without the prior written consent of each Lender (other than any Non-Voting Lender);

 

(g)          change the Conversion Date Certain without the prior written consent of each Lender (other than any Non-Voting Lender);

 

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(h)          change any provision that requires ratable treatment of Lenders in accordance with Section 3.14 ( Pro Rata Treatment ) without the prior written consent of each Lender (other than any Non-Voting Lender) that would be denied ratable treatment by such change;

 

(i)              amend the order of payments set forth in Section 6.01(b) or (c) of the Accounts Agreement without the prior written consent of each Lender (other than any Non-Voting Lender);

 

(j)              amend the order of payments set forth in Section 4.2 of the Intercreditor Agreement without the prior written consent of each Lender (other than any Non-Voting Lender);

 

and provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by an Agent in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, such Agent under this Agreement or any other Financing Document; and (ii)  Section 10.03(h) ( Assignments ) may not be amended, waived or otherwise modified without the prior written consent of each Granting Lender all or any part of whose Loan is being funded by an SPV at the time of such amendment, waiver or other modification.

 

Notwithstanding the other provisions of this Section 10.01 , the Borrower, the Collateral Agent and the Administrative Agent may (but shall have no obligation to) amend or supplement the Financing Documents without the consent of any Lender solely:  (i) to cure any ambiguity, defect or inconsistency; (ii) to make any change that would provide any additional rights or benefits to the Lenders or (iii) to make, complete or confirm any grant of Collateral permitted or required by this Agreement or any of the Security Documents or any release of any Collateral that is otherwise permitted under the terms of this Agreement and the Security Documents.

 

Section 10.02        Applicable Law; Jurisdiction; Etc. (a)  GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(b)          SUBMISSION TO JURISDICTION . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,

 

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AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER FINANCING DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY SENIOR SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER OF VENUE . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT IN ANY COURT REFERRED TO IN SECTION 10.02(b) . THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)          Appointment of Process Agent and Service of Process . The Borrower hereby irrevocably appoints C T Corporation System, with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its agent to receive on behalf of itself services of copies of the summons and complaint and any other process that may be served in any such action or proceeding in the State of New York. If for any reason the Process Agent shall cease to act as such for any Person, such Person hereby agrees to designate a new agent in New York City on the terms and for the purposes of this Section 10.02 reasonably satisfactory to the Administrative Agent. Such service may be made by mailing or delivering a copy of such process to such Person in care of the Process Agent at the Process Agent’s above address, and the Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by the air mailing of

 

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copies of such process to such Person at its then effective notice addresses pursuant to Section 10.11 ( Notices and Other Communications ) . Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any other Financing Document in the courts of any jurisdiction.

 

(e)           Immunity . To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably and unconditionally waives such immunity in respect of its obligations under the Financing Documents and, without limiting the generality of the foregoing, agrees that the waivers set forth in this Section 10.02(e)  shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

 

(f)             WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.02 .

 

Section 10.03        Assignments . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Agent and Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with Section 10.03(b) , (ii) by way of participation in accordance with Section 10.03(d) , (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.03(f) , or (iv) to an SPV in accordance with the provisions of Section 10.03(h)  (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in

 

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this Agreement, express or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in this Section 10.03 and, to the extent expressly contemplated hereby, the Related Parties of each Agent and Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)          Any Lender may at any time after the date hereof assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the Commitment (which for this purpose includes the Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Lender Assignment Agreement with respect to such assignment is delivered to the Administrative Agent or, if “ Trade Date ” is specified in the Lender Assignment Agreement, as of the Trade Date, shall not be less than three million Dollars ($3,000,000) and in integral multiples of one million Dollars ($1,000,000) in excess thereof, unless the Administrative Agent otherwise consents in writing; (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned; (iii) the parties to each assignment shall execute and deliver to the Administrative Agent a Lender Assignment Agreement, together with a processing and recordation fee of two thousand five hundred Dollars ($2,500); provided that (A) no such fee shall be payable in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender and (B) in the case of contemporaneous assignments by a Lender to one or more Approved Funds managed by the same investment advisor (which Approved Funds are not then Lenders hereunder), only a single such two thousand five hundred Dollar ($2,500) fee shall be payable for all such contemporaneous assignments and (iv) the Eligible Assignee, if it is not a Lender prior to such assignment, shall deliver to the Administrative Agent an administrative questionnaire. Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 10.03(c) , on and after the effective date specified in each Lender Assignment Agreement, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Lender Assignment Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Lender Assignment Agreement, be released from its obligations under this Agreement (and, in the case of a Lender Assignment Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such

 

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Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 4.01 ( Eurodollar Rate Lending Unlawful ) , Section 4.03 ( Increased Eurodollar Loan Costs ) , Section 4.05 ( Funding Losses ) , Section 10.06 ( Costs and Expenses ) and Section 10.08 ( Indemnification by the Borrower ) with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.03(b)  shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.03(d) .

 

(c)           The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s office a copy of each Lender Assignment Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrower, the Agents and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or other substantive change to the Financing Documents is pending, any Lender may request and receive from the Administrative Agent a copy of the Register.

 

(d)          Any Lender may at any time, without the consent of, or notice to, the Borrower or any Agent, sell participations to any Person (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 ( Amendments, Etc. ) that directly affects such Participant. Subject to Section 10.03(e) , the Borrower agrees that each Participant shall be entitled to the benefits of Section 4.01 ( Eurodollar Rate Lending Unlawful ) , Section 4.03 ( Increased Eurodollar Loan Costs )

 

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and Section 4.05 ( Funding Losses ) , to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.03(b) . To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.14 ( Right of Setoff ) as though it were a Lender; provided such Participant agrees to be subject to Section 3.15 ( Sharing of Payments ) as though it were a Lender.

 

(e)           A Participant shall not be entitled to receive any greater payment under Section 4.01 ( Eurodollar Rate Lending Unlawful ) or Section 4.03 ( Increased Eurodollar Loan Costs ) than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such participant is made with the prior written consent of the Borrower.

 

(f)             Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)          The words “ execution ,” “ signed ,” “ signature ,” and words of like import in any Lender Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

(h)          Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an “ SPV ”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to fund any Loan, and (ii) if an SPV elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 3.15 ( Sharing of Payments ) . Each party hereto hereby agrees that (A) neither the grant to any SPV nor the exercise by any SPV of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including their obligations under Section 4.03 ( Increased Eurodollar Loan Costs ) , (B) no SPV shall be liable for any

 

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indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (C) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Financing Document, remain the lender of record hereunder. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one (1) year and one (1) day after the payment in full of all outstanding commercial paper or other senior debt of any SPV, it will not institute against, or join any other Person in instituting against, such SPV in any Insolvency or Liquidation Proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPV may (1) with notice to, but without prior consent of the Administrative Agent and without paying any processing fee therefor, assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (2) disclose on a confidential basis any non-public information relating to its funding of any Loan to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPV.

 

Section 10.04        Benefits of Agreement . Except as expressly provided in the last sentence of Section 10.08(b) ( Indemnification by Borrower ) nothing in this Agreement or any other Financing Document, express or implied, shall give to any Person, other than the parties hereto and thereto, and each of their successors and permitted assigns under this Agreement or any other Financing Document, any benefit or any legal or equitable right or remedy under this Agreement.

 

Section 10.05        Consultants . (a) The Required Lenders acting jointly or the Administrative Agent may, in their sole discretion, appoint any Consultant for the purposes specified herein. If any of the Consultants is removed or resigns and thereby ceases to act for purposes of this Agreement and the other Financing Documents, the Required Lenders acting jointly or the Administrative Agent, as the case may be, shall designate a Consultant in replacement.

 

(b)          The Borrower shall reimburse each Consultant appointed hereunder for the reasonable fees and documented expenses of such Consultant retained on behalf of the Lenders pursuant to this Section 10.05 .

 

(c)           In all cases in which this Agreement provides for any Consultant to “ agree ,” “ approve ,” “ certify ” or “ confirm ” any report or other document or any fact or circumstance, such Consultant may make the determinations and evaluations required in connection therewith based upon information provided by the Borrower or other sources reasonably believed by such Consultant to be knowledgeable and responsible, without

 

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independently verifying such information; provided that, notwithstanding the foregoing, such Consultant shall engage in such independent investigations or findings as it may from time to time deem necessary in its reasonable discretion to support the determinations and evaluations required of it.

 

Section 10.06        Costs and Expenses . The Borrower shall pay (a) all reasonable and documented out-of-pocket expenses incurred by the Lead Arranger, the Lenders and the Agents (including all reasonable fees, costs and expenses of counsel for any Agent), in connection with the preparation, negotiation, syndication, execution and delivery of this Agreement and the other Financing Documents (whether or not the transactions contemplated hereby or thereby are consummated); (b) all reasonable out-of-pocket expenses incurred by the Lenders and the Agents (including all reasonable fees, costs and expenses of counsel for any Agent), in connection with any amendments, modifications or waivers of the provisions of this Agreement and the other Financing Documents (whether or not the transactions contemplated hereby or thereby are consummated); (c) all out-of-pocket expenses incurred by the Agents (including all reasonable fees, costs and expenses of counsel for any Agent), in connection with the administration of this Agreement and the other Financing Documents (whether or not the transactions contemplated hereby or thereby are consummated); and (d) all out-of-pocket expenses incurred by the Agents or any Lender (including all fees, costs and expenses of counsel for any Senior Secured Party), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Financing Documents, including its rights under this Section 10.06 , including in connection with any workout, restructuring or negotiations in respect of the Obligations.

 

Section 10.07        Counterparts; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective when it has been executed by the Administrative Agent and when the Administrative Agent has received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or portable document format (“ pdf ”) shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 10.08        Indemnification by the Borrower . (a) In addition to the indemnity by the Borrower set forth in Section 10.11(f) ( Notices and Other Communications ) , the Borrower hereby agrees to indemnify each Agent (and any sub-agent thereof), each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including all reasonable fees, costs and expenses of counsel for any Indemnitee), incurred by any

 

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Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of:

 

(i)                            the execution or delivery of this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby;

 

(ii)                         any Loan or the use or proposed use of the proceeds therefrom;

 

(iii)                      any actual or alleged presence, release or threatened release of Materials of Environmental Concern on or from the Project or any property owned, leased or operated by the Borrower, or any liability or costs pursuant to an Environmental Law related in any way to the Project, the Sites or the Borrower;

 

(iv)                     any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party, the GP Pledgor or any of its shareholders, directors or creditors, the Borrower or any of its partners or creditors, and in each case regardless of whether any Indemnitee is a party thereto and whether or not any of the transactions contemplated hereunder or under any of the other Financing Documents is consummated, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; and/or

 

(v)                        any claim, demand or liability for broker’s or finder’s or placement fees or similar commissions, whether or not payable by the Borrower, alleged to have been incurred in connection with such transactions, other than any broker’s or finder’s fees payable to Persons engaged by the Lenders or the Agents without the knowledge of the Borrower;

 

provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and Non-Appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

 

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(b)          To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Section 10.08(a)  to be paid by it to any Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to such Agent (or any such sub-agent), or such Related Party, as the case may be, such Lender’s ratable share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent (or any sub-agent thereof) in its capacity as such, or against any Related Party of any of the foregoing acting for such Agent (or any sub-agent thereof) in connection with such capacity. The obligations of the Lenders to make payments pursuant to this Section 10.08(b)  are several and not joint and shall survive the payment in full of the Obligations and the termination of this Agreement. The failure of any Lender to make payments on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to do so. The Lenders agree and acknowledge that the Accounts Bank is an intended third party beneficiary of this Section 10.08(b) .

 

(c)           Except as otherwise provided in ARTICLE VI ( Conditions Precedent ) , all amounts due under this Section 10.08 shall be payable not later than ten (10) Business Days after demand therefor.

 

Section 10.09        Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Financing Document, the interest paid or agreed to be paid under the Financing Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If any Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by any Agent or any Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

Section 10.10        No Waiver; Cumulative Remedies . No failure by any Senior Secured Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Financing Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and

 

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privileges herein provided, and provided under each other Financing Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Section 10.11        Notices and Other Communications . (a)  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 10.11(b) ), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or electronic mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)                            if to the Borrower or any Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.11(a) ;

 

(ii)                         if to any Lender, to the address, telecopier number, electronic mail address or telephone number specified in its administrative questionnaire; and

 

(iii)                      if to any Interest Rate Protection Provider, to the address, telecopier, number, electronic mail address or telephone number specified on Schedule 10.11(a) .

 

(b)          Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 10.11(d)  shall be effective as provided in Section 10.11(d) .

 

(c)           Notices and other communications to the Lenders or any Agent hereunder may be delivered or furnished by electronic communication (including e-mail and internet or intranet websites) pursuant to procedures approved by the Administrative Agent, and in the case of notices to the Collateral Agent, by the Collateral Agent as well; provided that the foregoing shall not apply to notices to any Lender pursuant to ARTICLE II ( Commitments and Funding ) if such Lender has so notified the Administrative Agent. Each of the Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

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(d)          Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “ return receipt requested ” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not received during the normal business hours of the recipient, such notice or communication shall be deemed to have been received at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in Section 10.11(d)(i)  of notification that such notice or communication is available and identifying the website address therefor.

 

(e)           Each of the Borrower and the Agents may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and each Agent.

 

(f)             The Agents and the Lenders shall be entitled to rely and act upon any written notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with any Agent may be recorded by such Agent, and each of the parties hereto hereby consents to such recording.

 

(g)          So long as WestLB is the Administrative Agent, the Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Financing Documents, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the Funding, (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default or (iv) is required to be delivered to satisfy any condition precedent to Funding (all such non-excluded communications being referred to herein collectively as “ Communications ”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to nyc_agency_services@westlb.com. In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent in the

 

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manner specified in the Financing Documents but only to the extent requested by the Administrative Agent.

 

(h)          So long as WestLB is the Administrative Agent, the Borrower further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on http://www.intralinks.com (or any replacement or successor thereto) or a substantially similar electronic transmission systems (the “ Platform ”).

 

(i)              THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENTS DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENTS IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “ AGENT PARTIES ”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(j)              The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth in Schedule 10.11(a)  shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Financing Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Financing Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such

 

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Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

 

(k)   Notwithstanding clauses (g) to (j) above, nothing herein shall prejudice the right of any Agent or Lender to give any notice or other communication pursuant to any Financing Document in any other manner specified in such Financing Document.

 

Section 10.12  Patriot Act Notice . Each Lender and Agent (for itself and not on behalf of any Lender or other Agent) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

 

Section 10.13  Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to any Agent or Lender, or any Agent or Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency or Liquidation Proceeding or otherwise, then (a) to the extent of such recovery, the Obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to each Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by such Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect. The obligations of the Lenders under Section 10.13(b) shall survive the payment in full of the Obligations and the termination of this Agreement.

 

Section 10.14  Right of Setoff . Each Lender and each of its respective Affiliates is hereby authorized at any time and from time to time during the continuance of an Event of Default, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Financing Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Financing Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights

 

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of each Lender and their respective Affiliates under this Section 10.14 are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

Section 10.15  Severability . If any provision of this Agreement or any other Financing Document is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Financing Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 10.16  Survival . Notwithstanding anything in this Agreement to the contrary, Section 10.06 ( Costs and Expenses ) and Section 10.08 ( Indemnification by the Borrower ) shall survive any termination of this Agreement. In addition, each representation and warranty made hereunder and in any other Financing Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by each Agent and each Lender, regardless of any investigation made by any Agent or any Lender or on their behalf and notwithstanding that any Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of the Funding, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder or under any other Financing Document shall remain unpaid or unsatisfied.

 

Section 10.17  Treatment of Certain Information; Confidentiality . Each of the Agents and the Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and to its Affiliates’ respective partners, directors, officers, employees, agents, advisors (including legal counsel and financial advisors) and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested or required by any regulatory authority purporting to have jurisdiction over it; (c) to the extent required by applicable Law or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder (including any actual or prospective purchaser of Collateral); (f) subject to an agreement containing provisions substantially the same as

 

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those of this Section 10.17 , to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty’s or prospective counterparty’s professional advisor) to any credit derivative transaction relating to obligations of the Borrower or (iii) any Person (and any of its officers, directors, employees, agents or advisors) that may enter into or support, directly or indirectly, or that may be considering entering into or supporting, directly or indirectly, either (A) contractual arrangements with such Agent or Lender, or any Affiliates thereof, pursuant to which all or any portion of the risks, rights, benefits or obligations under or with respect to any Loan or Financing Document is transferred to such Person or (B) an actual or proposed securitization or collateralization of, or similar transaction relating to, all or a part of any amounts payable to or for the benefit of any Lender under any Financing Document (including any rating agency); (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 10.17 or (ii) becomes available to any Agent, any Lender or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower; (i) to any state, federal or foreign authority or examiner (including the National Association of Insurance Commissioners or any other similar organization) regulating any Lender; or (j) to any rating agency when required by it (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Information relating to the Borrower received by it from such Lender). In addition, any Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement, the other Financing Documents, the Commitments, and the Funding. For the purposes of this Section 10.17 , “ Information ” means written information that the Borrower furnishes to any Agent or Lender after the date hereof (and designated at the time of delivery thereof in writing as confidential) pursuant to or in connection with any Financing Document, relating to the assets and business of the Borrower, but does not include any such information that (i) is or becomes generally available to the public other than as a result of a breach by such Agent or Lender of its obligations hereunder, (ii) is or becomes available to such Agent or Lender from a source other than the Borrower that is not, to the knowledge of such Agent or Lender, acting in violation of a confidentiality obligation with the Borrower or (iii) is independently compiled by any Agent or Lender, as evidenced by their records, without the use of the Information. Any Person required to maintain the confidentiality of Information as provided in this Section 10.17 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

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Section 10.18  Waiver of Consequential Damages, Etc . Except as otherwise provided in Section 10.08 ( Indemnification by the Borrower ) for the benefit of any Indemnitee, to the fullest extent permitted by applicable Law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Financing Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Financing Documents or the transactions contemplated hereby or thereby.

 

Section 10.19  Waiver of Litigation Payments . To the extent that the Borrower may, in any action, suit or proceeding brought in any of the courts referred to in Section 10.02(b) ( Applicable Law; Jurisdiction; Etc. – Submission to Jurisdiction ) or elsewhere arising out of or in connection with this Agreement or any other Financing Document to which it is a party, be entitled to the benefit of any provision of law requiring any Lender or any Agent in such action, suit or proceeding to post security for the costs of such Person or to post a bond or to take similar action, the Borrower hereby irrevocably waives such benefit, in each case to the fullest extent now or in the future permitted under the laws of New York or, as the case may be, the jurisdiction in which such court is located.

 

[Remainder of page intentionally blank. Next page is signature page.]

 

123


 

IN WITNESS WHEREOF, the parties hereto have caused this Senior Credit Agreement to be executed by their respective officers as of the day and year first above written.

 

 

HEARTLAND GRAIN FUELS, L.P. ,

 

as Borrower

 

By:

Dakota Fuels, Inc.

 

Its:

General Partner

 

 

 

By

:/s/ Revis L. Stephenson III

 

 

 

Name: Revis L. Stephenson III

 

 

Title:Chairman

 


 

 

WESTLB AG, NEW YORK BRANCH ,

 

as Lead Arranger, Sole Bookrunner and Syndication Agent

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 

Name: Michael Pantelogianis

 

 

Title:   Director

 

 

 

By:

/s/ Paul Vastola

 

 

 

Name:  Paul Vastola

 

 

Title:    Director

 

 

 

WESTLB AG, NEW YORK BRANCH ,

 

as Administrative Agent

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 

Name: Michael Pantelogianis

 

 

Title:   Director

 

 

 

By:

/s/ Paul Vastola

 

 

 

Name:  Paul Vastola

 

 

Title:    Director

 

 

 

WESTLB AG, NEW YORK BRANCH ,

 

as Collateral Agent

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 

Name: Michael Pantelogianis

 

 

Title:   Director

 

 

 

By:

/s/ Paul Vastola

 

 

 

Name:  Paul Vastola

 

 

Title:    Director

 


 

 

WESTLB AG, NEW YORK BRANCH ,

 

as Lender

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 

Name: Michael Pantelogianis

 

 

Title:   Director

 

 

 

By:

/s/ Paul Vastola

 

 

 

Name:  Paul Vastola

 

 

Title:    Director

 

 

 

WESTLB AG, NEW YORK BRANCH ,

 

as Issuing Bank

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 

Name: Michael Pantelogianis

 

 

Title:   Director

 

 

 

By:

/s/ Paul Vastola

 

 

 

Name:  Paul Vastola

 

 

Title:    Director

 


 

 

MARSHALL FINANCIAL GROUP, LLC,

 

as Lender

 

 

 

By:

/s/ James F. Clifford

 

 

 

Name: James F. Clifford

 

 

Title:   EVP

 


 

 

BANCO SANTANDER, S.A.,

 

NEW YORK BRANCH

 

 

as Lender

 

 

 

By:

/s/ Ignacio Campillo

 

 

 

Name: Ignacio Campillo

 

 

Title:   Executive Director

 

 

 

Grupo Santander

 

 

 

By:

/s/ Paul J. Lammey

 

 

 

Name: Paul J. Lammey

 

 

Title:   Executive Director

 

 

 

Grupo Santander

 


 

 

FARM CREDIT BANK OF TEXAS,

 

as Lender

 

 

 

By:

/s/ Horace R. Harrod

 

 

 

Name: Horace R. Harrod

 

 

Title:   Vice President

 


 

 

COÖPERATIEVE CENTRALE RAIFFEISEN-

 

BOERENLEENBANK B.A., “RABOBANK

 

NEDERLAND”, NEW YORK BRANCH,

 

as Lender

 

 

 

By:

/s/ Jeff Bliss

 

 

 

Name: Jeff Bliss

 

 

Title:   Vice President

 

 

 

By:

/s/ Brett Delfino

 

 

 

Name: Brett Delfino

 

 

Title:   Executive Director

 


 

 

NORDKAP BANK AG,

 

as Lender

 

 

 

By:

/s/ Niklaus Harler

 

 

 

Name: Niklaus Harler

 

 

Title:   CEO

 

 

 

By:

/s/ Batchimeg Gadola

 

 

 

Name: Batchimeg Gadola

 

 

Title:   Transactor

 


 

Exhibit A

 

“ Aberdeen I Plant ” means the existing ethanol production facility owned by the Borrower and located in Aberdeen, South Dakota, with a nameplate capacity of approximately 9 million gallons-per-year of denatured ethanol, including the respective Site and all buildings, structures, improvements, easements and other property related thereto.

 

“ Aberdeen II License Agreement ” means that certain License Agreement dated as of July 14, 2006, between the Borrower and the Technology License Provider, as amended by the Consent and Agreement, dated as of October 1, 2007, between the Borrower, the Technology License Provider and the Collateral Agent.

 

“ Aberdeen II Plant ” means the expansion ethanol production facility to be constructed and owned by the Borrower and located in the same location as the existing Aberdeen plant in Aberdeen, South Dakota, with a nameplate capacity of approximately 40 million gallons-per-year of denatured ethanol, including the Site and all buildings, structures, improvements, easements and other property related thereto.

 

“ Aberdeen Grain Elevator Lease ” means that certain Lease Agreement, dated as of October 1, 2007, between the Borrower and South Dakota Wheat Growers Association, relating to the grain elevator for the Aberdeen Plants.

 

“ Aberdeen Insurance and Condemnation Proceeds Account ” has the meaning provided in Section 3.01(a)(ix) of the Accounts Agreement.

 

“ Aberdeen Mortgage ” means the Mortgage—Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits, in form and substance reasonably satisfactory to the Lenders, to be made by the Borrower to the Collateral Agent for the benefit of the Senior Secured Parties in respect of the Sites for the Aberdeen Plants.

 

“ Aberdeen Plants ” means, collectively, the Aberdeen I Plant and the Aberdeen II Plant.

 

“ Aberdeen Subordination, Non-Disturbance and Attornment Agreement ” means that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of October 1, 2007, among COBANK, ACB, a/k/a CoBank, as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Aberdeen Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“ Acceptable Bank ” means a bank whose long-term unsecured and unguaranteed debt is rated at least “A-” (or the then-equivalent rating) by S&P or at least “A3” (or the then-equivalent rating) by Moody’s.

 


 

“ Account Collateral ” has the meaning provided in Section 2.07 ( Grant of First-Priority Security Interest ) of the Accounts Agreement.

 

“ Account Debtor ” means the Person that is obligated on or under any Account owing to the Borrower.

 

“ Accounts ” means all “accounts” as that term is defined in Section 9-102 of the UCC, now or hereafter owned by the Borrower.

 

“ Accounts Agreement ” means that certain Accounts Agreement dated as of the date hereof among the Borrower, the Accounts Bank, as accounts bank and securities intermediary, the Collateral Agent, the Administrative Agent, and the Bond Trustee on behalf of the Second Lien Claimholders (as defined in the Intercreditor Agreement).

 

“ Accounts Bank ” means Amarillo National Bank, not in its individual capacity, but solely as depositary bank and securities intermediary under the Accounts Agreement, and includes each other Person that may, from time to time, be appointed as successor Accounts Bank pursuant to and in accordance with the Accounts Agreement.

 

“ Accounts Bank Fee Letter ” has the meaning provided in Section 1.01 of the Accounts Agreement.

 

“ Additional Project Document ” means each contract, agreement, letter agreement or other instrument to which the Borrower becomes a party after the date hereof, other than any document under which the Borrower (a) could not reasonably be expected to have obligations or liabilities in the aggregate in excess of two million Dollars ($2,000,000), or be entitled to receive revenues in the aggregate in excess of two million Dollars ($2,000,000), in either case in value in any twelve (12) month period and (b) a termination of which could not reasonably be expected to result in a Material Adverse Effect; provided , that for the purposes of this definition, any series of related transactions (other than transactions, including hedging transactions, relating to the sale of Products or the purchase of corn and natural gas and Interest Rate Protection Agreements) shall be considered as one transaction, and all contracts, agreements, letter agreements or other instruments in respect of such transactions shall be considered as one contract, agreement, letter agreement or other instrument, as applicable.

 

“ Administrative Agent ” means WestLB, not in its individual capacity but solely as administrative agent for the Lenders hereunder and under the other Financing Documents, and includes each other Person that may, from time to time, be appointed as successor Administrative Agent pursuant to Section 9.06 ( Resignation or Removal of Agent ) .

 

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“ Administrative Services Agreement ” means that certain Administrative Services Agreement, dated as of October 1, 2007, between the Sponsor and the Borrower.

 

“ Affiliate ” of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person (a) possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise or (b) owns at least ten percent (10%) of the Equity Interests in such Person.

 

“ Agency Authorization Letter Agreement ” means that certain Agency Agreement, dated February 12, 2007, among the Borrower, as “Party Y”, Energy Management & Consulting Services, LLC, as “Party X” and BP Canada Energy Marketing Corp., pursuant to which Energy Management & Consulting Services, LLC is authorized to make purchases of natural gas from BP Canada on behalf of the Borrower pursuant to the Gas Purchase and Sale Agreement.

 

“ Agent Parties ” has the meaning provided in Section 10.11(i) (Notices and Other Communications) .

 

“ Agents ” means, collectively, the Administrative Agent, the Collateral Agent and the Accounts Bank.

 

“ Aggregate Construction Loan Commitment ” means ninety million seven hundred thousand Dollars ($90,700,000), as the same may be reduced in accordance with Section 2.08 ( Termination or Reduction of Commitments ) .

 

“ Aggregate Loan Commitment ” means ninety-eight million seven hundred thousand Dollars ($98,700,000), as the same may be reduced in accordance with Section 2.08 ( Termination or Reduction of Commitments ).

 

“ Aggregate Pre-Conversion Cash Sweeps ” means the aggregate of all prepayments made pursuant to priority twelfth of Section 6.01(b) of the Accounts Agreement and priority seventh of Section 2.06(e) (Funding of Loans) of this Agreement.

 

“ Aggregate Pre-Conversion Distributions ” means the aggregate of all payments made pursuant to priority tenth , and subsection (A) of priority twelfth, of Section 6.01(b) of the Accounts Agreement, and priority seventh of Section 2.06(e) (Funding of Loans ) of this Agreement.

 

3


 

“ Aggregate Term Loan Commitment ” means ninety million seven hundred thousand Dollars ($90,700,000), as the same may be reduced in accordance with Section 2.08 ( Termination or Reduction of Commitments ) .

 

“ Aggregate Working Capital Loan Commitment ” means eight million Dollars ($8,000,000), as the same may be reduced in accordance with Section 2.08 (Termination or Reduction of Commitments) .

 

“ Agreement ” has the meaning set forth in the Preamble.

 

“ Agricultural Market Consultant ” means Muse, Stancil & Co., or any replacement agricultural market consultant appointed by the Administrative Agent.

 

“ Ancillary Documents ” means, with respect to each Additional Project Document, the following, each of which shall be in form and substance reasonably satisfactory to the Administrative Agent and, in the case of items (i), (ii) and (iv), the Collateral Agent:

 

(i)                                      each security instrument and agreement necessary or desirable to grant to the Collateral Agent a first priority perfected Lien (subject only to Permitted Liens) in such Additional Project Document and all property interests received by the Borrower in connection therewith;

 

(ii)                                   all recorded UCC financing statements and other filings required to perfect such Lien;

 

(iii)                                if reasonably requested by the Administrative Agent, opinions of counsel for the Borrower addressing such matters relating to such document, each applicable Security Document and Lien as the Administrative Agent may reasonably request;

 

(iv)                               if reasonably requested by the Administrative Agent, the Borrower shall use its best efforts to obtain a Consent with respect to such Additional Project Document from each Project Party thereto, and shall use its best efforts to obtain an opinion of counsel to such Project Party addressing matters relating to such Additional Project Document and such Consent as the Administrative Agent may reasonably request; and

 

(v)                                  certified evidence of the authorization of such Additional Project Document by the Borrower.

 

4


 

“ Applicable Margin ” means, with respect to the Construction Loans or Term Loans, the Construction/Term Applicable Margin and, with respect to the Working Capital Loans, the Working Capital Applicable Margin.

 

“ Application for Payment ” means, with respect to the Aberdeen Design-Build Agreement, an “Application for Payment” as defined therein, and with respect to the Huron Design-Build Agreement, such term or any analogous term.

 

“ Approved Fund ” means, with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“ Auditors ” means those nationally recognized independent auditors selected by the Borrower and approved by the Administrative Agent.

 

“ Authorized Officer ” means (i) with respect to any Person that is a corporation, the chief executive officer, the chief operating officer, the president, any vice president, the treasurer or the chief financial officer of such Person, (ii) with respect to any Person that is a partnership, an Authorized Officer of a general partner of such Person, (iii) with respect to any Person that is a limited liability company, any manager, the president, any vice president, the treasurer or the chief financial officer of such Person, or an Authorized Officer of the managing member of such Person, or (iv) with respect to any Person, such other representative of such Person that is approved by the Administrative Agent in writing who, in each such case, has been named as an Authorized Officer on a certificate of incumbency of such Person delivered to the Administrative Agent and the Accounts Bank on or after the date hereof.

 

“ Base Rate ” means, for any day, a fluctuating rate per annum equal to the higher of (i) the Federal Funds Effective Rate plus one-half of one percent (0.50%) and (ii) the rate of interest in effect for such day as publicly announced from time to time by WestLB as its “prime rate.”  The “prime rate” is a rate set by WestLB based upon various factors including WestLB’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by WestLB shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“ Base Rate Loan ” means any Loan bearing interest at a rate determined by reference to the Base Rate and the provisions of Article II ( Commitments and Funding ) .

 

5


 

“ Blocked Account Agreement ” means an agreement, in substantially the form attached hereto as Exhibit M (or, if requested by the Borrower, such other form reasonably satisfactory to the Administrative Agent and the Collateral Agent), with respect to a Local Account among the Borrower, the bank with whom such Local Account was opened and the Collateral Agent.

 

“ Blocked Account Collateral ” has the meaning set forth in each Blocked Account Agreement.

 

“ Bond Collateral Documents ” has the meaning provided in Section 1.01 of the Accounts Agreement.

 

“ Bond Funds ” has the meaning provided in Section 1.01 of the Accounts Agreement.

 

“ Bond Indenture ” means that certain Bond Trust Indenture, dated as of October 1, 2007, between the Issuer and the Bond Trustee pursuant to which the Issuer issues the Bonds.

 

“ Bond Proceeds Sub-Account ” has the meaning provided in Section 3.01(a)(xiii) of the Accounts Agreement.

 

“ Bonds ” means those certain Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A in the amount of $19,000,000.

 

“ Bond Trustee ” means Wells Fargo Bank, National Association, not in its individual capacity but solely in its capacity as trustee of the Bonds under the Bond Indenture, the other Subordinated Debt Documents, the Accounts Agreement and the Intercreditor Agreement, and includes each other Person that may, from time to time, be appointed as successor Bond Trustee pursuant to the Bond Indenture.

 

“ Borrower ” has the meaning set forth in the Preamble.

 

“ Borrower LP Agreement ” means that certain Amended and Restated Agreement of Limited Partnership, dated as of October 1, 2007, entered into by the GP Pledgor as general partner, and the LP Pledgor as limited partner.

 

“ Borrowing Base ” means, on any given date, an amount equal to, eighty percent (80%) of the sum of, without duplication:

 

(i)                                      the face amount (less reserves, maximum discounts, credits and allowances that may be taken by or granted to the Account Debtor

 

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thereof in connection therewith) of all Eligible Accounts for the Project that are set forth in the Borrowing Base Certificate then most recently delivered by the Borrower to the Administrative Agent; and

 

(ii)                                   the Value of no more than sixty (60) days of Eligible Inventory for the Project (less reserves, maximum discounts, credits and allowances that may be taken by or granted to the Account Debtor thereof in connection therewith) as set forth in the Borrowing Base Certificate then most recently delivered by the Borrower to the Administrative Agent.

 

“ Borrowing Base Certificate ” means a certificate setting forth the Borrowing Base as of the date of such certificate, substantially in the form of Exhibit N .

 

“ Business Day ” means:

 

(i)                                      any day that is neither a Saturday or Sunday nor a day on which commercial banks are authorized or required to be closed in either Minneapolis, Minnesota or New York, New York; and

 

(ii)                                   relative to the making, continuing, prepaying or repaying of any Eurodollar Loans, any day on which dealings in Dollars are carried on in the London interbank market.

 

“ Business Interruption Insurance Proceeds ” means all proceeds of any insurance policies required pursuant to this Agreement or otherwise obtained with respect to the Borrower or the Project relating to business interruption or delayed start-up.

 

“ Capitalized Lease Liabilities ” of any Person means all monetary obligations of such Person under any leasing or similar arrangement that, in accordance with GAAP, would be classified as capitalized leases on a balance sheet of such Person or otherwise disclosed as such in a note to such balance sheet and, for purposes of the Financing Documents, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“ Cash Equivalents ” means:

 

(a)                                   readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof, or obligations unconditionally guaranteed by the full faith and credit of the

 

7


 

government of the United States, in each case maturing within one (1) year from the date of acquisition thereof;

 

(b)                                  securities issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than one (1) year from the date of acquisition thereof and, at the time of acquisition, having a rating of AA- or higher from S&P or Aa3 or higher from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(c)                                   investments in commercial paper maturing within one hundred eighty (180) days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(d)                                  investments in certificates of deposit, banker’s acceptances and time deposits maturing within two hundred and seventy (270) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America, any State thereof, any country that is a member of the Organization for Economic Co-Operation and Development or any political subdivision thereof, that has a combined capital and surplus and undivided profits of not less than five hundred million Dollars ($500,000,000);

 

(e)                                   fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (d) of this definition; and

 

(f)                                     investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (e) of this definition.

 

“ Cash Flow ” means, for any period, the sum (without duplication) of the following:  (i) all cash paid to the Borrower during such period in connection with the Ethanol Marketing Agreement, Co-Product Marketing Agreement and any other sales of

 

8


 

Products, (ii) all interest and investment earnings paid to the Borrower or the Project Accounts during such period on amounts on deposit in the Project Accounts, (iii) all cash paid to the Borrower during such period as Business Interruption Insurance Proceeds, and (iv) all other cash paid to the Borrower during such period; provided , however , that Cash Flow shall not include any proceeds of the Loans or any other Indebtedness incurred by the Borrower; Insurance Proceeds; Condemnation Proceeds; any equity contributions; proceeds from any disposition of assets of the Project or the Borrower (other than Products); tax refunds; amounts received, whether by way of a capital contribution or otherwise, from any holders of Equity Interests of the Borrower; and any other extraordinary or non-cash income or receipt of the Borrower under GAAP.

 

“ Cash Flow Available for Debt Service ” means, for any period, an amount equal to the amount of Cash Flow deposited in the Revenue Account during such period minus all amounts paid during such period pursuant to priorities first and second of Section 6.01(c) of the Accounts Agreement.

 

“ Casualty Event ” means an event that causes the Project, or any material portion thereof, to be damaged, destroyed or rendered unfit for normal use for any reason whatsoever.

 

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9604, et seq.), as amended, and rules, regulations, standards guidelines and publications issued thereunder.

 

“ Change of Control ” means any transaction or series of related transactions (including any merger or consolidation) the result of which is that (i) the Sponsor fails to maintain, directly, legally or beneficially, one hundred percent (100%) of the Equity Interests of the LP Pledgor, or (ii) the Pledgors fail to maintain, directly, legally or beneficially, one hundred percent (100%) of the Equity Interests of the Borrower (other than any such Equity Interests of the Independent Member of the LP Pledgor).

 

“ Change Order ” means each “Change Order” (if any) as described in the Design-Build Agreement.

 

“ Closing Date ” means the date on which all the conditions set forth in Section 6.01 ( Conditions to Closing and First Funding of Construction Loans ) have been satisfied or waived.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, including the regulations, technical advice, published rulings and private letter rulings adopted, proposed, published or otherwise promulgated in connection therewith.

 

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“ Collateral ” means all assets of and Equity Interests in the Borrower, whether now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document then in effect or contemplated to be in effect.

 

“ Collateral Agent ” means WestLB, not in its individual capacity but solely in its capacity as collateral agent for the Senior Secured Parties under the Financing Documents, and includes each other Person that may, from time to time, be appointed as successor Collateral Agent pursuant to Section 9.06 ( Resignation or Removal of Agent ) .

 

“ Commitment Fee ” has the meaning provided in Section 3.13(a) ( Fees ) .

 

“ Commitment Percentage ” means, as to any Lender at any time, such Lender’s Construction Loan Commitment Percentage, Term Loan Commitment Percentage or Working Capital Loan Commitment Percentage, as the context may require.

 

“ Commitments ” means, with respect to each Lender, as applicable, such Lender’s Construction Loan Commitment, Term Loan Commitment or Working Capital Loan Commitment, as the context may require.

 

“ Commodity Hedging Arrangements ” means any arrangement to hedge the price of corn purchases, ethanol sales, Distillers Grains sales or natural gas purchases.

 

“ Commodity Risk Management Plan ” means the risk management plan prepared by the Borrower and approved by the Administrative Agent pursuant to Section 7.01(v) ( Affirmative Covenants - Commodity Hedging Programs ) setting forth terms and conditions relating to any Commodity Hedging Arrangements from time to time proposed to be entered into by the Borrower, including any updates made to such risk management plan with the approval of the Administrative Agent.

 

“ Communications ” has the meaning provided in Section 10.11(g) (Notices and Other Communications) .

 

“ Condemnation Proceeds ” means any amounts and proceeds of any kind (including instruments) payable in respect of any Event of Taking.

 

“ Confidential Information Memorandum ” means the information memorandum, dated July 2007, together with any updates related thereto, describing the Project.

 

“ Consents ” means each Consent and Agreement entered into among a Project Party, the Borrower, and the Collateral Agent, each in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent.

 

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“ Construction Account ” has the meaning provided in Section 3.01(a)(i) of the Accounts Agreement.

 

“ Construction Budget ” means the budget attached hereto as Schedule 6.01(w)(i) that sets forth all categories of costs and expenses required in connection with the development, construction, start-up, and testing of the Aberdeen II Plant, including all construction costs, all costs under the Design-Build Agreement, all interest, taxes and other carrying costs related to the Construction Loans, and costs related to the construction of the facilities described under the Project Documents, as updated from time to time in accordance with Section 7.02(t) ( Negative Covenants - Construction Budget ) .

 

“ Construction Loan ” has the meaning provided in Section 2.01(a) .

 

“ Construction Loan Commitment Percentage ” means, as to any Lender at any time, the percentage that such Lender’s Construction Loan Commitment then constitutes of the Aggregate Construction Loan Commitment.

 

“ Construction Loan Commitments ” means, with respect to each Lender, the commitment of such Lender to make Construction Loans, as set forth opposite the name of such Lender in Schedule 2.01 , as the same may be reduced in accordance with Section 2.08 (Termination or Reduction of Commitments) .

 

“ Construction Loan Funding Notice ” means each request for Funding of Construction Loans in the form of Exhibit E delivered in accordance with Section 2.05 ( Notice of Fundings ) .

 

“ Construction Loan Maturity Date ” means the earlier of (a) the Conversion Date and (b) the Conversion Date Certain.

 

“ Construction Notes ” means the promissory notes of the Borrower, substantially in the form of Exhibit B , evidencing Construction Loans.

 

“ Construction/Term Applicable Margin ” means (a) with respect to the Eurodollar Loans, three and one-half percent (3.50%) and (b) with respect to the Base Rate Loans, two and one-half percent (2.50%).

 

“ Construction/Term Lenders ” means those Lenders of Construction Loans and Term Loans, as identified on Schedule 2.01 , and each other Person that acquires the rights and obligations of any such Lender pursuant to Section 10.03 ( Assignments ) .

 

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“ Consultants ” means the Independent Engineer, the Insurance Consultant, the Ethanol Market Consultant, the Environmental Consultant and the Agricultural Market Consultant.

 

“ Contest ” means, with respect to any matter or claim involving any Person, that such Person is contesting such matter or claim in good faith and by appropriate proceedings timely instituted; provided that the following conditions are satisfied:  (a) such Person has posted a bond or cash collateral (or other security acceptable to the Administrative Agent) for the full amount of such claim (or such lower amount as is acceptable to the Administrative Agent); (b) during the period of such contest, the enforcement of any contested item is effectively stayed; (c) none of such Person or any of its officers, directors or employees, or any Senior Secured Party or its respective officers, directors or employees, is or would reasonably be expected to become subject to any criminal liability or sanction in connection with such contested items; and (d) such contest and any resultant failure to pay or discharge the claimed or assessed amount during the pendency of such contest does not, and could not reasonably be expected to (i) result in a Material Adverse Effect or (ii) involve a material risk of the sale, forfeiture or loss of, or the creation, existence or imposition of any Lien on, any of the Collateral.

 

“ Contingency Line Item ” means the Line Item in the Construction Budget identified as “owner’s contingency” that is intended to cover the eventuality of unforeseen Project Costs for the Aberdeen II Plant.

 

“ Contingency Reserve Account ” has the meaning provided in Section 3.01(a)(xii) of the Accounts Agreement.

 

“ Contingency Reserve Required Amount ” means:

 

(i)                                      on any date prior to the Conversion Date, ten million Dollars ($10,000,000) minus the unused portion of the Contingency Line Item in the Construction Budget; and

 

(ii)                                   on and after the Conversion Date, two million five hundred thousand Dollars ($2,500,000).

 

“ Contingent Liabilities ” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other

 

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Person. The amount of any Person’s obligation under any contingent liabilities shall (subject to any limitation set forth therein) be deemed for purposes of this Agreement to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby; provided , however , that if the maximum amount of the debt, obligation or other liability guaranteed thereby has not been established, the amount of such contingent liability shall be the maximum reasonably anticipated amount of the debt, obligation or other liability; provided , further , that any agreement to limit the maximum amount of such Person’s obligation under such contingent liability shall not, of and by itself, be deemed to establish the maximum reasonably anticipated amount of such debt, obligation or other liability.

 

“ Contract Times ” means the “Contract Times” (as defined in the Design-Build Agreement).

 

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“ Conversion Date ” means the Business Day upon which (i) all the conditions precedent set forth in Section 6.04 ( Conditions to Term Loan Funding ) shall have been satisfied (or waived in accordance with the terms of this Agreement) and (ii) the Construction Loans are converted to Term Loans.

 

“ Conversion Date Certain ” means March 31, 2008.

 

“ Conversion Date Funding Notice ” means the request for Funding on the Conversion Date in the form of Exhibit F delivered in accordance with Section 2.05 ( Notice of Fundings ) .

 

“ Co-Product Marketing Agreement ” means that certain Co-Product Marketing Agreement, dated as of May 9, 2007, between the Borrower and Dakotaland Feeds, LLC.

 

“ Dakotaland Administrative Services Agreement ” means that certain Administrative Services Agreement, dated as of May 1, 2007, between the Borrower and Dakotaland Feeds, LLC.

 

“ DDG ” means dried distillers grains produced by the Borrower at the Project.

 

“ Debt Service ” means, for any period, the sum of (i) all fees (including Fees) scheduled to become due and payable during such period to the Senior Secured Parties, (ii) interest on the Loans (taking into account any Interest Rate Protection Agreements) scheduled to become due and payable during such period to the Senior Secured Parties,

 

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(iii) principal payments of the Loans (excluding the Required Cash Sweep and any other mandatory prepayments) scheduled to become due and payable during such period to the Senior Secured Parties and (iv) all payments due by the Borrower pursuant to Section 4.03 ( Increased Eurodollar Loan Costs ) and Section 4.07(a) ( Taxes )  with respect to such scheduled principal, interest and fees.

 

“ Debt Service LC Waiver Letter ” means, with respect to any Debt Service Reserve Letter of Credit, a waiver letter from the issuer thereof in substantially the form of Exhibit P .

 

“ Debt Service Reserve Account ” has the meaning set forth in Section 3.01(a)(vii) of the Accounts Agreement.

 

“ Debt Service Reserve Letter of Credit ” means an irrevocable, standby letter of credit issued by an Acceptable Bank in favor of, and in form and substance reasonably satisfactory to, the Collateral Agent and the Administrative Agent, and in respect of which a Debt Service LC Waiver Letter in favor of, and satisfactory to, the Collateral Agent has been delivered.

 

“ Debt Service Reserve Required Amount ” means, as of any date, scheduled Debt Service payable in respect of the succeeding six (6) months.

 

“ Default ” means any condition, occurrence or event that, after notice or passage of time or both, would be an Event of Default.

 

“ Default Rate ” has the meaning set forth in Section 3.06 ( Default Interest Rate ).

 

“ Deferred Approvals ” has the meaning provided in Section 5.03(a)(iii) ( Representations and Warranties - Governmental Approvals ) .

 

“ Deferred Contracts ” has the meaning provided in Section 5.11(a)(iv) ( Representations and Warranties - Contracts ) .

 

“ Design-Build Agreement ” means that certain Agreement Between Owner and Design/Builder on the Basis of a Stipulated Price, dated as of July 14, 2006, between the Borrower and Design-Build Contractor, including without limitation the “General Conditions” (as defined therein), as amended by the Consent and Agreement, dated as of October 1, 2007, between the Borrower, the Design-Build Contractor and the Collateral Agent.

 

“ Design-Build Contractor ” means ICM, Inc., a Kansas corporation.

 

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“ Distillers Grains ” means DDG, WDG, and any other form of distillers grain products (including syrup) marketed by the Borrower from time to time.

 

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

 

“ Domestic Office ” means, relative to any Lender, the office of such Lender designated on Schedule 2.01 or designated in the Lender Assignment Agreement pursuant to which such Lender became a Lender hereunder or such other office of a Lender (or any successor or assign of such Lender) within the United States as may be designated from time to time by written notice from such Lender, as the case may be, to the Borrower and the Administrative Agent.

 

“ Drawdown Schedule ” means, with respect to the Construction Loans, the schedule set forth on Schedule 6.03(a)(v) , as the same may be amended from time to time with the approval of the Administrative Agent and the Independent Engineer.

 

“ Eligible Accounts ” means all Accounts of the Borrower each of which meets the following requirements:

 

it arises from either (i) the delivery of Products by the Borrower, which delivery has been fully performed and, if applicable, acknowledged and/or accepted by the Account Debtor with respect thereto, or (ii) the sale or lease of goods by the Borrower, and if it arises from the sale of goods, such goods have been shipped or delivered to the Account Debtor thereof;

 

it is a valid, legally enforceable obligation of the Account Debtor thereunder, and is not subject to any reserve, discount, credit, allowance (except any reserve, discount, credit or allowance that has been deducted in computing the net amount thereof), offset, counterclaim or other defense on such Account Debtor’s part or to any claim on such Account Debtor’s part denying liability thereunder in whole or in part;

 

it is subject to a perfected Lien in the Collateral Agent’s favor, for the benefit of the Senior Secured Parties, and is not subject to any other Lien, except for Permitted Liens;

 

it is evidenced by an invoice (dated no later than the date of shipment to the Account Debtor or performance and having

 

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a due date not more than sixty (60) days after the date of such invoice) rendered to such Account Debtor, and is not evidenced by any instrument or chattel paper;

 

it is payable in Dollars;

 

it is not owing by any Governmental Authority;

 

it is not owing by any Account Debtor residing, located or having its principal activities or place of business outside the United States, unless the sale of goods giving rise to such Account is credit enhanced by means of a letter of credit, bankers’ acceptance or other credit support that is satisfactory to the Administrative Agent and, if required by the Administrative Agent, has been delivered to the Administrative Agent and is directly drawable by the Administrative Agent;

 

it is not owing by any Account Debtor involved in any Insolvency or Liquidation Proceeding or with respect to which any Borrower has received notice of an imminent Insolvency or Liquidation Proceeding or a material impairment of the financial condition of such Account Debtor;

 

it is not owing by any Affiliate of the Borrower, other than pursuant to a Project Document between the Borrower and an Affiliate thereof;

 

it is not unpaid more than sixty (60) days after the invoice date;

 

it is not owing by an Account Debtor that has amounts outstanding more than sixty (60) days after the due date of any invoice;

 

it is not an Account arising in a transaction where goods are sold on consignment or are sold pursuant to a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional; and

 

it is not an Account as to which the Administrative Agent, at any time or times hereafter, determines, in its reasonable judgment and in good faith, that the prospect of payment or

 

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performance by the Account Debtor thereof is or will be impaired in any material respect.

 

An Account of the Borrower that is at any time an Eligible Account, but which subsequently fails to meet any of the foregoing requirements, shall immediately cease to be an Eligible Account; provided , that if such an ineligible Account subsequently meets all of the foregoing requirements, it shall again be deemed an Eligible Account.

 

“ Eligible Assignee ” means (a) any Lender, (b) an Affiliate of any Lender, (c) any Person that a Lender merges into, consolidates with or is consolidated into, (d) any Person that acquires substantially all of the assets of a Lender, (e) an Approved Fund, and (f) any other Person (other than a natural person) approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed).

 

“ Eligible Inventory ” means the Inventory of the Borrower that meets each of the following requirements:

 

(i)                                      in the case of Inventory consisting of corn or other grain feedstock, or denaturant, such corn or other grain feedstock or denaturant that is readily usable for the operation of the Project in the ordinary course of business;

 

(ii)                                   in the case of Inventory consisting of Products, such Products that are readily marketable by the Project in the ordinary course of business;

 

(iii)                                in the case of goods held for sale, the value thereof is adjusted to its then-current market value;

 

(iv)                               it is owned by the Borrower and is subject to a perfected Lien in the Collateral Agent’s favor, for the benefit of the Senior Secured Parties, and is not subject to any other Lien, except for Permitted Liens;

 

(v)                                  it is not consigned Inventory;

 

(vi)                               it is located only at the Sites or at such other location as is approved in writing by the Administrative Agent; and

 

(vii)                            the Administrative Agent, in its reasonable judgment and in good faith, has not determined that it is unacceptable or should be price-adjusted in any material respect due to age, type, quality, category and/or quantity.

 

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Any of the Inventory of the Borrower that is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall immediately cease to be Eligible Inventory; provided that if such ineligible Inventory subsequently meets all of the foregoing requirements, it shall again be deemed Eligible Inventory.

 

“ Energy Management Agreement ” means that certain Energy Management Agreement, dated as of February 1, 2007, between Energy Management & Consulting Services, LLC and the Borrower.

 

“ Environmental Affiliate ” means any Person, only to the extent of, and only with respect to matters or actions of such Person for which, the Borrower could reasonably be expected to have liability as a result of the Borrower retaining, assuming, accepting or otherwise being subject to liability for Environmental Claims relating to such Person, whether the source of the Borrower’s obligation is by contract or operation of Law.

 

“ Environmental Approvals ” means any Governmental Approvals required under applicable Environmental Laws.

 

“ Environmental Claim ” means any written notice, claim, demand or similar written communication by any Person alleging potential liability or requiring or demanding regulatory compliance or remedial or responsive measures (including potential liability for investigatory costs, cleanup, remediation and mitigation costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties) in each such case (x) either (i) with respect to environmental contamination-related liabilities or obligations with respect to which the Borrower could reasonably be expected to be responsible that are, or could reasonably be expected to be, in excess of two hundred thousand Dollars ($200,000) in the aggregate, or (ii) that has or could reasonably be expected to result in a Material Adverse Effect and (y) arising out of, based on or resulting from (i) the presence, release or threatened release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such Person; (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Laws or Environmental Approvals; or (iii) personal injury or damage to property as a result of exposure to Materials of Environmental Concern.

 

“ Environmental Consultant ” means R.W. Beck, Inc., or any replacement environmental consultant appointed by the Administrative Agent with the approval of the Required Lenders.

 

“ Environmental Laws ” means all Laws applicable to the Project relating to pollution or protection of human health, safety or the environment (including ambient air,

 

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surface water, ground water, land surface or subsurface strata), including Laws relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise applicable to the Project relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, management, remediation or handling of Materials of Environmental Concern.

 

“ Environmental Site Assessment Report ” means, a Phase I environmental site assessment report prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent, which report shall comply with ASTM standard 1527-05 (with such modifications thereto as may reasonably be requested by the Borrower and are reasonably acceptable to the Administrative Agent), and a Phase II environmental site assessment reasonably acceptable to the Administrative Agent, addressing any recognized environmental conditions or other areas of concern identified in the relevant Phase I report if in the reasonable determination of the Administrative Agent, acting in consultation with the Independent Engineer, a Phase II assessment is warranted.

 

“ Equator Principles ” means The Equator Principles – An Industry Framework for Financial Institutions to Manage Environmental and Social Issues in Project Financing (commonly referred to as “The Equator Principles”).

 

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination, in each such case including all voting rights and economic rights related thereto.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

 

“ ERISA Affiliate ” means any Person, trade or business that, together with the Borrower, is or was treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

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“ Ethanol Market Consultant ” means Muse, Stancil & Co., or any replacement ethanol market consultant appointed by the Administrative Agent.

 

“ Ethanol Marketing Agreement ” means that certain Ethanol Marketing Agreement dated as of November 30, 2000, between the Borrower and Williams Ethanol Services, Inc. D/B/A  Williams Bio-Energy, N/K/A Aventine Renewable Energy, Inc., as amended March 31, 2003 and December 1, 2006.

 

“ Eurodollar Loan ” means any Loan bearing interest at a rate determined by reference to the Eurodollar Rate and the provisions of Article II ( Commitments and Funding ) and Article III ( Repayments, Prepayments, Interest and Fees ) .

 

“ Eurodollar Office ” means, relative to any Lender, the office of such Lender designated as such on Schedule 2.01 or designated in the Lender Assignment Agreement pursuant to which such Lender became a Lender hereunder or such other office of a Lender as designated from time to time by notice from such Lender to the Borrower and the Administrative Agent pursuant to Section 4.04 ( Obligation to Mitigate ) that shall be making or maintaining Eurodollar Loans of such Lender hereunder.

 

“ Eurodollar Rate ” means, for any Interest Period with respect to any Eurodollar Loan, an interest rate per annum equal to the rate per annum obtained by dividing (x) LIBOR for such Interest Period and such Eurodollar Loan, by (y) a percentage equal to (i) 100% minus (ii) the Eurodollar Reserve Percentage for such Interest Period.

 

“ Eurodollar Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the F.R.S. Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”). The Eurodollar Rate for each outstanding Eurodollar Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

 

“ Event of Abandonment ” means any of the following shall have occurred: (i) the abandonment by the Borrower of the development, construction, operation or maintenance of the Project for a period of more than sixty (60) consecutive days (other than as a result of force majeure, an Event of Taking or a Casualty Event), (ii) the suspension of all or substantially all of the Borrower’s activities with respect to the Project, other than as the result of a force majeure, Event of Taking  or Casualty Event, for a period of more than sixty (60) consecutive days, or (iii) any written

 

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acknowledgement by the Borrower of a final decision to take any of the foregoing actions.

 

“ Event of Default ” means any one of the events specified in Section 8.01 ( Events of Default ) .

 

“ Event of Taking ” means any taking, exercise of rights of eminent domain, public improvement, inverse condemnation, condemnation or similar action of or proceeding by any Governmental Authority relating to any material part of the Project with, any Equity Interests of the Borrower, or any other assets thereof.

 

“ Event of Total Loss ” means the occurrence of a Casualty Event affecting all or substantially all of the Project or the assets of the Borrower.

 

“ Excluded Taxes ” means, with respect to any Agent or any Lender or any other recipient of any payment to be made by or on account of any Obligation of the Borrower hereunder, (a) income or franchise Taxes imposed on (or measured by) such Agent’s, Lender’s or other recipient’s net income by the United States, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable office is located, or (b) any branch profits Tax imposed by the United States, or any similar Tax imposed by any other jurisdiction described in clause (a) above or (c) any United States withholding Tax to the extent that it is imposed on amounts payable to such Agent or such Lender at the time such Agent or such Lender becomes a party to this Agreement.

 

“ Existing Plant Debt ” means all outstanding payment obligations of the Borrower pursuant to (i) that certain Master Loan Agreement by and between Dakota Fuels, Inc. and CoBank, ACB, dated October 27, 2005; (ii) that certain Revolving Term Loan Revolver by and between Dakota Fuels, Inc. and CoBank, ACB dated October 27, 2005; (iii) that certain Multiple Advance Term Loan Supplement by and between Dakota Fuels, Inc. and CoBank, ACB dated October 27, 2005; (iv) that certain Master Loan Agreement by and between Borrower and Dakota Fuels, Inc. dated October 27, 2005; (v) that certain Revolving Term Loan Revolver by and between Borrower and Dakota Fuels, Inc. dated October 27, 2005; (vi) that certain Multiple Advance Term Loan Supplement by and between Borrower and Dakota Fuels, Inc. dated October 27, 2005; (vii) that certain Credit Agreement by and between the LP Pledgor and Kruse Investment Company, Inc. dated February 12, 2007 and (viii) that certain Subordinated Promissory Note, dated February 12, 2007, of the Borrower payable to the order of the LP Pledgor.

 

“ Existing Plants ” means, collectively, the Aberdeen I Plant and the Huron Plant.

 

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“ Extraordinary Proceeds Account ” has the meaning provided in Section 3.01(a)(xi) of the Accounts Agreement.

 

“ F.R.S. Board ” means the Board of Governors of the Federal Reserve System or any successor thereto.

 

“ Federal Funds Effective Rate ” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.

 

“ Fee Letters ” means (i) that certain Fee Letter among the Administrative Agent, the Collateral Agent and the Borrower, (ii) the Accounts Bank Fee Letter and (iii) that certain Fee Letter between the Lead Arranger and the Borrower, each dated as of the date hereof and setting forth certain fees that will, from time to time, become due and payable with respect to the Loans and to the Agents.

 

“ Fees ” means, collectively, each of the fees payable by the Borrower for the account of any Lender or Agent pursuant to Section 3.13 ( Fees ) .

 

“ Final Completion Certificate ” means (a) a certificate of the Independent Engineer, in substantially the form of Exhibit Q-1 , or (b) a certificate of the Borrower, in substantially the form of Exhibit Q-2 , in each case confirming that the Final Completion Date has occurred.

 

“ Final Completion Date ” means, with respect to the Aberdeen II Plant, the date (which shall occur on or before the Conversion Date Certain) on which the following conditions have been satisfied, as certified by each of the Borrower and the Independent Engineer in a Final Completion Certificate completed to the reasonable satisfaction of the Administrative Agent:

 

construction of such Plant shall have been completed (other than punch list items) and such Plant shall be ready to grind corn and begin operation for its intended use as an ethanol production facility, and such Plant shall not have adversely impacted the ability of the Existing Plants to perform at or above levels included in the performance assumption for the Existing Plants in the Financial Model;

 

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the Performance Test shall have been completed and shall have demonstrated that such Plant has achieved the Performance Criteria, while meeting air emissions requirements;

 

training shall have been completed for all required personnel for such Plant in accordance with the Design-Build Agreement;

 

the Borrower shall have received a plant operation manual and plant maintenance manual, associated documents, training manuals, final safety plans, and all materials and documents provided by the Design-Build Contractor and other manufacturers, suppliers and vendors for such Plant, and in each case, shall have been verified by the Independent Engineer;

 

the Borrower shall have received final construction drawings for such Plant;

 

all construction costs for such Plant shall have been fully paid and the Administrative Agent shall have received reasonably satisfactory evidence that there are no mechanic’s, workmen’s, materialmen’s or other similar Liens or other claims on any part of such Plant, the relevant Site, or other assets relating to the work or services of such Plant provided by the Design-Build Contractor or any of their subcontractors;

 

the Design-Build Contractor and each subcontractor for such Plant shall have provided all satisfactory Lien waivers;

 

all Necessary Project Approvals required to be obtained at such time with respect to such Plant shall have been obtained;

 

insurance required pursuant to Schedule 7.01(h) and, with respect to the Borrower, any Project Document shall be in place, as confirmed by the Insurance Consultant; and

 

an updated survey for such Plant’s Site has been prepared and is in form and substance satisfactory to the Independent Engineer.

 

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 “ Final Maturity Date ” means, with respect to the Term Loans, the earlier to occur of (a) the date that occurs six (6) years after the Conversion Date and (b) the date that occurs eight (8) years after the Closing Date.

 

“ Financial Model ” means the pro forma financial statements and projections of revenue and expenses and cash flows with respect to the Borrower and the Project for the period from September 1, 2007 through the Fiscal Year ended December 31, 2022, attached hereto as Exhibit K , as the same may be updated by the Borrower with the prior written approval of the Administrative Agent.

 

“ Financial Officer ” means, with respect to any Person, the controller, treasurer or chief financial officer of such Person.

 

“ Financing Documents ” means:

 

(i)                                      this Agreement;

 

(ii)                                   the Accounts Agreement;

 

(iii)                                the Intercreditor Agreement;

 

(iv)                               the Notes;

 

(v)                                  the Security Documents;

 

(vi)                               the Interest Rate Protection Agreements;

 

(vii)                            the Fee Letters;

 

(viii)                         the other financing and security agreements, documents and instruments delivered in connection with this Agreement; and

 

(ix)                                 each other document designated as a Financing Document by the Borrower and the Administrative Agent.

 

“ Fiscal Quarter ” means any quarter of a Fiscal Year.

 

“ Fiscal Year ” means any period of twelve (12) consecutive calendar months ending on September 30.

 

“ Funding ” means the incurrence of each Construction Loan, Term Loan or Working Capital Loan (other than a Working Capital Loan resulting from a draw on a Letter of Credit) made by the Lenders on a single date.

 

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“ Funding Date ” means, with respect to each Funding, the date on which funds are disbursed by the Administrative Agent, on behalf of the relevant Lenders, to the Borrower in accordance with Section 2.06 (Funding of Loans) .

 

“ Funding Notice ” means (i) in the case of a request for a Funding of Construction Loans, a Construction Loan Funding Notice, (ii) in the case of a request for a Funding of Term Loans, the Conversion Date Funding Notice, and (iii) in the case of a request for Funding of Working Capital Loans, a Working Capital Loan Funding Notice.

 

“ GAAP ” means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.

 

“ Gas Purchase and Sale Agreement ” means that certain Base Contract for Sale and Purchase of Natural Gas, dated October 1, 2006, between BP Canada Energy Marketing Corp. and the Borrower, together with any transaction confirmations related thereto.

 

“ Governmental Approval ” means any authorization, consent, approval, license, lease, ruling, permit, certification, exemption, filing for registration by or with any Governmental Authority.

 

“ Governmental Authority ” means any nation, state, sovereign, or government, any federal, regional, state, local or political subdivision and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“ GP Agreement ” means the Restated Certificate of Incorporation of Dakota Fuels, Inc., a Delaware corporation.

 

“ GP Pledgor ” means Dakota Fuels, Inc., a Delaware corporation.

 

“ Grain Origination Agreement ” means that certain Grain Origination Agreement dated November 8, 2006, between the Borrower and South Dakota Wheat Growers Association, as amended by the Amendment to Grain Origination Agreement dated as of October 1, 2007.

 

“ Granting Lender ” has the meaning provided in Section 10.03(h) ( Assignments ) .

 

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply

 

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funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).

 

“ Historical Debt Service Coverage Ratio ” or “ HDSCR ” means, as of any Quarterly Payment Date, for the four (4) Fiscal Quarters immediately preceding (and not including the then-current Fiscal Quarter) such Quarterly Payment Date (or, if less than four (4) Fiscal Quarters have elapsed since the Conversion Date, for such number of full Fiscal Quarters that has elapsed since the Conversion Date), the ratio of (i) Cash Flow Available for Debt Service during such period to (ii) Debt Service during such period.

 

“ Huron Grain Elevator Lease ” means that certain Lease Agreement, dated as of October 1, 2007, between the Borrower and South Dakota Wheat Growers Association, relating to the grain elevator for the Huron Plant.

 

“ Huron Grain Receiving Area Lease ” means that certain Lease Agreement, dated as of August 1, 2003, between the Borrower as lessor and South Dakota Wheat Growers Association as lessee, for the construction, installation and operation of the Corn System as defined therein, as amended by the Addendum to Lease Agreement, dated November 6, 2006.

 

“ Huron Ground Lease ” means that certain Ground Lease, effective May 1, 1998, between the Borrower as Lessee and Farmland Industries, Inc. as Lessor, as assigned to Land O’Lakes Farmland Feed LLC (n/k/a Land O’Lakes Purina Feed LLC) pursuant to an Assignment and Assumption of Ground Lease dated July 16, 2004, and as amended by the First Amendment to Lease dated as of February 10, 2006, between Land O’Lakes Purina Feed, LLC and the Borrower.

 

“ Huron Insurance and Condemnation Proceeds Account ” has the meaning provided in Section 3.01(a)(x) of the Accounts Agreement.

 

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“ Huron License Agreement ” means that certain Agreement for Engineering Services, dated as of September 20, 2005, between the Borrower as owner and Design-Build Contractor as engineer (including without limitation Exhibit F (License of Proprietary Property of Engineer) thereof), as amended by the Consent and Agreement, dated as of October 1, 2007, between the Borrower, the Technology License Provider and the Collateral Agent.

 

“ Huron Mortgage ” means the Mortgage—One Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits, in form and substance reasonably satisfactory to the Lenders, to be made by the Borrower to the Collateral Agent for the benefit of the Senior Secured Parties in respect of the Sites for the Huron Plants.

 

“ Huron Plant ” means the existing ethanol production facility owned by the Borrower and located in Huron, South Dakota, with a nameplate capacity of approximately 30 million gallons-per-year of denatured ethanol, including the Site and all buildings, structures, improvements, easements and other property related thereto.

 

“ Huron Subordination, Non-Disturbance and Attornment Agreement ” means that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of October 1, 2007, among COBANK, ACB, a/k/a CoBank, as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Huron Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)                                   all obligations of such Person for or in respect of moneys borrowed or raised, whether or not for cash by whatever means (including acceptances, deposits, discounting, letters of credit, factoring, and any other form of financing which is recognized in accordance with GAAP in such Person’s financial statements as being in the nature of a borrowing or is treated as “off-balance sheet” financing);

 

(b)                                  all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(c)                                   all obligations of such Person for the deferred purchase price of property or services;

 

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(d)                                  all obligations of such Person under conditional sale or other title retention agreements relating to property or assets acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property or are otherwise limited in recourse);

 

(e)                                   the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(f)                                     all Capitalized Lease Liabilities;

 

(g)                                  net obligations of such Person under any Swap Contract;

 

(h)                                  all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

 

(i)                                      all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

 

“ Indemnified Taxes ” means Taxes other than Excluded Taxes.

 

“ Indemnitee ” has the meaning provided in Section 10.08 ( Indemnification by the Borrower ) .

 

“ Independent Director ” means a Person, who is not at the time of initial appointment as the Independent Director or at any time while serving as the Independent Director and has not been at any time during the five (5) years preceding such initial appointment:

 

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(i)             a direct or indirect owner of any Equity Interest in, director (with the exception of serving as the Independent Director), officer, employee, member, partner, shareholder, manager or contractor, bankruptcy trustee, attorney or counsel of the Borrower, any partner of the Borrower or any Affiliate of any of them;

 

(ii)            a creditor, customer, supplier, or other person who derives any of its purchases or revenues from its activities with the Borrower, any partner of the Borrower, or any Affiliate of any of them (with the exception of its activity of serving as the Independent Director);

 

(iii)           a Person controlling or under common control with the Borrower, any partner of the Borrower or any Affiliate of any of them or any Person excluded from serving as Independent Director under clause (i) or (ii) of this definition;

 

(iv)           a member of the immediate family by blood or marriage of any Person excluded from being an Independent Director under clause (i) or (ii) of this definition; or

 

(v)            a Person who received, or a member or employee of a firm or business that received, fees or other income from the Borrower or any Affiliate thereof in the aggregate in excess of five percent (5%) of the gross income, for any applicable year, of such Person (with the exception of fees received for its activity of serving as the Independent Director).

 

“ Independent Engineer ” means R.W. Beck, Inc., or any replacement independent engineer appointed by the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, reasonably acceptable to Borrower (which acceptance shall not be unreasonably withheld or delayed).

 

“ Independent Engineer’s Certificate ” means a certificate of the Independent Engineer in substantially the form of Exhibit J-2 .

 

“ Information ” has the meaning provided in Section 10.17 ( Treatment of Certain Information; Confidentiality ) .

 

“ Informational Report ” means a progress report provided by the Design-Build Contractor in a form satisfactory to the Independent Engineer demonstrating, among other things, progress of construction of the Aberdeen II Plant during the period covered by the relevant Application for Payment.

 

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“ Initial Quarterly Payment Date ” means the first Quarterly Payment Date following the Conversion Date.

 

“ Insolvency or Liquidation Proceeding ” has the meaning provided in the Intercreditor Agreement.

 

“ Insurance Consultant ” means Moore-McNeil, LLC, or any replacement insurance consultant appointed by the Administrative Agent.

 

“ Insurance Proceeds ” means all proceeds of any insurance policies required pursuant to this Agreement or otherwise obtained with respect to the Borrower or the Project that are paid or payable to or for the account of the Borrower, or the Collateral Agent as loss payee, or additional insured (other than Business Interruption Insurance Proceeds and proceeds of insurance policies relating to third party liability).

 

“ Interconnect Agreement ” means that certain Interconnect Agreement, dated March 7, 2007, between the Borrower and Northern Border Pipeline Company, as amended by that certain Amendment to Interconnect Agreement dated August 16, 2007.

 

“ Intercreditor Agreement ” means that certain Intercreditor Agreement dated as of the date hereof among the Borrower, the Sponsor, the Pledgors, the Collateral Agent as First Lien Agent for the First Lien Claimholders and the Bond Trustee as Second Lien Agent (as defined therein).

 

“ Interest Payment Date ” means (i) with respect to Eurodollar Loans, the last day of each applicable Interest Period (and, if such Interest Period exceeds three months, on the day three months after such Eurodollar Loan is made or continued) or, if applicable, any date on which such Eurodollar Loan is converted to a Base Rate Loan and (ii) with respect to Base Rate Loans, on each Quarterly Payment Date or, if applicable, any date on which such Base Rate Loan is converted to a Eurodollar Loan.

 

“ Interest Period ” means, with respect to any Eurodollar Loan, the period beginning on (and including) the date on which such Eurodollar Loan is made pursuant to Section 2.06 ( Funding of Loans ) or the date on which each successive interest period for each such Eurodollar Loan is determined pursuant to Section 3.05 ( Interest Rates ) and ending on (and including) the day that numerically corresponds to such date one (1), two (2), three (3) or six (6) months thereafter, in either case as the Borrower may select in the relevant Funding Notice or Interest Period Notice; provided , however , that (i) if such Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is in a different calendar month, in which case such Interest Period shall end on the next preceding Business Day), (ii) any Interest Period that begins on the last

 

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Business Day of a month (or on a day for which there is no numerically corresponding day in the month at the end of such Interest Period) shall end on the last Business Day of the month at the end of such Interest Period, (iii) the Borrower may not select any Interest Period that ends after any Quarterly Payment Date unless, after giving effect to such selection, the aggregate outstanding principal amount of Eurodollar Loans having Interest Periods which end on or prior to such Quarterly Payment Date shall be at least equal to the aggregate principal amount of Eurodollar Loans due and payable on or prior to such Quarterly Payment Date, and (iv) no Interest Period may end later than the Maturity Date for the relevant type of Loan.

 

“ Interest Period Notice ” means a notice in substantially the form attached hereto as Exhibit O , executed by an Authorized Officer of the Borrower.

 

“ Interest Rate Protection Agreement ” means each interest rate swap, collar, put, or cap, or other interest rate protection arrangement, with a Qualified Counterparty, in each such case that is reasonably satisfactory to the Administrative Agent and is entered into in accordance with Section 7.01(u) ( Affirmative Covenants - Interest Rate Protection Agreement ) .

 

“ Interest Rate Protection Provider ” means a Qualified Counterparty that is party to an Interest Rate Protection Agreement.

 

“ Inventory ” means inventory, as that term is defined in the UCC, now or hereafter owned by the Borrower, including all products, goods, materials and supplies produced, purchased or acquired by the Borrower for the purpose of sale or use in the Borrower’s operations in the ordinary course of business.

 

“ Issuance Request ” means has the meaning provided in Section 2.04(b) ( Letters of Credit ) .

 

“ Issuer ” means Brown County, South Dakota.

 

“ Issuing Bank ” means WestLB.

 

“ Law ” means, with respect to any Governmental Authority, any constitutional provision, law, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, common law, holding, injunction, Governmental Approval or requirement of such Governmental Authority. Unless the context clearly requires otherwise, the term “ Law ” shall include each of the foregoing (and each provision thereof) as in effect at the time in question, including any amendments, supplements, replacements, or other modifications thereto or thereof, and whether or not in effect as of the date of this Agreement.

 

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“ LC Cap ” means three million Dollars ($3,000,000).

 

“ LC Cash Collateral Sub-Account ” has the meaning provided in Section 3.01(a)(xiv) of the Accounts Agreement.

 

“ Lead Arranger ” means WestLB in its capacity as sole lead arranger, bookrunner and syndication agent hereunder.

 

“ Leased Premises ” means those certain leased premises described in the Huron Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator Lease.

 

“ Lender Assignment Agreement ” means a Lender Assignment Agreement, substantially in the form of Exhibit R .

 

“ Lenders ” means the persons identified as “Lenders” and listed on the signature pages of this Agreement and each other Person that acquires the rights and obligations of a Lender hereunder pursuant to Section 10.03 ( Assignments ) .

 

“ Letter of Credit ” means each letter of credit issued by the Issuing Bank pursuant to Section 2.04 ( Letters of Credit) .

 

“ Letter of Credit Availability Fee ” has the meaning provided in Section 3.13(b) ( Fees ) .

 

“ Letter of Credit Fronting Fee ” has the meaning provided in Section 3.13(b) ( Fees ) .

 

“ LIBOR ” means, for any Interest Period for any Eurodollar Loan:

 

(a)                           the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period; or

 

(b)                          if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service is not available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an

 

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average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period; or

 

(c)                           if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by WestLB to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two (2) Business Days prior to the first day of such Interest Period.

 

“ License Agreements ” means, collectively, the Aberdeen II License Agreement and the Huron License Agreement.

 

“ Lie n ” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, bailment, conditional sales or title retention agreement, lien (statutory or otherwise), charge against or interest in property, in each case of any kind, to secure payment of a debt or performance of an obligation.

 

“ Lien Waiver Statement ” means, in connection with the construction of the Aberdeen II Plant, a statement evidencing receipt of payment by, in each case in respect of such Plant, the Design-Build Contractor, all subcontractors, all contractors performing the Owners Scope and all other Persons who were paid from the proceeds of the then last preceding Funding, (i) in the form attached hereto as Exhibit S or (ii) in form and substance satisfactory to each of the Administrative Agent and the Independent Engineer.

 

“ Line Item ” means a line item of cost or expense set forth in the Construction Budget.

 

“ Liquidated Damages Account ” has the meaning set forth in Section 3.01(a)(ii) of the Accounts Agreement.

 

“ Loan Parties ” means, collectively, the Borrower and the Pledgors.

 

“ Loans ” means, collectively, the Construction Loans, the Term Loans and the Working Capital Loans.

 

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“ Local Account ” means any local bank account (other than the Project Accounts and the Bond Funds) in the name of the Borrower.

 

“ LP Pledgor ” means ABE Heartland, LLC, a Delaware limited liability company.

 

“ LP Pledgor LLC Agreement ” means that certain Amended and Restated Limited Liability Company Agreement of ABE Heartland LLC, dated as of October 1, 2007, entered into by Advanced BioEnergy, LLC as founding member, and C T Corporation Staffing, Inc., a Delaware corporation, as independent member.

 

“ Maintenance Capital Expense Account ” has the meaning set forth in Section 3.01(a)(v) of the Accounts Agreement.

 

“ Maintenance Capital Expenses ” means all expenditures by the Borrower for regularly scheduled (or reasonably anticipated) major maintenance of the Project, Prudent Ethanol Operating Practice and vendor and supplier requirements constituting major maintenance (including teardowns, overhauls, capital improvements, replacements and/or refurbishments of major components of the Project).

 

“ Mandatory Prepayment ” means a prepayment in accordance with Section 3.10 ( Mandatory Prepayment ) .

 

“ Material Adverse Effect ” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, property, condition (financial or otherwise), prospects, or operations of the Borrower or the Project, taken as a whole, (ii) the ability of the Borrower, any Pledgor, any Project Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement to perform its material obligations under any Transaction Document to which it is a party, (iii) creation, perfection or priority of the Liens granted, or purported to be granted, in favor, or for the benefit, of the Collateral Agent pursuant to the Security Documents or (iv) the rights or remedies of any Senior Secured Party under any Financing Document.

 

 “ Materials of Environmental Concern ” means chemicals, pollutants, contaminants, wastes, toxic substances and hazardous substances, any toxic mold, radon gas or other naturally occurring toxic or hazardous substance or organism and any material that is regulated in any way, or for which liability is imposed, pursuant to an Environmental Law.

 

“ Maturity Date ” means, as the context may require, (a) with respect to the Construction Loans, the Construction Loan Maturity Date (b) with respect to the Term

 

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Loans, the Final Maturity Date and (c) with respect to the Working Capital Loans, the Working Capital Loan Maturity Date.

 

“ Maximum Available Amount ” means, with respect to any Letter of Credit at any time, the maximum amount the beneficiary of such Letter of Credit may draw thereunder at such time, as such amount may be reduced from time to time pursuant to the terms of such Letter of Credit.

 

“ Maximum Rate ” has the meaning provided in Section 10.09 ( Interest Rate Limitation ) .

 

“ Moody’s ” means Moody’s Investors Service Inc., and any successor thereto that is a nationally recognized rating agency.

 

“ Mortgaged Property ” means all real property right, title and interest of the Borrower that is subject to the Mortgages in favor of the Collateral Agent.

 

“ Mortgages ” means the Aberdeen Mortgage and the Huron Mortgage.

 

“ Multiemployer Plan ” means a Plan that is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

 

“ Necessary Project Approvals ” has the meaning set forth in Section 5.03(a)(i) ( Representations and Warranties - Governmental Approvals ) .

 

“ Necessary Project Contracts ” has the meaning set forth in Section 5.11(a)(ii) ( Representations and Warranties - Contracts ) .

 

“ Non-Appealable ” means, with respect to any specified time period allowing an appeal of any ruling under any constitutional provision, Law, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, certificate, holding or injunction that such specified time period has elapsed without an appeal having been brought.

 

“ Non-U.S. Lender ” has the meaning set forth in Section 4.07(e) ( Taxes - Foreign Lenders ) .

 

“ Non-Voting Lender ” means any Lender who (a) is also a Loan Party, a Project Party, a party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement, or any Affiliate or Subsidiary thereof, or (b) has sold a participation in the Loan held by it to any such Person.

 

“ Notes ” means the Construction Notes, the Term Notes and the Working Capital Notes, including any promissory notes issued by the Borrower in connection with

 

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assignments of any Loan of a Lender, in each case substantially in the form of Exhibit B , Exhibit C or Exhibit D as they may be amended, restated, supplemented or otherwise modified from time to time.

 

“ Notice to Proceed ” means the “Notice to Proceed” as defined in, and issued in accordance with the terms of, the Design-Build Agreement.

 

“ Obligations ” means and includes all loans, advances, debts, liabilities, Indebtedness and obligations, howsoever arising, owed to the Agents, the Lenders or any other Senior Secured Party of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower of any Insolvency or Liquidation Proceeding naming the Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, pursuant to the terms of this Agreement or any of the other Financing Documents (including the Interest Rate Protection Agreements), including all principal, interest, fees, charges, expenses, attorneys’ fees, costs and expenses, accountants’ fees and Consultants’ fees payable by the Borrower hereunder or thereunder.

 

“ Operating Account ” has the meaning provided in Section 3.01(a)(iv) of the Accounts Agreement.

 

“ Operating Budget ” has the meaning set forth in Section 7.01(j) ( Affirmative Covenants - Operating Budgets ) .

 

“ Operating Budget Category ” means, at any time with respect to each Operating Budget, each line item set forth in such Operating Budget in effect at such time.

 

“ Operating Statement ” means an operating statement with respect to the Project, in substantially the form of Exhibit L .

 

“ Operation and Maintenance Expenses ” means, for any period, the sum without duplication of all (i) reasonable and necessary expenses of administering, managing and operating, and generating Products for sale from, the Project and maintaining it in good repair and operating condition, (ii)  costs associated with the supply and transportation of all corn, natural gas, electricity and other supplies and raw materials to the Project and distribution and sale of Products from the Project that the Borrower is obligated to pay, (iii) all reasonable and necessary insurance costs (other than insurance premiums that are paid as Project Costs), (iv) property, sales and franchise

 

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taxes to the extent that the Borrower is liable to pay such taxes to the taxing authority (other than taxes imposed on or measured by income or receipts) to which the Project, may be subject (or payment in lieu of such taxes to which the Project may be subject), (v) reasonable and necessary costs and fees incurred in connection with obtaining and maintaining in effect the Necessary Project Approvals, (vi) reasonable and arm’s-length legal, accounting and other professional fees attendant to any of the foregoing items during such period, (vii) the reasonable costs of administration and enforcement of the Transaction Documents, (viii) costs incurred pursuant to the Permitted Commodity Hedging Arrangements, and (ix) all other costs and expenses included in the then-current Operating Budget. In no event shall Project Costs or Maintenance Capital Expenses be considered Operation and Maintenance Expenses.

 

“ Organic Documents ” means, with respect to any Person that is a corporation, its certificate of incorporation, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock; with respect to any Person that is a limited liability company, its certificate of formation or articles of organization and its limited liability agreement and, with respect to a limited partnership, its certificate of limited partnership and its agreement of limited partnership.

 

“ Owners Scope ” means, with respect to the Aberdeen II Plant, any work needed to complete such Plant other than work that is solely the responsibility of the Design-Build Contractor, including without limitation all work described in Article 8 of the “General Conditions” (as defined in the Design-Build Agreement) and Article 8 of such agreement, in each case of the Design-Build Agreement.

 

“ Participant ” has the meaning provided in Section 10.03(d) ( Assignments ) .

 

“ Patriot Act ” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) of 2001, and the rules and regulations promulgated thereunder from time to time in effect.

 

“ PBGC ” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

 

“ Performance Criteria ” means the “Performance Criteria” set forth in Exhibit A of the Design-Build Agreement.

 

“ Performance Test ” means the seven-day performance test described in Section 4.01.B.3 and Exhibit A of the Design-Build Agreement; conducted pursuant to performance test protocols that are acceptable to the Independent Engineer.

 

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“ Performance Test Report ” has the meaning provided in Section 7.01(k) ( Affirmative Covenants - Performance Tests ) .

 

“ Permitted Commodity Hedging Arrangements ” means those Commodity Hedging Arrangements entered into by the Borrower in accordance with Section 7.02(u) ( Negative Covenants - Commodity Hedging Arrangements ) .

 

“ Permitted Indebtedness ” means Indebtedness identified in Section 7.02(a) ( Negative Covenants - Restrictions on Indebtedness of the Borrower ) .

 

“ Permitted Liens ” means Liens identified in Section 7.02(b) ( Negative Covenants - Liens ) .

 

“ Permitted Tax Distribution ” means, with respect to any distributee that is required to pay tax as a result of its direct or indirect ownership of the Borrower, an amount equal to forty percent (40%) of such distributee’s estimated share of the taxable income of the Borrower (after netting or otherwise taking account of a distributee’s shares of the income, loss, deduction and credit associated with the distributee’s interest in the Borrower) that the distributee is reasonably expected to have to report for income tax purposes for the Fiscal Quarter distributed to the extent necessary to fund a distributee’s timely payment to a Governmental Authority of tax liability (including estimated payments thereof) and subject to correction as described below.

 

“ Person ” means any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

 

“ Pipeline Construction Agreement ” means that certain Agreement for Engineering and Pipeline Construction Services, dated January 11, 2007, between the Borrower and Montana Dakota Utilities Co., a division of MDU Resources Group, Inc.

 

“ Plan ” means an employee pension benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV of ERISA or Section 412 of the Code that is sponsored or maintained by the Borrower or any ERISA Affiliate, or in respect of which the Borrower or any ERISA Affiliate has any obligation to contribution or Liability.

 

“ Plants ” means, collectively, the Aberdeen Plants and the Huron Plant.

 

“ Platform ” has the meaning provided in Section 10.11(h) (No Waiver; Cumulative Remedies) .

 

“ Pledge Agreement ” means the Pledge and Security Agreement, dated as of the date hereof among the Borrower, the Pledgors and the Collateral Agent, pursuant to

 

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which the Pledgors pledge one hundred percent (100%) of the Equity Interests in the Borrower to the Collateral Agent.

 

“ Pledgors ” means, collectively, the GP Pledgor and the LP Pledgor.

 

“ Pre-Conversion Prepayment Target ” shall mean when the aggregate amount of (x) prepayments pursuant to priority eleventh of Section 6.01(b) of the Accounts Agreement, priority fifteenth of Section 6.01(c) of the Accounts Agreement, and (y) reductions in the Aggregate Construction Loan Commitment pursuant to priority fifth of Section 2.06(e) (Funding of Loans) , has reached twenty-nine million Dollars ($29,000,000), as confirmed by the Administrative Agent.

 

“ Prepayment Holding Account ” has the meaning set forth in Section  3.01(a)(viii) of the Accounts Agreement.

 

“ Primary Swap Obligations ” means, with respect to any Interest Rate Protection Agreement, all scheduled obligations due and payable by any Person party to such Interest Rate Protection Agreement (after giving effect to any netting applicable thereto) and all payments of Swap Termination Value due and payable by any Person party to such Interest Rate Protection Agreement, but excluding any amounts owed in respect of Taxes, expenses and indemnification obligation which do not constitute payments of Swap Termination Value.

 

“ Process Agent ” means any Person appointed as agent by the Borrower, the Pledgor or any party to the Intercreditor Agreement or Accounts Agreement, to the extent required under the Financing Documents, to receive on behalf of itself and its property services of copies of summons and complaint or any other process which may be served in connection with any action or proceeding before any court arising out of or relating to this Agreement or any other Financing Document to which it is a party, including CT Corporation System.

 

“ Products ” means ethanol, Distillers Grains, and any other co-product or by-product produced in connection with the production of ethanol at the Project.

 

“ Project ” means, at all times, the Existing Plants, the Aberdeen II Plant and all auxiliary and other facilities constructed or to be constructed by or on behalf of the Borrower pursuant to the Project Documents relating to each such Plant or otherwise, together with all fixtures and improvements thereto and each Site and all other real property, easements and rights-of-way held by or on behalf of the Borrower and all rights to use easements and rights-of-way of others.

 

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“ Project Accounts ” has the meaning provided in Section 1.01 of the Accounts Agreement.

 

“ Project Costs ” means, the following costs and expenses incurred by the Borrower in connection with the Aberdeen II Plant prior to the Final Completion Date and set forth in the Construction Budget or otherwise approved in writing by the Required Lenders (in consultation with the Independent Engineer):

 

(i)                                      costs incurred by the Borrower under the Design-Build Agreement, and other costs related to the acquisition, site preparation, design, engineering, construction, installation, start-up, and testing of the Aberdeen II Plant;

 

(ii)                                   fees and expenses incurred by or on behalf of the Borrower in connection with the development of the Aberdeen II Plant and the consummation of the transactions contemplated by this Agreement, including financial, accounting, legal, surveying and consulting fees, and the costs of preliminary engineering;

 

(iii)                                (A) interest and Fees on the Construction Loans and (B) interest on the Subordinated Debt for the Aberdeen II Plant until March 31, 2008;

 

(iv)                               financing fees and expenses in connection with the Loans and the fees, costs and expenses of the Agents’ counsel, any Interest Rate Protection Provider’s counsel and the Consultants;

 

(v)                                  insurance premiums with respect to the Title Insurance Policy for the Project and the insurance for the Project required pursuant to Section 7.01(h) ( Affirmative Covenants - Insurance ) ;

 

(vi)                               costs of corn and natural gas utilized for commissioning, Performance Tests for, and operation of, the Aberdeen II Plant prior to the Final Completion Date;

 

(vii)                            up to forty-seven million Dollars ($47,000,000) to repay the Existing Plant Debt;

 

(viii)                         amounts required to fund the Debt Service Reserve Account up to the amount in the Construction Budget; and

 

(ix)                                 all other costs and expenses included in the Construction Budget.

 

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“ Project Documents ” means:

 

 

(i)

the Design-Build Agreement;

 

 

 

 

(ii)

the Aberdeen II License Agreement;

 

 

 

 

(iii)

the Huron License Agreement;

 

 

 

 

(iv)

the Grain Origination Agreement;

 

 

 

 

(v)

the Pipeline Construction Agreement;

 

 

 

 

(vi)

the Interconnect Agreement;

 

 

 

 

(vii)

the Energy Management Agreement;

 

 

 

 

(viii)

the Gas Purchase and Sale Agreement;

 

 

 

 

(ix)

the Agency Authorization Letter Agreement;

 

 

 

 

(x)

the Ethanol Marketing Agreement;

 

 

 

 

(xi)

the Co-Product Marketing Agreement;

 

 

 

 

(xii)

the Dakotaland Administrative Services Agreement;

 

 

 

 

(xiii)

the Water Supply Contract;

 

 

 

 

(xiv)

the Huron Ground Lease;

 

 

 

 

(xv)

the Huron Grain Receiving Area Lease;

 

 

 

 

(xvi)

the Huron Grain Elevator Lease;

 

 

 

 

(xvii)

the Aberdeen Grain Elevator Lease;

 

 

 

 

(xviii)

the Administrative Services Agreement;

 

 

 

 

(xix)

each Additional Project Document; and

 

 

 

 

(xx)

any replacement agreement for any such agreement.

 

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“ Project Document Termination Payments ” means all payments that are required to be paid to or for the account of the Borrower as a result of the termination of any Project Document.

 

“ Project Party ” means each Person (other than the Borrower or the Pledgors) who is a party to a Project Document.

 

“ Proposed Letter of Credit Issuance Date ” means, with respect to a Letter of Credit, the proposed date of issuance of such Letter of Credit set forth in the respective Issuance Request.

 

“ Prospective Debt Service Coverage Ratio ” or “ PDSCR ” means, for any Quarterly Payment Date, for the Fiscal Quarter including such Quarterly Payment Date and the three (3) Fiscal Quarters immediately following such Quarterly Payment Date, the ratio of (i) Cash Flow Available for Debt Service projected for such period to (ii) Debt Service projected for such period, in each case based on the then-current Operating Budget approved in accordance with Section 7.01(j) ( Affirmative Covenants - Operating Budgets ) , as the same has been updated (if necessary) to reflect the then-current projections for commodity prices, and approved by the Administrative Agent, acting reasonably.

 

“ Prudent Ethanol Operating Practice ” means those reasonable practices, methods and acts that (i) are commonly used in the region where the Project is located to manage, operate and maintain ethanol production, distribution, equipment and associated facilities of the size and type that comprise the Project safely, reliably, and efficiently and in compliance with applicable Laws, manufacturers’ warranties and manufacturers’ and licensor’s recommendations and guidelines, and (ii) in the exercise of reasonable judgment, skill, diligence, foresight and care are expected of an ethanol plant operator, in order to efficiently accomplish the desired result consistent with safety standards, applicable Laws, manufacturers’ warranties, manufacturers’ recommendations and, in the case of the Project, the Project Documents. Prudent Ethanol Operating Practice does not necessarily mean one particular practice, method, equipment specifications or standard in all cases, but is instead intended to encompass a broad range of acceptable practices, methods, equipment specifications and standards.

 

“ Qualified Counterparty ” means any of the following:  (i) any Person who is a Lender, the Administrative Agent, or the Collateral Agent on the date the relevant Interest Rate Protection Agreement is entered into or (ii) any Affiliate of any Person listed in clause (i).

 

“ Quarterly Payment Date ” means each of March 31, June 30, September 30 and December 31.

 

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“ Quarterly Period ” means each three (3) month period beginning on (and including) the day immediately following a Quarterly Payment Date and ending on (and including) the next Quarterly Payment Date.

 

“ RCRA ” means the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as amended, and all rules, regulations, standards, guidelines, and publications issued thereunder.

 

“ Register ” has the meaning set forth in Section 10.03(c) ( Assignments ) .

 

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“ Removal ,” “ Remedial ” and “ Response ” actions shall include the types of activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and whether the activities are those which might be taken by a Governmental Authority or those which a Governmental Authority or any other Person might seek to require of potentially responsible parties, liable parties, waste generators, handlers, distributors, processors, users, disposers, storers, treaters, owners, operators, transporters, recyclers, reusers, disposers, or other Persons under “removal,” “remedial,” or other “response” actions.

 

“ Reportable Event ” means a “reportable event” within the meaning of Section 4043(c) of ERISA.

 

“ Required Cash Sweep ” means each mandatory prepayment of the Loans made pursuant to Section 3.10 ( Mandatory Prepayment ) .

 

“ Required GP Provisions ” has the meaning provided in Section 5.24 ( Representations and Warranties - Required LP, GP and LLC Provisions ) .

 

“ Required Lenders ” means (a) at any time prior to the Conversion Date, Lenders (excluding all Non-Voting Lenders) holding Commitments in excess of fifty percent (50.00%) of the Construction Loan Commitments and the Working Capital Loan Commitments (excluding the Construction Loan Commitments and the Working Capital Loan Commitments of all Non-Voting Lenders) and (b) at any time after the Conversion Date, Lenders (excluding all Non-Voting Lenders) holding Loans and Commitments in excess of fifty percent (50.00%) of an amount equal to (x) the then aggregate outstanding principal amount of the Loans plus (y) the undisbursed amount of the Aggregate Working Capital Loan Commitment (excluding the principal amounts of any Loans made by, and any Working Capital Loan Commitments of, any Non-Voting Lenders).

 

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“ Required LP Pledgor LLC Provisions ” has the meaning provided in Section 5.24 ( Representations and Warranties - Required LP, GP and LLC Provisions ) .

 

“ Required LP Provisions ” has the meaning provided in Section 5.24 ( Representations and Warranties - Required LP, GP and LLC Provisions ) .

 

“ Required Working Capital Lenders ” means Lenders (excluding all Non-Voting Lenders) holding in excess of fifty percent (50.00%) of an amount equal to (x) the then aggregate outstanding principal amount of the Working Capital Loans plus (y) the undisbursed amount of the Aggregate Working Capital Loan Commitment (excluding the principal amounts of any Working Capital Loans made by, and any Working Capital Loan Commitments of, any Non-Voting Lenders).

 

“ Restricted Payment Certificate ” has the meaning provided in the Accounts Agreement.

 

“ Restricted Payments ” means any (a) dividend or other distribution (whether in cash, securities or other property), or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any Equity Interests of the Borrower, or on account of any return of capital to any holder of any such Equity Interest in, or any other Affiliate of, the Borrower, or any option, warrant or other right to acquire any such dividend or other distribution or payment, (b) any payment of fees (other than corporate overhead, costs, expenses or any other payments pursuant to the Administrative Services Agreement) for any management, consultancy or administrative services, to any Person who owns, directly or indirectly, any Equity Interest in the Borrower, or any Affiliate of any such Person, or (c) any payment of indemnification obligations pursuant to the Borrower LP Agreement; provided that any Permitted Tax Distributions shall not constitute Restricted Payments.

 

“ Revenue Account ” has the meaning set forth in Section 3.01(a)(iii) of the Accounts Agreement.

 

“ S&P ” means Standard & Poor’s Rating Services, a Division of the McGraw-Hill Companies Inc.

 

“ Securities Intermediary ” means Amarillo National Bank, not in its individual capacity, but solely as securities intermediary under the Accounts Agreement, and includes each other Person that may, from time to time, be appointed as successor Securities Intermediary pursuant to and in accordance with the Accounts Agreement.

 

44


 

“ Security ” means the security created in favor of the Collateral Agent pursuant to the Security Documents.

 

“ Security Agreement ” means the Assignment and Security Agreement dated as of the date hereof to be made by the Borrower in favor of the Collateral Agent.

 

“ Security Discharge Date ” means the date on which (i) all outstanding Commitments and Interest Rate Protection Agreements have been terminated and (ii) all amounts payable in respect of the Obligations have been irrevocably and indefeasibly paid in full in cash (other than obligations under the Financing Documents that by their terms survive and with respect to which no claim has been made by the Senior Secured Parties).

 

“ Security Documents ” means:

 

(i)                                      the Mortgages;

 

(ii)                                   this Agreement (to the extent that it relates to the Project Accounts);

 

(iii)                                the Accounts Agreement;

 

(iv)                               the Consents;

 

(v)                                  the Pledge Agreement;

 

(vi)                               the Security Agreement;

 

(vii)                            the Blocked Account Agreements;

 

(viii)                         any other document designated as a Security Document by the Borrower and the Administrative Agent; and

 

(ix)                                 any fixture filings, financing statements, notices, authorization letters, or other certificates filed, recorded or delivered in connection with the foregoing.

 

“ Senior Secured Parties ” means the Lenders, the Agents and any Interest Rate Protection Provider.

 

“ Site ” means, with respect to each Plant, those certain parcels described on Schedule 5.13 with respect to such Plant.

 

45


 

“ SNDAs ” means each of the Aberdeen Subordination, Non-Disturbance and Attornment Agreement and the Huron Subordination, Non-Disturbance and Attornment Agreement.

 

“ Solvent ” means, with respect to any Person, that as of the date of determination both (i) (A) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including Contingent Liabilities but excluding amounts payable under intercompany loans or promissory notes) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (B) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (C) such Person does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to pay such debts as they become due; and (ii) such Person is “solvent” within the meaning given that term and similar terms under applicable Laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any Contingent Liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“ Specified Period ” has the meaning set forth in Section 7.01(t) ( Affirmative Covenants - Financial Model ) .

 

“ Sponsor ” means Advanced BioEnergy, LLC, a Delaware limited liability company.

 

“ SPV ” has the meaning provided in Section 10.03(h) ( Assignments ) .

 

“ Stated Amount ” has the meaning specified for such term in any Debt Service Reserve Letter of Credit.

 

“ Subordinated Debt ” means the payment obligations of the Borrower pursuant to the Subordinated Loan Agreement.

 

“ Subordinated Debt Documents ” means (i) the Bond Indenture, (ii) the Subordinated Loan Agreement, (iii) the bond resolution adopted by the Issuer on August 8, 2007 that became effective on September 3, 2007, relating to the Bonds, (iv) each of the Bonds, (v) each of the Bond Collateral Documents, (vi) that certain Tax Exemption Agreement and Certificate relating to the Bonds, dated as of October 1, 2007, among the Borrower, the Bond Trustee, the Issuer and the Accounts Bank, (vii) that certain Bond Purchase Agreement, dated October 2, 2007, among the Issuer, Dougherty

 

46


 

& Company LLC as Underwriter and the Borrower, (viii) that certain Continuing Disclosure Agreement, dated as of October 1, 2007, between the Bond Trustee, as dissemination agent, and the Borrower, (ix) that certain Environmental and ADA Indemnification Agreement by the Borrower in favor of the Bond Trustee, (x) each other document executed on or prior to the date hereof in connection with the Bonds or the Subordinated Debt and (xi) each document executed after the date hereof in connection with the Bonds or the Subordinated Debt in compliance with the Intercreditor Agreement.

 

“ Subordinated Loan Agreement ” means that certain Loan Agreement relating to the Bonds, dated as of October 1, 2007, between the Issuer and the Borrower, as assigned by the Issuer to the Bond Trustee (except with respect to the “Unassigned Rights” (as defined in the Bond Indenture)) pursuant to the Bond Indenture.

 

“ Subsidiary ” of any Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other Equity Interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.

 

“ Survey ” has the meaning provided in Section 6.01(x) ( Conditions to Closing and First Funding of Construction Loans - Survey ) .

 

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement and (c) for the avoidance of doubt, includes the Permitted Commodity Hedging Arrangements and any Interest Rate Protection Agreements and excludes any contract for the physical sale or purchase of any commodity.

 

47


 

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts (including any Permitted Commodity Hedging Arrangements or any Interest Rate Protection Agreements), after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, in accordance with the terms of the applicable Swap Contract, or, if no provision is made therein, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“ Tax ” or “ Taxes ” means any present or future taxes (including income, gross receipts, license, payroll, employment, excise, severance, stamp, documentary, occupation, premium, windfall profits, environmental, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, ad valorem, alternative or add-on minimum, estimated, or other tax of any kind whatsoever), levies, imposts, duties, fees or charges (including any interest, penalty, or addition thereof) imposed by any government or any governmental agency or instrumentality or any international or multinational agency or commission.

 

“ Tax Return ” means all returns, declarations, reports, claims for refund and information returns and statements of any Person required to be filed with respect to, or in respect of, any Taxes, including any schedule or attachment thereto and any amendment thereof.

 

“ Technology License Provider ” means ICM, Inc., a Kansas corporation.

 

“ Termination Event ” means (i) a Reportable Event with respect to any Plan, (ii) the initiation of any action by the Borrower, any ERISA Affiliate or any Plan fiduciary to terminate any Plan (other than a standard termination under Section 4041(b) of ERISA) or the treatment of an amendment to any Plan as a termination under Section 4041(e) of ERISA, (iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to terminate any Plan or to appoint a trustee to administer any Plan, (iv) the withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan during a plan year in which the Borrower or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of twenty percent (20%) of any Multiemployer Plan participants who are employees of the Borrower or any ERISA Affiliate, (v) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan, or (vi) the Borrower or any ERISA Affiliate is in default

 

48


 

(as defined in Section 4219(c)(5) of ERISA) with respect to payments to any Multiemployer Plan.

 

“ Term Loan ” has the meaning provided in Section 2.02(a) ( Term Loans ) .

 

“ Term Loan Commitment ” means, with respect to each Lender, the commitment of such Lender to make Term Loans, as set forth opposite the name of such Lender in Schedule 2.01 , as the same may be reduced in accordance with Section 2.08 (Termination or Reduction of Commitments) .

 

“ Term Loan Commitment Percentage ” means, as to any Lender at any time, the percentage that such Lender’s Term Loan Commitment then constitutes of the Aggregate Term Loan Commitment.

 

“ Term Notes ” means the promissory notes of the Borrower, substantially in the form of Exhibit C , evidencing Term Loans.

 

“ Threat of Release ” shall mean “threat of release” as used in CERCLA.

 

“ Title Continuation ” means a written notice issued by the Title Insurance Company (including their local title insurance abstractors) confirming the status of title as set forth in the Title Insurance Policy, which indicates that, since the last preceding Funding Date (or, if the current Funding is on the Closing Date, since the date hereof), there has been no change in the title of title to the Mortgaged Property and no Liens or survey exceptions (in the case of any updated or “as-built” survey that has been issued) not theretofore approved by the Required Lenders, which written notice shall contain no recorded mechanic’s liens except as approved by the Required Lenders or as otherwise subject to a Contest.

 

“ Title Insurance Company ” means Old Republic National Title Insurance Company, or such other title insurance company or companies reasonably satisfactory to the Administrative Agent.

 

“ Title Insurance Policy ” has the meaning provided in Section 6.01(y) ( Conditions to Closing and First Funding - Title Insurance ) .

 

“ Transaction Documents ” means, collectively, the Financing Documents and the Project Documents.

 

“ Unfunded Benefit Liabilities ” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all accrued benefits calculated on an accumulated benefit obligation basis and based upon the actuarial assumptions used for accounting purposes ( i . e ., those determined in accordance with FASB statement No. 35

 

49


 

and used in preparing the Plan’s financial statements) exceeds (ii) the fair market value of all Plan assets allocable to such benefits, determined as of the then most recent actuarial valuation report for such Plan.

 

“ Uniform Commercial Code ” or “ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however , in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “ UCC ” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of provisions relating to such perfection or priority and for purposes of definitions related to such provisions.

 

“ United States ” or “ U.S. ” means the United States of America, its fifty States and the District of Columbia.

 

“ United States Person ” means a “United States person” as defined in Section 7701(a)(30) of the Code.

 

“ Value ” means, with respect to any inventory or other goods, the cost thereof to the Borrower, calculated on a first-in first-out basis in accordance with GAAP.

 

“ Warranty Period ” means, with respect to the Aberdeen II Plant, the period commencing on the Conversion Date and terminating on the date that is twelve (12) months from the Conversion Date; provided , that if any warranty work is performed, then the “Warranty Period” shall extend until the later of (i) twelve (12) months from the date of completion of such warranty work and (ii) the expiration of the original Warranty Period, but in no event shall such Warranty Period extend beyond twenty-four (24) months after the Conversion Date.

 

“ Water Supply Contract ” means that certain Construction and Water Supply Contract, dated as of January 31, 2007, between the WEB Water Development Association, Inc., and the Borrower and Advanced BioEnergy, LLC jointly, including the Water Supply Contract attached as Exhibit A thereof and incorporated therein by reference.

 

“ WDG ” means wet distillers grains produced by the Borrower at the Project.

 

“ WestLB ” means WestLB AG, New York Branch.

 

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“ Working Capital Applicable Margin ” means (a) with respect to the Eurodollar Loans, three and one-half percent (3.50%) and (b) with respect to the Base Rate Loans, two and one-half percent (2.50%).

 

“ Working Capital Available Amount ” means up to eight million Dollars ($8,000,000); provided that the Working Capital Available Amount shall at no time exceed the Borrowing Base, as certified from time to time by the Borrower.

 

“ Working Capital Expenses ” means, collectively, costs of goods prior to the Conversion Date, Operation and Maintenance Expenses, Maintenance Capital Expenses, margin calls, Project Costs relating to the initial start-up and testing of the Aberdeen II Plant, breakage costs or other termination payments under any Permitted Commodity Hedging Arrangement.

 

“ Working Capital Lenders ” means those Lenders of Working Capital Loans, as identified on Schedule 2.01 , and each other Person that acquires the rights and obligations of any such Lender pursuant to Section 10.03 (Assignments) .

 

“ Working Capital Loan ” has the meaning provided in Section 2.03(a) (Working Capital Loans ) .

 

“ Working Capital Loan Commitment ” means, with respect to each Working Capital Lender, the commitment of such Working Capital Lender to make Working Capital Loans, as set forth opposite the name of such Working Capital Lender in Schedule 2.01 , as the same may be reduced in accordance with Section 2.08 (Termination or Reduction of Commitments) .

 

“ Working Capital Loan Commitment Percentage ” means, as to any Working Capital Lender at any time, the percentage that such Working Capital Lender’s Working Capital Loan Commitment then constitutes of the Aggregate Working Capital Loan Commitment.

 

“ Working Capital Loan Funding Notice ” means each request for Funding of Working Capital Loans in the form of Exhibit G delivered in accordance with Section 2.05 (Notice of Fundings) .

 

“ Working Capital Loan Maturity Date ” means the date that occurs five (5) years after the Closing Date.

 

“ Working Capital Notes ” means the promissory notes of the Borrower, substantially in the form of Exhibit D , evidencing Working Capital Loans.

 

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“ Working Capital Reserve Account ” has the meaning set forth in Section 3.01(a)(vi) of the Accounts Agreement.

 

“ Working Capital Reserve Required Amount ” means the amount necessary such that the sum of (i) the Working Capital Loan Commitment and (ii) the amount on deposit in the Working Capital Reserve Account equals eight million Dollars ($8,000,000).

 

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EXHIBIT B

to Senior Credit Agreement

 

[FORM OF CONSTRUCTION NOTE]

 

Construction Note

 

             $ [__________]

 

[ __________________ ]

 

October ____, 2007

 

FOR VALUE RECEIVED, HEARTLAND GRAIN FUELS, L.P. (the “Borrower”), HEREBY PROMISES TO PAY to the order of [ __________________ ] , a [ _________________ ] (the “Lender”), at its offices located at [ __________________ ] , the principal sum of [ __________ ] Dollars ($ [ __________ ] ) or, if less, the aggregate unpaid principal amount of the Construction Loans made by the Lender to the Borrower under the Senior Credit Agreement, dated as of October 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “ Senior Credit Agreement ”) among the Borrower, each of the Lenders from time to time party hereto, WESTLB AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG, NEW YORK BRANCH, as Collateral Agent for the Senior Secured Parties, WESTLB AG, NEW YORK BRANCH, as Issuing Bank, and WESTLB AG, NEW YORK BRANCH, as lead arranger, sole bookrunner and syndication agent.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Senior Credit Agreement.

 

The Borrower also promises to pay (i) interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times provided in the Senior Credit Agreement and (ii) fees at such times and at such rates and amounts as specified in the Senior Credit Agreement.

 

Principal, interest and fees are payable in lawful money of the United States of America and in immediately available funds, at the times and in the amounts provided in the Senior Credit Agreement.

 

This Construction Note is entitled to the benefits and is subject to the terms and conditions of the Senior Credit Agreement, and is entitled to the benefits of the security provided under the Security Documents.  As provided in the Senior Credit Agreement, this Construction Note is subject to mandatory prepayment and voluntary prepayment, in whole or in part.  The Borrower agrees to make prepayment of principal on the dates and in the amounts specified in the Senior Credit Agreement.

 

B-1


 

The Senior Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

 

The Lender is hereby authorized, at its option, either (i) to endorse on the schedule attached hereto (or on a continuation of such schedule attached to this Construction Note and made a part hereof) an appropriate notation evidencing the date and amount of the Construction Loans evidenced hereby and the date and amount of each principal payment in respect thereof, or (ii) to record such Construction Loans and such payments in its books and records.  Such schedule or such books and records, as the case may be, shall constitute prima facie evidence of the accuracy of the information contained therein, but in no event shall any failure by the Lender to endorse or record pursuant to clauses (i) and (ii) be deemed to relieve any Borrower from any of its obligations.

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Construction Note.  All amounts payable under this Construction Note are payable without relief from valuation and appraisement Laws.

 

The Borrower agrees to pay all costs and expenses, including without limitation attorneys’ fees, incurred in connection with the enforcement of this Construction Note, in accordance with and to the extent provided by the Senior Credit Agreement.

 

B-2


 

THIS CONSTRUCTION NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

 

 

HEARTLAND GRAIN FUELS, L.P.,

 

a Delaware limited partnership

 

 

By:

Dakota Fuels, Inc.

 

 

Its:

General Partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

B-3


 

Schedule to
Construction Note

 

LOANS, MATURITIES AND PAYMENTS OF PRINCIPAL

 

Date

 

Amount of
Loan

 

Maturity
of Loan

 

Amount of
Principal Paid
or Prepaid

 

Unpaid
Principal
Balance

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B-4


 

EXHIBIT C

to Senior Credit Agreement

 

[FORM OF TERM NOTE]

 

Term Note

 

$ [__________]

 

[ __________________ ]

[ __________ ] , [ ____ ]   

 

FOR VALUE RECEIVED, HEARTLAND GRAIN FUELS, L.P. (the “Borrower”), HEREBY PROMISES TO PAY to the order of [ __________________ ] , a [ _________________ ] (the “Lender”), at its offices located at [ __________________ ] , the principal sum of [ __________ ] Dollars ($ [ __________ ] ) or, if less, the aggregate unpaid principal amount of the Term Loans made by the Lender to the Borrower under the Senior Credit Agreement, dated as of October 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “ Senior Credit Agreement ”) among the Borrower, each of the Lenders from time to time party hereto, WESTLB AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG, NEW YORK BRANCH, as Collateral Agent for the Senior Secured Parties, WESTLB AG, NEW YORK BRANCH, as Issuing Bank, and WESTLB AG, NEW YORK BRANCH, as lead arranger, sole bookrunner and syndication agent.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Senior Credit Agreement.

 

The Borrower also promises to pay (i) interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times provided in the Senior Credit Agreement and (ii) fees at such times and at such rates and amounts as specified in the Senior Credit Agreement.

 

Principal, interest and fees are payable in lawful money of the United States of America and in immediately available funds, at the times and in the amounts provided in the Senior Credit Agreement.

 

This Term Note is entitled to the benefits and is subject to the terms and conditions of the Senior Credit Agreement, and is entitled to the benefits of the security provided under the Security Documents.  As provided in the Senior Credit Agreement, this Term Note is subject to mandatory prepayment and voluntary prepayment, in whole or in part.  The Borrower agrees to make prepayment of principal on the dates and in the amounts specified in the Senior Credit Agreement.

 

C-1


 

The Senior Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

 

The Lender is hereby authorized, at its option, either (i) to endorse on the schedule attached hereto (or on a continuation of such schedule attached to this Term Note and made a part hereof) an appropriate notation evidencing the date and amount of the Term Loans evidenced hereby and the date and amount of each principal payment in respect thereof, or (ii) to record such Term Loans and such payments in its books and records.  Such schedule or such books and records, as the case may be, shall constitute prima facie evidence of the accuracy of the information contained therein, but in no event shall any failure by the Lender to endorse or record pursuant to clauses (i) and (ii) be deemed to relieve any Borrower from any of its obligations.

 

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Term Note.  All amounts payable under this Term Note are payable without relief from valuation and appraisement Laws.

 

The Borrower agrees to pay all costs and expenses, including without limitation attorneys’ fees, incurred in connection with the interpretation or enforcement of this Term Note, in accordance with and to the extent provided by the Senior Credit Agreement.

 

C-2


 

THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

 

 

HEARTLAND GRAIN FUELS, L.P.,

 

a Delaware limited partnership

 

 

By: Dakota Fuels, Inc.

 

 

Its: General Partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

C-3


 

Schedule to
Term Note

 

LOANS, MATURITIES AND PAYMENTS OF PRINCIPAL

 

Date

 

Amount of
Loan

 

Maturity
of Loan

 

Amount of
Principal Paid
or Prepaid

 

Unpaid
Principal
Balance

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C-4


 

EXHIBIT D

to Senior Credit Agreement

 

[FORM OF WORKING CAPITAL NOTE]

 

Working Capital Note

 

$ [__________]

 

[ __________________ ]    

 

October _____, 2007

 

FOR VALUE RECEIVED, HEARTLAND GRAIN FUELS, L.P. (the “Borrower”), HEREBY PROMISES TO PAY to the order of [ __________________ ] , a [ _________________ ] (the “Lender”), at its offices located at [ __________________ ] , the principal sum of [ __________ ] Dollars ($ [ __________ ] ) or, if less, the aggregate unpaid principal amount of the Working Capital Loans made by the Lender to the Borrower under the Senior Credit Agreement, dated as of October 1, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “ Senior Credit Agreement ”) among the Borrower, each of the Lenders from time to time party hereto, WESTLB AG, NEW YORK BRANCH, as Administrative Agent for the Lenders, WESTLB AG, NEW YORK BRANCH, as Collateral Agent for the Senior Secured Parties, WESTLB AG, NEW YORK BRANCH, as Issuing Bank, and WESTLB AG, NEW YORK BRANCH, as lead arranger, sole bookrunner and syndication agent.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Senior Credit Agreement.

 

The Borrower also promises to pay (i) interest on the unpaid principal amount hereof from the date hereof until paid in full at the rates and at the times provided in the Senior Credit Agreement and (ii) fees at such times and at such rates and amounts as specified in the Senior Credit Agreement.

 

Principal, interest and fees are payable in lawful money of the United States of America and in immediately available funds, at the times and in the amounts provided in the Senior Credit Agreement.

 

This Working Capital Note is entitled to the benefits and is subject to the terms and conditions of the Senior Credit Agreement, and is entitled to the benefits of the security provided under the Security Documents.  As provided in the Senior Credit Agreement, this Working Capital Note is subject to mandatory prepayment and voluntary prepayment, in whole or in part.  The Borrower agrees to make prepayment of principal on the dates and in the amounts specified in the Senior Credit Agreement.

 

D-1


 

The Senior Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

 

The Lender is hereby authorized, at its option, either (i) to endorse on the schedule attached hereto (or on a continuation of such schedule attached to this Working Capital Note and made a part hereof) an appropriate notation evidencing the date and amount of the Working Capital Loans evidenced hereby and the date and amount of each principal payment in respect thereof, or (ii) to record such Working Capital Loans and such payments in its books and records.  Such schedule or such books and records, as the case may be, shall constitute prima facie evidence of the accuracy of the information contained therein, but in no event shall any failure by the Lender to endorse or record pursuant to clauses (i) and (ii) be deemed to relieve any Borrower from any of its obligations.

 

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Working Capital Note.  All amounts payable under this Working Capital Note are payable without relief from valuation and appraisement Laws.

 

The Borrower agrees to pay all costs and expenses, including without limitation attorneys’ fees, incurred in connection with the enforcement of this Working Capital Note, in accordance with and to the extent provided by the Senior Credit Agreement.

 

D-2


 

THIS WORKING CAPITAL NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

 

 

HEARTLAND GRAIN FUELS, L.P.,

 

a Delaware limited partnership

 

 

By: Dakota Fuels, Inc.

 

 

Its: General Partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

D-3


 

Schedule to
Working Capital Note

 

LOANS, MATURITIES AND PAYMENTS OF PRINCIPAL

 

 

Date

 

Amount of
Loan

 

Maturity
of Loan

 

Amount of
Principal Paid
or Prepaid

 

Unpaid
Principal
Balance

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D-4

EXHIBIT 10.2

 

 

ACCOUNTS AGREEMENT

dated as of October 1, 2007

among

HEARTLAND GRAIN FUELS, L.P. ,
as the Borrower,

AMARILLO NATIONAL BANK,
as the Accounts Bank and the Securities Intermediary,

WESTLB AG, NEW YORK BRANCH ,
as the Collateral Agent for the Senior Secured Parties,

WESTLB AG, NEW YORK BRANCH ,
as the Administrative Agent for the Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE OF THE
BROWN COUNTY, SOUTH DAKOTA SUBORDINATE SOLID WASTE

FACILITIES REVENUE BONDS (HEARTLAND GRAIN FUELS, L.P.
ETHANOL PLANT PROJECT) SERIES 2007A ,
as the Second Lien Agent for the Second Lien Claimholders

 

 


TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS AND INTERPRETATION

2

Section 1.01

Defined Terms

2

Section 1.02

Principles of Interpretation

12

Section 1.03

Credit Agreement and UCC Definitions

12

Section 1.04

Accounting and Financial Determinations

12

 

 

 

ARTICLE II APPOINTMENT; GRANT OF SECURITY INTEREST

13

Section 2.01

Appointment by Collateral Agent

13

Section 2.02

Appointment by Second Lien Agent

13

Section 2.03

Limitation of Liability

14

Section 2.04

Project Accounts

14

Section 2.05

Representations, Warranties and Covenants of Accounts Bank

15

Section 2.06

Project Accounts as Deposit Account

18

Section 2.07

Grant of First-Priority Security Interest

18

Section 2.08

Grant of Second-Priority Security Interest

19

Section 2.09

Control and Perfection of Account Collateral

20

Section 2.10

Subordination

21

Section 2.11

Agreement to Hold In Trust

22

 

 

 

ARTICLE III PROJECT ACCOUNTS

22

Section 3.01

Establishment of Project Accounts

22

Section 3.02

Deposits into and Withdrawals from Project Accounts

24

 

 

 

ARTICLE IV CONSTRUCTION ACCOUNT

26

Section 4.01

Construction Account

26

Section 4.02

Bond Proceeds Sub-Account

28

 

 

 

ARTICLE V LIQUIDATED DAMAGES ACCOUNT

32

Section 5.01

Liquidated Damages Account

32

 

 

 

ARTICLE VI REVENUE ACCOUNT

33

Section 6.01

Revenue Account

33

 

 

 

ARTICLE VII OPERATING ACCOUNT

44

Section 7.01

Operating Account

44

 

 

 

ARTICLE VIII MAINTENANCE CAPITAL EXPENSE ACCOUNT

45

Section 8.01

Maintenance Capital Expense Account

45

 

i


 

ARTICLE IX WORKING CAPITAL RESERVE ACCOUNT

45

Section 9.01

Working Capital Reserve Account

45

 

 

 

ARTICLE X DEBT SERVICE RESERVE ACCOUNT

47

Section 10.01

Debt Service Reserve Account

47

Section 10.02

Debt Service Letter of Credit

48

Section 10.03

Excess in Debt Service Reserve Account

48

 

 

 

ARTICLE XI PREPAYMENT HOLDING ACCOUNT

49

Section 11.01

Prepayment Holding Account

49

 

 

 

ARTICLE XII INSURANCE AND CONDEMNATION PROCEEDS ACCOUNTS

50

Section 12.01

Insurance and Condemnation Proceeds Accounts

50

 

 

 

ARTICLE XIII EXTRAORDINARY PROCEEDS ACCOUNT

54

Section 13.01

Extraordinary Proceeds Account

54

 

 

 

ARTICLE XIV CONTINGENCY RESERVE ACCOUNT

55

Section 14.01

Contingency Reserve Account. (a) Payments into the Contingency Reserve Account

55

 

 

 

ARTICLE XV GENERAL PROVISIONS RELATING TO THE PROJECT ACCOUNTS

57

Section 15.01

No Security Interests

57

Section 15.02

Borrower Acknowledgments

57

Section 15.03

Further Assurances

58

Section 15.04

UCC Termination Statements

59

 

 

 

ARTICLE XVI INTEREST AND INVESTMENTS

59

Section 16.01

Investments

59

Section 16.02

Sale and Liquidation

60

Section 16.03

Interest and Investment Income

60

Section 16.04

Accounts Information

61

 

 

 

ARTICLE XVII DEFAULT AND ENFORCEMENT

62

Section 17.01

Notices of Suspension of Project Accounts

62

Section 17.02

Collateral Agent Appointed Attorney-in-Fact

62

Section 17.03

Enforcement

64

Section 17.04

Application of Proceeds

66

Section 17.05

Collateral Agent’s Discretionary Powers

66

Section 17.06

Regarding the Collateral Agent

66

 

ii


 

ARTICLE XVIII THE ACCOUNTS BANK

67

Section 18.01

Duties of the Accounts Bank and Securities Intermediary

67

Section 18.02

Exculpatory Provisions

68

Section 18.03

Reliance by Accounts Bank

70

Section 18.04

Written Instructions; Notices

70

Section 18.05

Resignation or Removal of Accounts Bank

71

Section 18.06

No Amendment to Duties of Accounts Bank Without Consent

72

 

 

 

ARTICLE XIX REPRESENTATIONS AND WARRANTIES

72

Section 19.01

Representations and Warranties

72

 

 

 

ARTICLE XX MISCELLANEOUS

74

Section 20.01

Rights of Second Lien Agent and Second Lien Claimholders

74

Section 20.02

Amendments, Etc.

75

Section 20.03

Applicable Law; Jurisdiction; Etc.

75

Section 20.04

Assignments

77

Section 20.05

Benefits of Accounts Agreement

77

Section 20.06

Costs and Expenses

78

Section 20.07

Counterparts; Effectiveness

79

Section 20.08

Indemnification by the Borrower

79

Section 20.09

No Waiver; Cumulative Remedies

81

Section 20.10

Notices and Other Communications

81

Section 20.11

Patriot Act Notice

84

Section 20.12

Severability

84

Section 20.13

Survival

84

Section 20.14

Waiver of Consequential Damages, Etc.

84

Section 20.15

Waiver of Litigation Payments

85

 

iii


 

 

 

 

EXHIBITS

 

 

 

 

 

Exhibit A

Form of Construction Withdrawal Certificate

 

Exhibit B

Form of Liquidated Damages Transfer Certificate

 

Exhibit C-1

Form of Pre-Conversion Date Revenue Account Withdrawal Certificate

 

Exhibit C-2

Form of Post-Conversion Date Revenue Account Withdrawal Certificate

 

Exhibit D

Form of Restricted Payment Certificate

 

Exhibit E

Form of Operating Account Withdrawal Certificate

 

Exhibit F

Form of Working Capital Reserve Transfer Certificate

 

Exhibit G

Form of Debt Service Reserve Release Certificate

 

Exhibit H

Form of Insurance and Condemnation Proceeds Request Certificate

 

Exhibit I

Form of Extraordinary Proceeds Release Certificate

 

Exhibit J

Form of Contingency Reserve Transfer Certificate

 

Exhibit K

Form of Bond Proceeds Withdrawal Certificate

 

Exhibit L

Form of Independent Engineer’s Certificate

 

 

 

iv

 


 

THIS ACCOUNTS AGREEMENT, dated as of October 1, 2007, (this “ Accounts Agreement ”), is entered into by and among HEARTLAND GRAIN FUELS, L.P., a Delaware limited partnership (the “ Borrower ”), AMARILLO NATIONAL BANK, in its capacity as accounts bank (together with its successors and assigns in such capacity, the “ Accounts Bank ”) and in its capacity as securities intermediary (together with its successors and assigns in such capacity, the “ Securities Intermediary ”), WESTLB AG, NEW YORK BRANCH, in its capacity as collateral agent for the Senior Secured Parties (as defined below) (together with its successors and assigns in such capacity, the “ Collateral Agent ”), WESTLB AG, NEW YORK BRANCH, in its capacity as administrative agent for the Lenders (together with its successors and assigns in such capacity, the “ Administrative Agent ”), Wells Fargo Bank, National Association, in its capacity as trustee of the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A (in such capacity and, together with its successors and permitted assigns, the “ Second Lien Agent ”) for the Second Lien Claimholders (as defined below).

 

RECITALS

 

WHEREAS, the Borrower has entered into that certain Senior Credit Agreement, dated as of the date hereof (the “ Credit Agreement ”), among the Borrower, each of the Lenders from time to time party thereto, the Administrative Agent, the Collateral Agent, WestLB AG, New York Branch, as Issuing Bank, and WestLB AG, New York Branch, as Lead Arranger, Sole Bookrunner and Syndication Agent, pursuant to which, among other things, the Lenders have committed to make loans to, and for the benefit of, the Borrower;

 

WHEREAS, certain Lenders or their affiliates may, from time to time, enter into interest rate hedging agreements with the Borrower as permitted under the Credit Agreement;

 

WHEREAS, pursuant to that certain Bond Trust Indenture dated as of October 1, 2007 (the “ Bond Indenture ”) between Brown County, South Dakota (the “ Issuer ”) as bond issuer and the Second Lien Agent as bond trustee, the Issuer will issue and deliver its $19,000,000 Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A (the “ Bonds ”) for the purpose of purchasing, constructing and installing certain improvements to be located on the Site for the Aberdeen Plants;

 

WHEREAS, the Issuer has agreed to lend the proceeds of the Bonds (the “ Subordinated Debt ”) to the Borrower pursuant to that certain Loan Agreement effective as of the date hereof (the “ Subordinated Loan Agreement ”) between the Borrower and

 


 

the Issuer. Pursuant to the Bond Indenture, the Issuer has assigned to the Second Lien Agent its rights and obligations under the Subordinated Loan Agreement, except for the Unassigned Rights (as defined in the Bond Indenture); and

 

WHEREAS, it is a requirement under the Credit Agreement and the Subordinated Loan Agreement that the Borrower execute and deliver this Accounts Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the promises contained herein, and to induce the lenders under the Credit Agreement to enter into the Credit Agreement and to make the advances of credit to the Borrower contemplated thereby, and to induce the Interest Rate Protection Providers (as defined in the Credit Agreement) to enter into the Interest Rate Protection Agreements (as defined below) and to provide the interest rate hedges contemplated thereby, and to induce the Issuer to issue and deliver the Bonds, to enter into the Subordinated Loan Agreement and to make the advances of credit to the Borrower contemplated thereby, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

Section 1.01           Defined Terms . The following terms when used in this Accounts Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings:

 

“ Aberdeen Insurance and Condemnation Proceeds Account ” has the meaning provided in Section 3.01(a)(ix) ( Establishment of Project Accounts ) .

 

“ Account Collateral ” has the meaning provided in Section 2.07 ( Grant of First-Priority Security Interest ) .

 

“ Accounts Bank ” has the meaning provided in the preamble.

 

“ Accounts Bank Action ” has the meaning provided in Section 18.04(b) ( Written Instructions; Notices ) .

 

2


 

“ Accounts Bank Fee Letter ” means that certain Fee Letter between the Accounts Bank and the Borrower, dated as of the date hereof, setting forth certain fees due and payable to the Accounts Bank.

 

“ Administrative Agent ” has the meaning provided in the preamble .

 

“ Agents ” means, collectively, the Administrative Agent, the Collateral Agent and the Accounts Bank.

 

“ Bond Collateral Documents ” means (i) the Bond Indenture, (ii) the “Subordinate Mortgage” (as defined in the Bond Indenture), (iii) the “Subordinate Security Agreement” (as defined in the Bond Indenture), (iv) the “Subordinate Equity Pledge Agreement” (as defined in the Bond Indenture), and any documents granting, or relating to the grant, of security for the payment of amounts due under the Subordinated Loan Agreement and the Bonds.

 

“ Bond Debt Service Reserve Fund ” means the trust fund entitled “Debt Service Reserve Fund” created under the Bond Indenture.

 

“ Bond Expense Fund ” means the trust fund entitled “Expense Fund” created under the Bond Indenture.

 

“ Bond Funds ” means the “Bond Sinking Fund”, the “Debt Service Reserve Fund”, the “Expense Fund”, the “Interest Fund”, the “Project Fund”, the “Rebate Fund”, the “Redemption Fund” and the “Revenue Fund” (each as defined in the Bond Indenture), together with such other funds, accounts or sub-accounts established by the Bond Trustee pursuant to the Bond Indenture in administering the Trust Estate (as defined in the Bond Indenture).

 

“ Bond Indenture ” has the meaning provided in the third recital .

 

“ Bond Liens ” means the second-priority security interest created in favor of the Second Lien Agent, for the benefit of the Second Lien Claimholders, pursuant to the Bond Collateral Documents, which security interest (other than the lien on the Bond Funds) is subject to Section 7.02(b) ( Negative Covenants—Liens ) of the Credit Agreement and to the Intercreditor Agreement.

 

“ Bond Proceeds Sub-Account ” has the meaning provided in Section 3.01(a)(xiii) ( Establishment of Project Accounts ) .

 

“ Bond Proceeds Withdrawal Certificate ” means a certificate in substantially the form of Exhibit K , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Bond Proceeds Sub-Account.

 

3


 

“ Bond Project Fund ” means the trust fund entitled “Project Fund” created under the Bond Indenture.

 

“ Bond Revenue Fund ” means the trust account of that name created under the Bond Indenture.

 

“ Bonds ” has the meaning provided in the third recital .

 

“ Borrower ” has the meaning provided in the preamble .

 

“ Cash Equivalents ” means:

 

(a)                                   readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof, or obligations unconditionally guaranteed by the full faith and credit of the government of the United States, in each case maturing within one (1) year from the date of acquisition thereof;

 

(b)                                  securities issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than one (1) year from the date of acquisition thereof and, at the time of acquisition, having a rating of AA- or higher from S&P or Aa3 or higher from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(c)                                   investments in commercial paper maturing within one hundred eighty (180) days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(d)                                  investments in certificates of deposit, banker’s acceptances and time deposits maturing within two hundred and seventy (270) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America, any State thereof, any country that is a member of the Organisation for Economic Co-Operation and Development or any political subdivision

 

4


 

thereof, that has a combined capital and surplus and undivided profits of not less than five hundred million Dollars ($500,000,000);

 

(e)                                   fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (d) of this definition; and

 

(f)                                     investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (e) of this definition.

 

“ Collateral Agent ” has the meaning provided in the preamble .

 

“ Construction Account ” has the meaning provided in Section 3.01(a)(i) ( Establishment of Project Accounts ) .

 

“ Construction Withdrawal Certificate ” means a certificate in substantially the form of Exhibit A , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Construction Account.

 

“ Contingency Reserve Account ” has the meaning provided in Section 3.01(a)(xii) ( Establishment of Project Accounts ) .

 

“ Contingency Reserve Transfer Certificate ” means a certificate in substantially the form of Exhibit J , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Contingency Reserve Account.

 

“ Costs of the Project ” has the meaning provided in the Bond Indenture.

 

“ Credit Agreement ” has the meaning provided in the first recital .

 

“ Current Priority Subordinated Interest ” means, with respect to any Quarterly Period, interest at the per annum rate of eight and one-half percent (8.50%) accrued, and due and payable, under the Subordinated Loan Agreement (provided that the aggregate outstanding principal amount of Subordinated Debt does not exceed nineteen million Dollars ($19,000,000)) during such Quarterly Period, but expressly excluding any such interest that accrued on the Subordinated Debt in any previous Quarterly Period.

 

“ Debt Service Reserve Account ” has the meaning provided in Section 3.01(a)(vii) ( Establishment of Project Accounts ) .

 

5


 

“ Debt Service Reserve Release Certificate ” means a certificate in substantially the form of Exhibit G , duly executed by an Authorized Officer of the Borrower directing the transfer or withdrawal of funds from the Debt Service Reserve Release Certificate.

 

“ Delay Liquidated Damages ” means any delay liquidated damages payable to the Borrower pursuant to the Design-Build Agreement or any other construction contracts to which the Borrower is a party.

 

“ Extraordinary Proceeds Account ” has the meaning provided in Section 3.01(a)(xi) ( Establishment of Project Accounts ) .

 

“ Extraordinary Proceeds Release Certificate ” means a certificate in substantially the form of Exhibit I , duly executed by an Authorized Officer of the Borrower directing the transfer or withdrawal of funds from the Extraordinary Proceeds Account.

 

“ Gross Proceeds ” has the meaning provided in the Code.

 

“ Huron Insurance and Condemnation Proceeds Account ” has the meaning provided in Section 3.01(a)(x) ( Establishment of Project Accounts ) .

 

“ Indemnitee ” has the meaning provided in Section 20.08(a) ( Indemnification by the Borrower ) .

 

“ Independent Engineer’s Certificate ” means a certificate of the Independent Engineer in substantially the form of Exhibit L .

 

“ Insurance and Condemnation Proceeds Accounts ” means, collectively, the Aberdeen Insurance and Condemnation Proceeds Account and the Huron Insurance and Condemnation Proceeds Account.

 

“ Insurance and Condemnation Proceeds Request Certificate ” means a certificate, in substantially the form of Exhibit H , duly executed by an Authorized Officer of the Borrower, setting forth proposed instructions for the transfer or withdrawal of Insurance Proceeds and/or Condemnation Proceeds from an Insurance and Condemnation Proceeds Account.

 

“ Investment Proceeds ” has the meaning provided in the Code.

 

“ Interest Rate Protection Agreement ” means each interest rate swap, collar, put, or cap, or other interest rate protection arrangement, with a Qualified Counterparty, in each such case that is reasonably satisfactory to the Administrative Agent and is

 

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entered into in accordance with Section 7.01(u) ( Affirmative Covenants – Interest Rate Protection Agreement ) of the Credit Agreement.

 

“ Issue Price ” has the meaning provided in the Code.

 

“ Issuer ” has the meaning provided in the third recital .

 

“ LC Cash Collateral Sub-Account ” has the meaning provided in Section 3.01(a)(xiv) ( Establishment of Project Accounts ) .

 

“ Liquidated Damages Account ” has the meaning provided in Section 3.01(a)(ii) ( Establishment of Project Accounts ) .

 

“ Liquidated Damages Transfer Certificate ” means a certificate in substantially the form of Exhibit B , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Liquidated Damages Account.

 

“ Maintenance Capital Expense Account ” has the meaning provided in Section  3.01(a)(v) ( Establishment of Project Accounts ) .

 

“ Material Default ” means

 

(i)                                      any Default under Section 8.01(a)(ii) ( Nonpayment ), Section 8.01(f)(ii)(B) ( Cross Defaults ), Section 8.01(i) ( Bankruptcy, Insolvency ) or Section 8.01(j) ( Project Document Defaults; Termination ) of the Credit Agreement;

 

(ii)                                   any Default under Section 8.01(d) ( Non-Performance of Other Covenants and Obligations ) of the Credit Agreement arising as a result of any default

 

(A)                               by the Borrower in the due performance and observance of any covenant or agreement under Section 7.01(a) ( Compliance with Laws ), Section 7.01(b) ( Environmental Matters ), Section 7.01(c) ( Operations and Maintenance ), Section 7.01(e) ( Payment of Obligations ), Section 7.01(f) ( Governmental Approvals ), Section 7.01(l) ( Project Documents ), Section 7.01(m) ( Preservation of Title; Acquisition of Additional Property ), Section 7.01(n)(ii) and (iii) ( Maintenance of Liens; Creation of Liens on Newly Acquired Property ), Section 7.01(o) ( Certificate of Formation ), Section 7.01(p) ( Separateness ) and Section

 

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7.01(u) ( Interest Rate Protection Agreement ) of the Credit Agreement;

 

(B)                                 by the Borrower in the due performance and observance of any covenant or agreement under Section 5.03 ( No Other Filings ) and Section 5.04 ( No Sale of Collateral ) of the Security Agreement; and

 

(C)                                 by any Pledgor under Section 5.03 ( No Other Filings ) of the Pledge Agreement.

 

“ Monthly Date ” means the last Business Day of each calendar month.

 

“ Net Swap Payment ” means, with respect to any Interest Rate Protection Agreement and for any period, all scheduled Obligations due and payable by the Borrower under such Interest Rate Protection Agreement during such period, as a result of any netting applicable thereto.

 

“ Notice of Security Discharge Date ” has the meaning provided in Section 20.01 ( Rights of Second Lien Agent and Second Lien Claimholders ).

 

“ Notice of Suspension ” has the meaning provided in Section 17.01(a) ( Notices of Suspension of Project Accounts ) .

 

“ Operating Account ” has the meaning provided in Section 3.01(a)(iv) ( Establishment of Project Accounts ) .

 

“ Operating Account Withdrawal Certificate ” means a certificate in substantially the form of Exhibit E , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Operating Account.

 

“ Original Proceeds ” has the meaning provided in the Code.

 

“ Patriot Act ” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) of 2001, and the rules and regulations promulgated thereunder from time to time in effect.

 

“ Permitted Budgeted Operating Expenses Level ” means, for any month in any Fiscal Year, with respect to Operation and Maintenance Expenses (other than Operation and Maintenance Expenses for the cost of corn and natural gas), one hundred and ten percent (110%) of the amount projected for such expenses (other than Operation and Maintenance Expenses for the cost of corn and natural gas) for the period from the start

 

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of such Fiscal Year (or, if the Closing Date occurred during such Fiscal Year, from the Closing Date) through (and including) such month in the then-current Operating Budget.

 

“ Post-Conversion Date Revenue Account Withdrawal Certificate ” means a certificate in substantially the form of Exhibit C-2 , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Revenue Account.

 

“ Pre-Conversion Date Revenue Account Withdrawal Certificate ” means a certificate in substantially the form of Exhibit C-1 , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Revenue Account.

 

“ Pre-Conversion Prepayment Target ” has the meaning provided in the Credit Agreement.

 

“ Prepayment Holding Account ” has the meaning provided in Section 3.01(a)(x) ( Establishment of Project Accounts ) .

 

“ Project Accounts ” means the Construction Account, the Liquidated Damages Account, the Revenue Account, the Operating Account, the Maintenance Capital Expense Account, the Working Capital Reserve Account, the Debt Service Reserve Account, the Prepayment Holding Account, the Aberdeen Insurance and Condemnation Proceeds Account, the Huron Insurance and Condemnation Proceeds Account, the Extraordinary Proceeds Account, the Contingency Reserve Account, the Additional Capital Expenditure Sub-Account, the Bond Proceeds Sub-Account and the LC Cash Collateral Sub-Account.

 

“ Qualified Counterparty ” has the meaning provided in the Credit Agreement.

 

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“ Restoration or Replacement Plan ” means a plan and time schedule, reasonably satisfactory to the Required Lenders and the Independent Engineer, for the application of Insurance Proceeds and Condemnation Proceeds arising from any Casualty Event or Event of Taking, respectively, and any other funds available to the Borrower with which to restore or replace the Project, or any portion thereof, affected by such Casualty Event or Event of Taking.

 

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“ Restricted Payment Certificate ” means a certificate in substantially the form of Exhibit D , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds for Restricted Payments.

 

“ Revenue Accoun t” has the meaning provided in Section 3.01(a)(iii) ( Establishment of Project Accounts ) .

 

“ Revenue Account Withdrawal Certificate ” means, before the Conversion Date, a Pre-Conversion Date Revenue Account Withdrawal Certificate, and after the Conversion Date, a Post-Conversion Date Revenue Account Withdrawal Certificate.

 

“ Second Lien Account Collateral ” has the meaning provided in Section 2.08 ( Grant of Second-Priority Security Interest ) .

 

“ Second Lien Agent ” has the meaning provided in the preamble .

 

“ Second Lien Agent Indemnitee ” has the meaning provided in Section 20.08(b) ( Indemnification by the Borrower ) .

 

“ Second Lien Claimholders ” means, at any relevant time, the holders of Second Lien Obligations (as defined in the Intercreditor Agreement) at such time, including the holders of Bonds, the Second Lien Agent and the Issuer.

 

“ Second Lien Project Accounts ” means the Revenue Account, the Operating Account, the Maintenance Capital Expense Account, the Working Capital Reserve Account, the Aberdeen Insurance and Condemnation Proceeds Account, the Huron Insurance and Condemnation Proceeds Account, the Extraordinary Proceeds Account, and the Additional Capital Expenditure Sub-Account.

 

“ Securities Intermediary ” has the meaning provided in the preamble .

 

“ Security Discharge Date ” means the date on which (i) all outstanding Commitments (as defined in the Credit Agreement) and Interest Rate Protection Agreements have been terminated and (ii) all amounts payable in respect of the Obligations have been irrevocably and indefeasibly paid in full in cash (other than obligations under the Financing Documents that by their terms survive and with respect to which no claim has been made by the Senior Secured Parties).

 

“ Senior Secured Parties ” means the Lenders, the Agents and any Interest Rate Protection Provider.

 

“ Subordinated Debt ” has the meaning provided in the fourth recital .

 

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“ Subordinated Loan Agreement ” has the meaning provided in the fourth recital.

 

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts (including any Permitted Commodity Hedging Arrangements or any Interest Rate Protection Agreements), after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, in accordance with the terms of the applicable Swap Contract, or, if no provision is made therein, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“ Target Balance Amount ” means the aggregate principal amount under the Term Loans on the Conversion Date as reduced by 1/24 th of such amount on each Quarterly Payment Date thereafter.

 

“ Tax Exemption Agreement ” means that certain Tax Exemption Agreement and Certificate, dated as of October 1, 2007, among the Borrower, the Issuer, the Accounts Bank and the Second Lien Agent.

 

“ UCC ” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided , however , in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security in any Account Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “ UCC ” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.

 

“ Warranty Work ” means any work relating to the repair, replacement or correction of any failure, defect or deficiency related to the Aberdeen II Plant.

 

“ Working Capital Reserve Account ” has the meaning provided in Section 3.01(a)(vi) ( Establishment of Project Accounts ) .

 

“ Working Capital Reserve Transfer Certificate ” means a certificate in substantially the form of Exhibit F , duly executed by an Authorized Officer of the Borrower, directing the transfer or withdrawal of funds from the Working Capital Reserve Account.

 

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Section 1.02           Principles of Interpretation . (a)  Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Accounts Agreement shall have the same meanings when used in the Credit Agreement.

 

(b)        Unless the context requires otherwise, any reference in this Accounts Agreement to any Financing Document shall mean such Financing Document and all schedules, exhibits and attachments thereto, as amended from time to time.

 

(c)         All the agreements, contracts or documents defined or referred to herein shall mean such agreements, contracts or documents as the same may from time to time be supplemented, amended or replaced or the terms thereof waived or modified to the extent permitted by, and in accordance with, the terms thereof and this Accounts Agreement, and shall disregard any supplement, amendment, replacement or waiver made in breach of this Accounts Agreement.

 

(d)        Defined terms in this Accounts Agreement shall include in the singular number the plural and in the plural number the singular.

 

(e)         The words “herein,” “hereof” and “hereunder” and words of similar import when used in this Accounts Agreement shall, unless otherwise expressly specified, refer to this Accounts Agreement as a whole and not to any particular provision of this Accounts Agreement and all references to Articles, Sections, Exhibits and Schedules shall be references to Articles, Sections, Exhibits and Schedules of this Accounts Agreement, unless otherwise specified.

 

(f)         The words “include,” “includes” and “including” are not limiting.

 

(g)        The word “or” is not exclusive.

 

(h)        Any reference to any Person shall include its permitted successors and permitted assigns in the capacity indicated, and in the case of any Governmental Authority, any Person succeding to its functions and capacities.

 

Section 1.03           Credit Agreement and UCC Definitions . Unless otherwise defined herein or unless the context otherwise requires, terms used in this Accounts Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement or, if not defined therein, the UCC.

 

Section 1.04           Accounting and Financial Determinations . Unless otherwise specified, all accounting terms used in any Financing Document shall be interpreted, all accounting determinations and computations hereunder or thereunder shall

 

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be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared, in accordance with GAAP.

 

ARTICLE II

APPOINTMENT; GRANT OF SECURITY INTEREST

 

Section 2.01           Appointment by Collateral Agent . (a) The Collateral Agent, on behalf and at the direction of the Senior Secured Parties, hereby appoints and authorizes the Accounts Bank to act as its depository for the benefit of the Senior Secured Parties, and as the securities intermediary or bank with respect to the Project Accounts for the benefit of the Collateral Agent, on behalf of the Senior Secured Parties, with such powers as are expressly delegated to the Accounts Bank by the terms of this Accounts Agreement, together with such other powers as are reasonably incidental thereto. The Accounts Bank hereby accepts each such appointment and agrees to act as the depository for the Collateral Agent, on behalf of the Senior Secured Parties, and as the securities intermediary or bank with respect to the Project Accounts, for the benefit of the Collateral Agent, on behalf of the Senior Secured Parties, in accordance with the terms of this Accounts Agreement. The Accounts Bank further agrees to accept and hold, as securities intermediary or as a bank, in its custody and in accordance with the terms of this Accounts Agreement, for the Collateral Agent, on behalf of the Senior Secured Parties, the Project Accounts and the Account Collateral.

 

(b)        The Collateral Agent also hereby appoints and authorizes the Accounts Bank to act on its behalf for the purpose of the creation and perfection of a first priority security interest in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, in the Project Accounts to the extent that they are deemed under applicable Law not to constitute securities accounts or deposit accounts and in any Account Collateral that is deemed under applicable Law not to constitute a “financial asset” (within the meaning of Section 8-102(9) of the UCC). The Accounts Bank hereby accepts this appointment and agrees to act as the Accounts Bank for the Collateral Agent, on behalf of the Senior Secured Parties , for such purpose and to hold and maintain exclusive dominion and control over the Project Accounts and any such Account Collateral on behalf of the Collateral Agent, acting for the benefit of the Senior Secured Parties.

 

Section 2.02           Appointment by Second Lien Agent . (a) The Second Lien Agent, on behalf and at the direction of the Second Lien Claimholders, hereby appoints and authorizes the Accounts Bank to act as its depository for the benefit of the Second Lien Claimholders, and as the securities intermediary or bank with respect to the Second Lien Project Accounts for the benefit of the Second Lien Agent, on behalf of the Second Lien Claimholders, with such powers as are expressly delegated to the Accounts Bank by

 

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the terms of this Accounts Agreement, together with such other powers as are reasonably incidental thereto. The Accounts Bank hereby accepts each such appointment and agrees to act as the depository for the Second Lien Agent, on behalf of the Second Lien Claimholders, and as the securities intermediary or bank with respect to the Second Lien Project Accounts, for the benefit of the Second Lien Agent, on behalf of the Second Lien Claimholders, in accordance with the terms of this Accounts Agreement. The Accounts Bank further agrees to accept and hold, as securities intermediary or as a bank, in its custody and in accordance with the terms of this Accounts Agreement, for the Second Lien Agent, on behalf of the Second Lien Claimholders, the Second Lien Project Accounts and the Second Lien Account Collateral.

 

(b)        The Second Lien Agent also hereby appoints and authorizes the Accounts Bank to act on its behalf for the purpose of the creation and perfection of a second priority security interest in favor of the Second Lien Agent, for the benefit of the Second Lien Claimholders, in the Second Lien Project Accounts to the extent that they are deemed under applicable Law not to constitute securities accounts or deposit accounts and in any Second Lien Account Collateral that is deemed under applicable Law not to constitute a “financial asset” (within the meaning of Section 8-102(9) of the UCC). The Accounts Bank hereby accepts this appointment and agrees to act as the Accounts Bank for the Second Lien Agent, on behalf of the Second Lien Claimholders , for such purpose.

 

Section 2.03           Limitation of Liability . Notwithstanding any provision to the contrary contained elsewhere in any Financing Document or any Subordinated Debt Document, the Accounts Bank shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Accounts Bank have or be deemed to have any fiduciary relationship with any Senior Secured Party, the Second Lien Agent or any Second Lien Claimholder, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into any Financing Document or any Subordinated Debt Document or otherwise exist against the Accounts Bank. Without limiting the generality of the foregoing sentence, the use of the term “agent” in any Financing Document or Subordinated Debt Document with reference to the Accounts Bank is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

 

Section 2.04           Project Accounts . (a) The Borrower agrees that it will have no legal or equitable right to withdraw funds from the Project Accounts, except for those rights expressly granted to the Borrower in this Accounts Agreement. The Account Collateral will not constitute repayment of the Obligations or the Subordinated Debt until

 

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so applied as payments in accordance with the terms of this Accounts Agreement and the other Financing Documents.

 

(b)        The Accounts Bank shall not have title to the funds on deposit in or credited to the Project Accounts, and shall credit the Project Accounts with all receipts of interest, dividends and other income received on the property held in the Project Accounts. The Accounts Bank shall administer and manage the Project Accounts in strict compliance with its duties with respect to the Project Accounts pursuant to this Accounts Agreement, and shall be subject to and comply with all of the obligations that the Accounts Bank owes to the Borrower and the Collateral Agent, for the benefit of the Senior Secured Parties, with respect to the Project Accounts, including all subordination obligations set forth in Section 2.10 ( Subordination ) with respect to the Accounts Bank’s right of set-off or recoupment or right to obtain a Lien, pursuant to the terms of this Accounts Agreement. The Accounts Bank hereby agrees to comply with any and all written instructions originated by the Collateral Agent directing the disbursement, deposit and/or transfer of any funds and all other property held in the Project Accounts without any further consent of the Borrower or any other Person, and to comply with any and all written instructions originated by the Borrower directing the disbursement, deposit and/or transfer of any funds and all other property held in the Project Accounts subject to, and in accordance with, the terms of this Accounts Agreement.

 

Section 2.05           Representations, Warranties and Covenants of Accounts Bank . The Accounts Bank hereby represents, warrants, covenants and agrees as follows:

 

(a)         it is a securities intermediary on the date hereof and shall act as such in maintaining the Project Accounts and all of the Account Collateral (including all securities and other financial assets or security entitlements deposited in or credited to the Project Accounts) from time to time transferred, deposited in or credited to or maintained in the Project Accounts;

 

(b)        it is the bank with which each Project Account is maintained and the securities intermediary with respect to the financial assets held in the Project Accounts. In this regard, (i) if the Accounts Bank has knowledge that an issuer of any financial asset is required to make a payment or distribution in respect of such financial asset, the Accounts Bank shall have fulfilled its duty under applicable Law to take action to obtain such payment or distribution if (A) it credits such payment or distribution to the Project Accounts in accordance with this Accounts Agreement if such payment or distribution is made or (B) it notifies the Borrower and the Collateral Agent that such payment or distribution has not been made, and (ii) if the Accounts Bank is required by applicable Law or this Accounts Agreement to credit to any Project Account any financial asset purported to be transferred or credited to the Accounts Bank pursuant

 

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to applicable Law, the Accounts Bank shall have fulfilled its duty to so credit any Project Account if it credits as a security entitlement to the applicable party whatever rights the Accounts Bank purportedly has in the financial asset transferred or credited to the Accounts Bank and the Accounts Bank shall have no duty to ensure that applicable Law has been complied with in respect of the transfer of the financial asset or to create a security interest in or Lien on any financial asset purported to be transferred or credited to the Accounts Bank and subsequently credited to any Project Account;

 

(c)         it shall promptly perform all duties imposed upon a securities intermediary and a bank under the UCC, other applicable Law and this Accounts Agreement;

 

(d)        the Collateral Agent, for the benefit of the Senior Secured Parties, and no other Person, is the Accounts Bank’s customer with respect to the Project Accounts, and the Borrower has consented to the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, being deemed the customer hereunder;

 

(e)         the Securities Intermediary’s jurisdiction, for purposes of this Accounts Agreement and Article 8 of the UCC, is and shall continue to be the State of New York, and the bank’s jurisdiction of the Accounts Bank, for purposes of this Accounts Agreement and Section 9-304(b)(1) of the UCC, is and shall continue to be the State of New York;

 

(f)         it has established and maintains the Project Accounts as set forth in Section 3.01 ( Establishment of Project Accounts ) ;

 

(g)        each Project Account is and will be maintained as a securities account or, as set forth in Section 2.06 ( Project Accounts as Deposit Account ) , a deposit account;

 

(h)        all financial assets acquired by or delivered to the Accounts Bank shall be held by the Accounts Bank and credited by book entry to the relevant Project Account or otherwise accepted by the Accounts Bank for credit to the relevant Project Account. Any financial asset so credited or accepted for credit to the relevant Project Account shall be registered in the name of, payable to, or to the order of, or indorsed to the Accounts Bank or in blank and in no case will any financial asset credited to any Project Account or held by the Accounts Bank for credit to any Project Account be registered in the name of, payable to, to the order of, or indorsed to, the Borrower, except to the extent that such financial asset has been subsequently indorsed by the Borrower to the Accounts Bank or in blank;

 

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(i)          each item of property (including any cash, security, general intangible, document, instrument or obligation, share, participation, interest or other property whatsoever) deposited in or credited to any Project Account shall be treated as a financial asset under and for the purposes of Article 8 of the UCC, including Section 8-102(a)(9)(iii) thereof. Notwithstanding any provision herein to the contrary, any property contained in the Project Accounts that is not deemed to be a financial asset under applicable Law, to the extent permitted by applicable Law, will be deemed to be deposited in a deposit account and subject to Section 2.06 ( Project Accounts as Deposit Account ) ;

 

(j)          the Collateral Agent, for the benefit of the Senior Secured Parties, is the entitlement holder in any security entitlements with respect to any financial assets deposited in or credited to the Project Accounts, and the Collateral Agent may issue entitlement orders with respect thereto;

 

(k)         if at any time it receives an entitlement order or any other order from the Collateral Agent directing the transfer, redemption or liquidation of any financial asset carried in the Project Accounts or any instruction originated by the Collateral Agent directing the disbursement, deposit and/or transfer of any funds or other property held in the Project Accounts, the Accounts Bank shall comply with such entitlement order, instruction or other order without further consent by the Borrower or any other Person. The Borrower hereby agrees that the Collateral Agent, on behalf of and for the benefit of the Senior Secured Parties, shall have control of the security entitlements carried in the Project Accounts and of the financial assets carried in the Project Accounts, and the Borrower hereby disclaims any entitlement to claim control of such security entitlements or financial assets;

 

(l)          all property delivered to the Accounts Bank pursuant to this Accounts Agreement or the other Financing Documents will be promptly deposited in or credited to a Project Account by an appropriate entry in its records in accordance with this Accounts Agreement;

 

(m)        the Accounts Bank shall not change the name or account number of any Project Account unless it obtains the prior written consent of the Collateral Agent and provides prior written notice to the Borrower;

 

(n)        except for the claims and interest of (i) the Collateral Agent, for the benefit of the Senior Secured Parties, in the Project Accounts, (ii) the Second Lien Agent, for the benefit of the Second Lien Claimholders, in the Second Lien Project Accounts and (iii) the Borrower, in the Project Accounts, it does not know of and has not received written notice of any right or claim (including any adverse claim) to or interest in the Project Accounts or any Account Collateral (including, without limitation,

 

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funds and financial assets) deposited in or credited to the Project Accounts by any Person. If any Person (other than the Collateral Agent, on behalf of the Senior Secured Parties, or the Second Lien Agent, on behalf of the Second Lien Claimholders) asserts any Lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against any Project Account or in any financial asset or other property deposited therein or credited thereto, the Accounts Bank will promptly notify the Collateral Agent, the Borrower and, if such Project Account is a Second Lien Project Account, the Second Lien Agent, in writing thereof; and

 

(o)        the Accounts Bank has not entered into and will not enter into any agreement with respect to the Project Accounts or any financial assets or other property deposited in or credited to any Project Account other than this Accounts Agreement, as may be amended from time to time. The Accounts Bank has not entered into and will not enter into any agreement with the Borrower or any other Person purporting to limit or condition the obligation of the Accounts Bank to comply with entitlement orders or any other order originated by the Collateral Agent in accordance with this Accounts Agreement.

 

Section 2.06           Project Accounts as Deposit Account . (a) The parties hereto agree that, to the extent that the Project Accounts are not considered “securities accounts” (within the meaning of Section 8-501(a) of the UCC), the Project Accounts shall be deemed to be deposit accounts (as defined in Section 9-102(a)(29) of the UCC) to the extent a security interest can be granted and perfected under the UCC in the Project Accounts as deposit accounts, which the Borrower shall maintain with the Accounts Bank acting not as Securities Intermediary but as a “bank” (within the meaning of Section 9-102(a)(8) of the UCC).

 

(b)        The Collateral Agent, on behalf of the Senior Secured Parties, shall be deemed the sole customer of the Accounts Bank for purposes of the Project Accounts and, as such, shall be entitled to all of the rights that customers of banks have under applicable Law with respect to deposit accounts, including the right to withdraw funds from, or close, the Project Accounts, and the Borrower hereby consents to the Collateral Agent being deemed the customer hereunder.

 

Section 2.07           Grant of First-Priority Security Interest . (a)  As security for the prompt and complete payment when due (whether at stated maturity, by acceleration or otherwise) of any and all of the Obligations and the due performance and compliance by the Borrower with all of the terms, conditions, and agreements to be performed and complied with by it under and pursuant to the terms of the Credit Agreement and the other Financing Documents, the Borrower hereby acknowledges and confirms the pledge, collateral assignment, hypothecation, and granting of a first-priority security interest to

 

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the Collateral Agent, for the benefit of the Senior Secured Parties, pursuant to the Security Agreement in, all of its right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by the Borrower, wherever located, and whether now or hereafter existing or arising (collectively, the “ Account Collateral ”):

 

(i)                                      each of the Project Accounts (other than the Bond Proceeds Sub-Account), including all funds, Cash Equivalents, securities, financial assets or other property held in, required to be held in or credited to any of such Project Accounts or otherwise in possession or control of the Accounts Bank pursuant to this Accounts Agreement, and all interest, dividends and other income derived therefrom;

 

(ii)                                   all statements, certificates, instruments and investment property representing or evidencing any property described in clause (i) above held in, required to be held in or credited to any of such Project Accounts or otherwise in possession or control of the Accounts Bank pursuant to this Accounts Agreement; and

 

(iii)                                to the extent not included in the foregoing, all proceeds, products and accessions of and to any and all of the foregoing, including whatever is received upon any collection, exchange, sale or other disposition of any of the foregoing and any property into which any of the foregoing is converted, whether cash or non-cash proceeds, and any and all other amounts paid or payable under or in connection with any of the foregoing and all security entitlements of the Borrower in any and all of the foregoing.

 

Section 2.08           Grant of Second-Priority Security Interest . (a)  As security for the prompt and complete payment when due (whether at stated maturity, by acceleration or otherwise) of any and all of the obligations of the Borrower and the due performance and compliance by the Borrower with all of the terms, conditions, and agreements to be performed and complied with by it under and pursuant to the terms of the Subordinated Loan Agreement and the other Subordinated Debt Documents, the Borrower hereby acknowledges and confirms the pledge, collateral assignment, hypothecation, and granting of a second-priority security interest (subject to the terms of the Intercreditor Agreement) to the Second Lien Agent, for the benefit of the Second Lien Claimholders, pursuant to the “Subordinate Security Agreement” (as defined in the Bond

 

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Indenture), over all of its right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by the Borrower, wherever located, and whether now or hereafter existing or arising (collectively, the “ Second Lien Account Collateral ”):

 

(i)                                      each of the Second Lien Project Accounts, including all funds, Cash Equivalents, securities, financial assets or other property held in, required to be held in or credited to any of the Second Lien Project Accounts or otherwise in possession or control of the Accounts Bank pursuant to this Accounts Agreement, and all interest, dividends and other income derived therefrom;

 

(ii)                                   all statements, certificates, instruments and investment property representing or evidencing any property described in clause (i) above held in, required to be held in or credited to any of the Second Lien Project Accounts or otherwise in possession or control of the Accounts Bank pursuant to this Accounts Agreement; and

 

(iii)                                to the extent not included in the foregoing, all proceeds, products and accessions of and to any and all of the foregoing, including whatever is received upon any collection, exchange, sale or other disposition of any of the foregoing and any property into which any of the foregoing is converted, whether cash or non-cash proceeds, and any and all other amounts paid or payable under or in connection with any of the foregoing and all security entitlements of the Borrower in any and all of the foregoing;

 

For the avoidance of doubt, (x) the Second Lien Account Collateral shall not include any right, title or interest in any property held in, required to be held in or credited to the Construction Accounts, the Liquidated Damages Account, the Debt Service Reserve Account, the Contingency Reserve Account, the Prepayment Holding Account or the Bond Proceeds Sub-Account, and (ii) notwithstanding any provision of this Agreement to the contrary, the Collateral Agent shall have no lien on the funds in the Bond Proceeds Sub-Account.

 

Section 2.09           Control and Perfection of Account Collateral . (a) The Borrower specifically acknowledges and agrees that (i) (A) each Project Account pledged hereunder shall be maintained so that the Collateral Agent, on behalf and for the benefit

 

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of the Senior Secured Parties, has control of such Project Account in the manner specified in Section 9-104 of the UCC, (B) all Cash Equivalents pledged hereunder shall be maintained so that the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, has control of such Cash Equivalents in the manner specified in Section 9-106 of the UCC, and (C) all financial assets held in the Project Accounts and pledged hereunder shall be maintained so that the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, has control of such financial assets in the manner specified in Section 8-106 of the UCC.

 

(b)        The Borrower shall give, execute, deliver, file, record, authenticate, authorize or obtain all such UCC financing statements as may be necessary to perfect and maintain the security interests granted under this Accounts Agreement.

 

(c)         Until the Security Discharge Date and payment in full of all obligations under the Subordinated Debt Documents, the Borrower shall not have any rights against or to monies held in the Project Accounts, except the right to receive or make requisitions of funds deposited in or credited to the Project Accounts as permitted by this Accounts Agreement.

 

Section 2.10           Subordination . (a) The Accounts Bank hereby acknowledges the first-priority security interest granted hereby to the Collateral Agent, for the benefit of the Senior Secured Parties, and the second-priority security interest granted hereby to the Second Lien Agent, for the benefit of the Second Lien Claimholders. In the event that the Accounts Bank has or subsequently obtains by agreement, operation of Law or otherwise a right of recoupment or set-off or any Lien in any of the Project Accounts, Account Collateral or any financial asset or other property deposited therein or credited thereto or any security entitlement related thereto, the Accounts Bank hereby agrees that such right of recoupment or set-off and/or any such Lien shall (except to the extent provided in clause (c) of this Section 2.10 ) be subordinate to the security interest of each of the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, and the Second Lien Agent, on behalf of and for the benefit of the Second Lien Claimholders. The Accounts Bank agrees that it shall not (except to the extent provided in clause (c) of this Section 2.10 ) assert or enforce any such right of recoupment or set-off and/or any Lien until the Notice of Security Discharge Date and payment in full of all obligations under the Subordinated Debt Documents.

 

(b)        (i) Until the Notice of Security Discharge Date, the financial assets and other items deposited in or credited to the Project Accounts and all other Account Collateral will not (except to the extent provided in clause (c) of this Section 2.10 ) be subject to deduction, set-off, banker’s lien or any other right in favor of any Person other than the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, and (ii)  from and after the Notice of Security Discharge Date until the payment

 

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in full of all obligations under the Subordinated Debt Documents, the financial assets and other items deposited in or credited to the Project Accounts and all other Account Collateral will not (except to the extent provided in clause (c) of this Section 2.10 ) be subject to deduction, set-off, banker’s lien or any other right in favor of any Person other than the Second Lien Agent, on behalf and for the benefit of the Second Lien Claimholders.

 

(c)         The Project Accounts, Account Collateral or any financial asset or other property deposited therein or credited thereto shall be subject to deduction, set-off, banker’s lien and recoupment to the extent of returned items and chargebacks either for uncollected checks or other items of payment and transfers previously credited to one or more Project Accounts, and each of the Collateral Agent, on behalf of and for the benefit of the Senior Secured Parties, the Second Lien Agent, on behalf of and for the benefit of the Second Lien Claimholders, and the Borrower hereby expressly authorize the Accounts Bank to debit the relevant Project Account(s) for such amounts.

 

Section 2.11           Agreement to Hold In Trust . All payments received directly by the Borrower that are required to be deposited into the Project Accounts in accordance with the terms of this Accounts Agreement, the Credit Agreement, or any other Financing Document (including any amount received by the Borrower pursuant to, or in connection with, any Project Document or any sale of Products) shall be held by the Borrower in trust for the Collateral Agent, on behalf and for the benefit of the Senior Secured Parties, shall be segregated from other funds of the Borrower and shall, forthwith upon receipt by the Borrower, be turned over to the Collateral Agent or its designee in the same form as received by the Borrower (duly endorsed by the Borrower to the Collateral Agent or the Accounts Bank, if requested) for deposit and disbursement in accordance with this Accounts Agreement.

 

ARTICLE III

PROJECT ACCOUNTS

 

Section 3.01                                 Establishment of Project Accounts . (a) On or prior to the Closing Date, the Accounts Bank shall establish and maintain, in the name of the Collateral Agent and on the books and records of the Accounts Bank’s offices located in Amarillo, Texas, the accounts set forth below:

 

(i)                                      a special, segregated, Dollar-denominated account entitled “ Construction Account ”, Account No. 129542 (the “ Construction Account ”);

 

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(ii)                                   a special, segregated Dollar-denominated account entitled “Liquidated Damages Account”, Account No. 129607 (the “ Liquidated Damages Account ”);

 

(iii)                                a special, segregated, Dollar-denominated account entitled “Revenue Account”, Account No. 129615 (the “ Revenue Account ”);

 

(iv)                               a special, segregated, Dollar-denominated account entitled “Operating Account”, Account No. 129461 (the “ Operating Account ”);

 

(v)                                  a special, segregated, Dollar-denominated account entitled “Maintenance Capital Expense Account”, Account No. 
129488 (the “ Maintenance Capital Expense Account ”);

 

(vi)                               a special, segregated, Dollar-denominated account entitled “Working Capital Reserve Account”, Account No. 128619 (the “ Working Capital Reserve Account ”);

 

(vii)                            a special, segregated, Dollar-denominated account entitled “Debt Service Reserve Account”, Account No. 129496 (the “ Debt Service Reserve Account ”);

 

(viii)                         a special, segregated, Dollar-denominated account entitled “Prepayment Holding Account”, Account No. 129518 (the “ Prepayment Holding Account ”);

 

(ix)                                 a special, segregated, Dollar-denominated account entitled “Aberdeen Insurance and Condemnation Proceeds Account”, Account No. 129526 (the “ Aberdeen Insurance and Condemnation Proceeds Account ”);

 

(x)                                    a special, segregated, Dollar-denominated account entitled “Huron Insurance and Condemnation Proceeds Account”, Account No. 129534 (the “ Huron Insurance and Condemnation Proceeds Account ”);

 

(xi)                                 a special, segregated, Dollar-denominated account entitled “Extraordinary Proceeds Account”, Account No. 128449 (the “ Extraordinary Proceeds Account ”);

 

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(xii)                              a special, segregated, Dollar-denominated account entitled “Contingency Reserve Account”, Account No. 128457 (the “ Contingency Reserve Account ”);

 

(xiii)                           a special, segregated, Dollar-denominated sub-account of the Construction Account entitled the “Bond Proceeds Sub-Account”, Account No. 128511 (the “ Bond Proceeds Sub-Account ”); and

 

(xiv)                          a special, segregated, Dollar-denominated sub-account of the Working Capital Reserve Account entitled the “LC Cash Collateral Sub-Account”, Account No. 129364 (the “ LC Cash Collateral Sub-Account ”).

 

Section 3.02           Deposits into and Withdrawals from Project Accounts . (a) Amounts shall be deposited into and withdrawn from the Project Accounts in strict accordance with this Article III .

 

(b)        The Accounts Bank will only be required to transfer funds hereunder on a “same day” basis if it has received written notice of such proposed transfer, together with all certificates, notices, directions and other documents required under this Accounts Agreement to be delivered to the Accounts Bank relating thereto, not later than 11:00 a.m. Eastern time on the Business Day of such proposed transfer and, if such notice or any such related document is received by the Accounts Bank after such time, such transfer will be undertaken on the next Business Day succeeding the date of receipt by the Accounts Bank of all such documentation.

 

(c)         If any transfer, withdrawal, deposit, investment or payment of any funds by the Accounts Bank or any other action to be taken by the Accounts Bank under this Accounts Agreement is to be made or taken on a day other than a Business Day, such transfer, withdrawal, deposit, investment, payment or other action will be made or taken on the next succeeding Business Day.

 

(d)        (i)  Any instruction, direction, notice, certificate, request or requisition given to the Accounts Bank by the Borrower with respect to the transfer, withdrawal, deposit, investment or payment of any funds under this Accounts Agreement or with respect to any other obligations to be performed by the Accounts Bank under this Accounts Agreement (A) must be in writing and signed by an Authorized Officer of the Borrower, (B) in referencing any of the Project Accounts, must refer to the specific Project Account name and number, (C) shall constitute a representation by the Borrower that all conditions set forth in this Accounts Agreement for such withdrawal have been satisfied, whether or not those conditions are explicitly

 

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stated to be so satisfied and (D) shall be copied to the Administrative Agent and the Collateral Agent.

 

(ii)  Any instruction, direction, notice, certificate, request or requisition given to the Accounts Bank by the Collateral Agent or the Administrative Agent with respect to the transfer, withdrawal, deposit investment or payment of any funds under this Accounts Agreement or with respect to any other obligations to be performed by the Accounts Bank under this Accounts Agreement (A) must be in writing, (B) in referencing any of the Project Accounts, must refer to the specific Project Account name and number, and (C) shall be copied to the Borrower.

 

(iii)  Notwithstanding anything contained in this Accounts Agreement or any other Financing Document to the contrary, the Accounts Bank may rely on, and shall be protected in acting or refraining from acting upon, any instruction, direction, notice, certificate, request or requisition of the Borrower, the Administrative Agent or the Collateral Agent.

 

(e)         None of the Project Accounts shall go into overdraft, and the Accounts Bank shall not comply with any request or direction to the extent that it would cause any of the Project Accounts to do so.

 

(f)         The Borrower hereby acknowledges that it has irrevocably instructed each Project Party, and agrees that it shall so instruct each future Project Party and each payor in connection with any sale of Product, to make all payments due and payable to the Borrower under any Project Document and in connection with any such sale of Product directly to the Accounts Bank for deposit in, or to be credited in the manner set forth in this Article III . The Borrower further agrees that it shall irrevocably instruct each other Person from whom the Borrower is entitled to receive Cash Flow or Insurance Proceeds and Condemnation Proceeds to make all payments due and payable to the Borrower from such Person directly to the Accounts Bank for deposit, and to be credited, in the manner set forth in this Article III .

 

(g)        The Accounts Bank shall not be charged with knowledge of any Notice of Suspension, Default or Event of Default unless the Accounts Bank has received such Notice of Suspension or other written notice of such Default or Event of Default from the Administrative Agent, the Collateral Agent or an Authorized Officer of the Borrower. The Accounts Bank shall not be charged with the knowledge that the Conversion Date has occurred unless it has received written notice thereof from the Administrative Agent or from the Borrower if countersigned by the Administrative Agent.

 

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(h)        The Accounts Bank shall not be charged with the knowledge that any transfer or withdrawal from any Project Account would result in the occurrence of a Default or Event of Default, unless it has received written notice thereof from the Administrative Agent, the Collateral Agent or an Authorized Officer of the Borrower.

 

(i)          Notwithstanding anything contained in this Accounts Agreement or any other Financing Document to the contrary, the Accounts Bank shall have no obligation to (i) make any payment, transfer or withdrawal from any Project Account until it has received written direction to make such payment, transfer or withdrawal from the Collateral Agent, the Administrative Agent, or the Borrower if this Accounts Agreement explicitly provides that any such direction may be made by the Borrower, or (ii) determine whether any payment, transfer or withdrawal from any Project Account made in accordance with any written direction from the Collateral Agent, the Administrative Agent or the Borrower (if this Accounts Agreement explicitly provides that any such direction may be made by the Borrower) complies with the terms of this Accounts Agreement. The Accounts Bank shall have no liability for, nor any responsibility or obligation to confirm, the use or application by the Borrower, Administrative Agent, the Collateral Agent or any other recipient of amounts withdrawn or transferred from any Project Account.

 

(j)          Notwithstanding any other provision of this Accounts Agreement or any other Financing Document (but without limiting Section 3.02(g), (h) and (i) ( Deposits into and Withdrawals from Project Accounts ) ), without the express prior written consent of the Required Lenders, no amount may be withdrawn from any Project Account if a Default or Event of Default would occur as a result of such withdrawal.

 

(k)         On the date of each withdrawal by the Accounts Bank from a Project Account, the Borrower shall be deemed to represent and warrant that no Notice of Suspension is in effect and that no Default or Event of Default would occur as a result of such withdrawal, unless the Required Lenders have previously consented in writing to such withdrawal, notwithstanding that a Notice of Suspension is in effect or that a Default or Event of Default would occur as a result of such withdrawal.

 

ARTICLE IV

CONSTRUCTION ACCOUNT

 

Section 4.01           Construction Account . (a)  Payments into the Construction Account . Until (and including) the Conversion Date, the Borrower (or, with respect to Loan proceeds, the Administrative Agent) shall cause the following amounts to be paid into the Construction Account:

 

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(i)                                      until the Conversion Date, all equity contributions received by the Borrower in respect of the Aberdeen II Plant;

 

(ii)                                   all proceeds disbursed from the Bond Project Fund for the Aberdeen II Plant pursuant to the Bond Indenture with directions to deposit such proceeds into the Bond Proceeds Sub-Account;

 

(iii)                                all proceeds of the Construction Loans (except (A) for any Fundings applied directly to the payment of Debt Service or other Obligations or (B) as otherwise applied on the Conversion Date in accordance with Section 2.06(e) ( Funding of Loans ) of the Credit Agreement);

 

(iv)                               all damages payable (other than Delay Liquidated Damages) under the Design-Build Agreement;

 

(v)                                  all amounts required to be deposited into the Construction Account pursuant to Section 14.01(b) ( Contingency Reserve Account ) ; and

 

(vi)                               all amounts deposited into the Construction Account pursuant to Section 4.02(b)(i)(y) ( Withdrawals from the Bond Proceeds Sub-Account ).

 

(b)        Withdrawals from the Construction Account . (i)  Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated by this Section 4.01 , the Borrower may direct the transfer or withdrawal of funds standing to the credit of the Construction Account (A) to pay Project Costs then due and owing strictly in accordance with the Construction Budget, (B) to pay Project Costs relating to repayment in full on the Closing Date of Existing Plant Debt and (C) to the extent of any additional equity provided by the Pledgors pursuant to Section 6.01(gg) ( Existing Plant Debt Payoff ) of the Credit Agreement, to pay the amount by which the repayment in full of the Existing Plant Debt (including accrued interest) exceeds forty-seven million Dollars ($47,000,000), in each case by delivering a Construction Withdrawal Certificate to the Accounts Bank (with a copy to the Administrative Agent and the Independent Engineer) which, in the case of any Loan proceeds, shall be for application strictly in accordance with the relevant Funding Notice (as defined in the Credit Agreement). All payments from the Construction Account shall be made by the Accounts Bank pursuant to instructions set forth in the relevant Construction Withdrawal Certificate directly to the payee. In the event that the Borrower fails to deliver such a Construction Withdrawal Certificate, the

 

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Administrative Agent is hereby authorized to direct, in writing, the Accounts Bank to transfer or withdraw the amounts necessary to pay Project Costs that are, from time to time, due and payable.

 

(ii)           Conversion Date . On the Conversion Date, all amounts on deposit in or standing to the credit of the Construction Account (other than amounts on deposit in or standing to the credit of the Additional Capital Expenditure Sub-Account and the Bond Proceeds Sub-Account) shall be withdrawn and such account (but not the Additional Capital Expenditure Sub-Account) shall be terminated and closed at the written instruction of the Borrower or the Administrative Agent, and such amounts shall be applied in accordance with Section 2.06(e) ( Funding of Loans ) of the Credit Agreement and the Construction Withdrawal Certificate (a copy of which shall be delivered to, and shall constitute instructions to, the Accounts Bank).

 

Section 4.02           Bond Proceeds Sub-Account . (a)  All proceeds disbursed from the Bond Project Fund for the Aberdeen II Plant pursuant to the Bond Indenture shall be deposited into the Bond Proceeds Sub-Account. On the Closing Date the Second Lien Agent is required to deposit fifteen million five hundred eighty-three thousand five hundred sixty-two Dollars and fifty cents ($15,583,562.50) of the Original Proceeds of the Bonds solely into the Bond Proceeds Sub-Account.

 

(b)        Withdrawals from the Bond Proceeds Sub-Account . (i)  Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated by this Section 4.02 , funds standing to the credit of the Bond Proceeds Sub-Account shall be disbursed only upon delivery to the Accounts Bank of (A) a Bond Proceeds Withdrawal Certificate (with a copy to the Administrative Agent, the Independent Engineer and the Second Lien Agent), countersigned by each of the Borrower and the Second Lien Agent, and, (B) an Independent Engineer’s Certificate. All payments from the Bond Proceeds Sub-Account shall be made by the Accounts Bank pursuant to instructions set forth in the relevant Bond Proceeds Withdrawal Certificate either (x) directly to the payee, or (y) in the case of a requested disbursement for Costs of the Project previously paid by or on behalf of the Borrower, but in respect of which no Bond Proceeds Withdrawal Certificate has been delivered previously, for transfer to the Construction Account in an amount equal to the amount of such previous payments.

 

(ii)         Termination . On the earlier of the Conversion Date and the Conversion Date Certain, at the written instruction of the Second Lien Agent, all amounts on deposit in or standing to the credit of the Bond Proceeds Sub-Account shall be paid to the Second Lien Agent for deposit into the Bond Project Fund and application as set forth in the Bond Indenture, and such account shall be terminated and closed. All parties to this Accounts Agreement agree and covenant not to contest or seek to prohibit

 

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the payment of such amounts to the Second Lien Agent or assert any claim to such monies under any theory.

 

(c)         Notices Regarding Nature of Bond Proceeds . The Borrower and the Second Lien Agent hereby notify the parties hereto that:

 

(i)             the initial deposit of Original Proceeds of the Bonds referenced in Section 4.02(a) constitutes all of the Original Proceeds of the Bonds (being $19,000,000) less $1,900,000 of such Original Proceeds which are being deposited into the Bond Debt Service Reserve Fund, $366,000 of such Original Proceeds being deposited to the Bond Expense Fund, and $1,136,437.50 of such Original Proceeds for the purpose of paying interest on the Bonds during the construction period;

 

(ii)            the Bonds are being issued with a date of issuance so there is no accrued interest and are being sold by Dougherty & Company LLC, as underwriter, to the ultimate purchaser(s) thereof at a price equal to the par amount thereof resulting in an Issue Price of $19,000,000;

 

(iii)           all earnings on investments of Original Proceeds deposited into the Bond Proceeds Sub-Account constitute Investment Proceeds;

 

(iv)           the Original Proceeds and Investment Proceeds (which includes investment earnings on investment earnings) constitute Gross Proceeds of the Bonds;

 

(v)            the Gross Proceeds of the Bonds deposited into the Bond Proceeds Sub-Account are subject to yield restrictions as to investment as set forth in the Code, except to the extent to which a temporary period (as defined in the Code) exists to allow for the investment of such accounts at a yield (as defined in the Code) in excess of the yield (as defined in the Code) on the Bonds;

 

(vi)           Excess Earnings (as defined in the Code) on Gross Proceeds are subject to rebate to the United States of America as set forth in the Code and tax returns are

 

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required to be filed periodically as set forth in the Code as to the calculation of such rebate;

 

(vii)        The exclusion of interest paid on the Series 2007A Bonds from gross income of the recipient for federal income tax purposes is dependant on continued compliance with the requirements of the Code after issuance of the Bonds and such compliance requirements apply to the proceeds deposited into the Bond Proceeds Sub-Account, are not limited to matters within the control of the Issuer or the Borrower, may be based on actual occurrences rather than reasonable expectations of the Issuer or the Borrower at the time of issuance of the Bonds and may result in all interest paid on the Bonds to be included in taxable income of the recipient thereof from the date of issuance of the Bonds;

 

(viii)       Compliance obligations with respect to the Bonds, including without limitation, recordkeeping, may survive the termination of the Accounts Agreement and the payment in full of the Bonds; and

 

(ix)        References to the Code shall include the regulations, technical advice memorandum, published rulings and private letter rulings of the Internal Revenue Service relating to the applicable provisions of the Code.

 

(d)                          Covenants Relating to Bond Proceeds Sub-Account .

 

(i)           Except for amounts transferred to the Construction Account in accordance with Section 4.02(b)(i)(y) , all amounts on deposit in the Bond Proceeds Sub-Account shall be used solely for the payment of Costs of the Project.

 

(ii)         Notwithstanding any provision herein to the contrary, all amounts on deposit in the Bond Proceeds Sub-Account (A) shall be invested solely at the direction of the Second Lien Agent in Cash Equivalents, (B) shall be segregated and separated from all other amounts on deposit pursuant to the Accounts Agreement, (C) shall not be commingled with any amounts on deposit in any other Project Accounts, and (D) shall be accounted for separately from all other amounts on deposit with the Accounts Bank.

 

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(iii)           Each investment of amounts on deposit in the Bond Proceeds Sub-Account shall be purchased solely from such amounts. No such investment shall be apportioned to or represent an investment of monies in any other Project Account.

 

(iv)           The Accounts Bank shall maintain complete and accurate records of all disbursements from the Bond Proceeds Sub-Account, and shall provide monthly reports of such disbursements together with copies of all supporting documentation to the Second Lien Agent within 10 days from the end of each month for such month. Such obligation to maintain records shall survive the termination of the Accounts Agreement for the period set forth in Section 9.01 ( Recordkeeping Obligation ) of the Tax Exemption Agreement.

 

(v)            The Accounts Bank shall maintain complete and accurate records as to all investments and earnings with such information as required by Section 9.01 ( Recordkeeping Obligation ) of the Tax Exemption Agreement and provide reports to the Second Lien Agent within 10 days from the end of each month for activity during such month, together with copies of all back-up documentation. The obligation to maintain such records shall survive the termination of the Accounts Agreement for the period set forth in Section 9.01 ( Recordkeeping Obligation ) of the Tax Exemption Agreement.

 

(vi)           The Accounts Bank shall not honor any claim by any other party to funds in the Bond Proceeds Sub-Account to be disbursed and shall not so disburse such funds to any such claimant and shall promptly notify the Second Lien Agent, the Borrower, the Issuer and the Administrative Agent of any such claim.

 

(vii)          No disbursement shall be made to the Borrower, or any other party, for Costs of the Project actually paid by the Borrower or any other party more than 60 days prior to July 3, 2007, except preliminary expenditures identified in Treas. Reg. Section 1.150-2(f)(2) not exceeding $3,800,000.

 

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(viii)         No party to the Accounts Agreement other than the Second Lien Agent shall have the right to give instructions to withdraw or use the amounts on deposit in the Bond Proceeds Sub-Account, other than the Accounts Bank acting as agent for the Second Lien Agent to maintain possession of such funds, or shall make any claim or commence any action under any provision of any document, law or asserted legal right with respect to such amounts and specifically agree that such amounts may be used solely for the payment of Costs of the Project pursuant to the terms and conditions of this Accounts Agreement.

 

(ix)            The delivery of the proceeds of the Bonds, and the investment earnings thereon, to the Accounts Bank does not constitute delivery to or possession by the Borrower and the Borrower shall have no right of control over such funds other than to request disbursement thereof upon a valid Written Request (as defined in the Bond Indenture). No party to this Agreement shall assert, claim or seek a determination that such amounts constitute part of the bankrupt estate of the Borrower for bankruptcy or insolvency purposes. All amounts in the Bond Proceeds Sub-Account shall be held in trust for the benefit of the Second Lien Claimholders, subject to application to pay Costs of the Project as set forth in Section 4.02(b)(i) .

 

(x)             Once all of the conditions in this Agreement and the relevant Bond Proceeds Withdrawal Certificate (other than execution of such certificate by the Second Lien Agent) to disbursement of funds from the Bond Proceeds Sub-Account have been satisfied, then the Second Lien Agent shall execute, and deliver to the Borrower and the Accounts Bank, such Bond Proceeds Withdrawal Certificate.

 

ARTICLE V

LIQUIDATED DAMAGES ACCOUNT

 

Section 5.01            Liquidated Damages Account . (a)  Payments into the Liquidated Damages Account . The Borrower shall cause all Delay Liquidated Damages received on or prior to the Conversion Date to be paid into the Liquidated Damages Account.

 

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(b)         Withdrawals from the Liquidated Damages Account . (i)  Payment of Debt Service or Fixed Costs . Until (but not including) the Conversion Date, unless a Notice of Suspension is in effect or a Default or an Event of Default would occur as a result of any application of funds contemplated by this Section 5.01 , the Borrower may, from time to time, submit a Liquidated Damages Transfer Certificate to the Accounts Bank to direct the transfer or withdrawal of funds standing to the credit of the Liquidated Damages Account to pay directly any amounts due and payable for (A) Debt Service or (B) fixed costs or other amounts, in each case that are due and owing and approved by the Administrative Agent and the Independent Engineer. In the event that the Borrower fails to deliver such a Liquidated Damages Transfer Certificate, the Collateral Agent, as directed in writing by the Administrative Agent, is hereby authorized to direct, in writing, the Accounts Bank (with a copy to the Borrower) to transfer or withdraw the amounts necessary to pay Debt Service, fixed costs or other amounts that are due and owing.

 

(ii)  Conversion Date . On the Conversion Date, the Accounts Bank shall, upon written direction from the Borrower or the Collateral Agent, transfer any funds on deposit in or standing to the credit of the Liquidated Damages Account to the Revenue Account.

 

ARTICLE VI

REVENUE ACCOUNT

 

Section 6.01            Revenue Account . (a) Payments into the Revenue Account . The Borrower shall cause the following amounts to be paid into the Revenue Account:

 

(i)             all Cash Flow;

 

(ii)            except as set forth in Section 13.01 ( Extraordinary Proceeds Account ) , all proceeds from the sale or disposition of any assets of the Borrower;

 

(iii)           any other income received by or on behalf of the Borrower that is not required to be deposited in or credited to another Project Account, or applied directly to the Obligations, in accordance with this Accounts Agreement;

 

(iv)           any Delay Liquidated Damages received after the Conversion Date; and

 

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(v)            amounts transferred to the Revenue Account pursuant to Section 2.06(e) ( Funding of Loans ) of the Credit Agreement, Section 5.01(b)(ii) ( Withdrawals from the Liquidated Damages Account ) , Section 9.01(b) (Withdrawals from the Working Capital Reserve Account) or (c) (Excess Amount in Working Capital Reserve Account ) , Section 10.03 (Excess in Debt Service Reserve Account ) , Section 11.01(b) ( Withdrawals from the Prepayment Holding Account ) , Section 13.01(b)(i)(A) (Withdrawals from the Extraordinary Proceeds Account – Asset Disposal) or (ii)(A) ( Withdrawals from the Extraordinary Proceeds Account – Project Document Termination Payments ) or Section 14.01(b)(iii) (Withdrawals from the Contingency Reserve Account ) .

 

(b)         Withdrawals from the Revenue Account Prior to Conversion Date . Until (but not including) the Conversion Date, unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated by this Section 6.01(b) , upon receipt of a Pre-Conversion Date Revenue Account Withdrawal Certificate duly executed by an Authorized Officer of the Borrower, the Accounts Bank shall, in accordance with the directions set forth therein, cause funds held in the Revenue Account to be withdrawn or transferred to pay the following amounts on the dates and at the priorities indicated below:

 

(i)             first , on each Monthly Date (or, in the case of amounts to pay Operation and Maintenance Expenses for the cost of corn, on any date), to the Operating Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate as required to pay Operation and Maintenance Expenses that, in each such case (other than Operation and Maintenance Expenses for the cost of corn), are or will become due and payable during the immediately succeeding calendar month; provided , that the aggregate amount of withdrawals (other than for amounts to pay Operation and Maintenance Expenses for the cost of corn and natural gas) pursuant to this priority first for all calendar months in such Fiscal Year (or, if the Closing Date occurred during such Fiscal Year, for all calendar months since the Closing Date), including amounts proposed to be drawn on such Monthly Date for the immediately succeeding calendar month, does not exceed the Permitted Budgeted Operating Expenses Level for such

 

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immediately succeeding calendar month, as certified by the Borrower in such Revenue Account Withdrawal Certificate;

 

(ii)            second , on each Monthly Date, to the Maintenance Capital Expense Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate as necessary to pay Maintenance Capital Expenses that, in each such case, are or will become due and payable during the immediately succeeding calendar month; provided that such transfer shall require the approval of the Independent Engineer if (A) such Maintenance Capital Expenses are incurred or to be incurred for compliance with any Environmental Law or other applicable Law and (I) would exceed five hundred thousand Dollars ($500,000) or (II) together with all previous transfers to the Maintenance Capital Expense Account pursuant to this clause (A) during the then current Fiscal Year (or, if the Closing Date occurred during the current Fiscal Year, since the Closing Date), would exceed, in the aggregate, one million Dollars ($1,000,000), or (B) such Maintenance Capital Expenses are for any other purpose and, taken together with all previous transfers to the Maintenance Capital Expense Account pursuant to this clause (B) during the then current Fiscal Year (or, if the Closing Date occurred during the current Fiscal Year, since the Closing Date), would exceed, in the aggregate, five hundred thousand Dollars ($500,000), as certified by the Borrower in such Revenue Account Withdrawal Certificate;

 

(iii)           third , on any date when due and payable, to the Administrative Agent, for the account of the Senior Secured Parties, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as necessary to pay Fees, costs and expenses then due and payable under the Financing Documents;

 

(iv)           fourth , on any date when due and payable, to the Administrative Agent, for the account of the Senior Secured Parties, in the amount certified by the Borrower in

 

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such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as necessary to pay any interest then due and payable under the Financing Documents and any fees, expenses or Net Swap Payments owing to any Interest Rate Protection Provider;

 

(v)            fifth , on each Monthly Date when due and payable, to the Administrative Agent, for the account of the Interest Rate Protection Providers, on a pro rata basis, the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as payments of Swap Termination Value then due and payable by the Borrower with respect to any Interest Rate Protection Agreements;

 

(vi)           sixth , on each Monthly Date, when required pursuant to Section 3.10(e)(ii) of the Credit Agreement, to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate, as a payment of the Working Capital Loans to ensure that there are no outstanding Working Capital Loans for a period of ten (10) consecutive Business Days in each calendar year;

 

(vii)          seventh , on any date when required pursuant to Section 3.10(a)(v) or Section 3.10(e)(i) ( Mandatory Prepayment ) of the Credit Agreement, or otherwise at the option of the Borrower pursuant to Section 3.09(d)(ii) ( Optional Prepayment ) of the Credit Agreement, to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, for application as a prepayment of the Working Capital Loans;

 

(viii)         eighth , on each Monthly Date, to the Working Capital Reserve Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as equal to the difference between

 

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(A) the Working Capital Reserve Required Amount and (B) the funds on deposit in or standing to the credit of the Working Capital Reserve Account on such Monthly Date;

 

(ix)            ninth , on each Monthly Date, to the Contingency Reserve Account, the amount specified in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as shall cause the amount on deposit in the Contingency Reserve Account to equal the Contingency Reserve Required Amount at such time;

 

(x)             tenth , provided that no Default or Event of Default has occurred and is continuing, on each Quarterly Payment Date, in an amount certified by the Borrower in such Revenue Account Withdrawal Certificate, which amount shall not exceed fifty percent (50%) of the funds remaining after priority ninth above, to the Persons or accounts specified in such Revenue Account Withdrawal Certificate (including, if required to be paid directly to any taxing authority, to such taxing authority), for payment of any Permitted Tax Distribution;

 

(xi)            eleventh , on each Quarterly Payment Date, to the Administrative Agent, all remaining amounts after priority tenth , as certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, for application as a prepayment of the Construction Loans in accordance with Section 3.10(b)(i) ( Mandatory Prepayment ) of the Credit Agreement, provided that the aggregate prepayments pursuant to this priority eleventh shall not exceed twenty-nine million Dollars ($29,000,000); and

 

(xii)           twelfth, on each Quarterly Payment Date, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, as a prepayment of the Construction Loans in accordance with Section 3.10(b)(i) ( Mandatory Prepayment ) of the Credit Agreement and, provided that no Default or Event of

 

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Default has occurred and is continuing, for distribution to the Pledgors, in amounts such that the ratio of Aggregate Pre-Conversion Cash Sweeps to Aggregate Pre-Conversion Distributions is equal to 60:40, provided , that if sufficient amounts are not available at this priority for prepayment of the Construction Loans in order for such ratio to be achieved, then all such amounts shall be applied as a prepayment of the Construction Loans in accordance with Section 3.10(b)(i) ( Mandatory Prepayment ) of the Credit Agreement.

 

(c)          Withdrawals from the Revenue Account On and After the Conversion Date . Commencing on (and including) the Conversion Date, unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated by this Section 6.01(c) , upon receipt of a Post-Conversion Date Revenue Account Withdrawal Certificate duly executed by an Authorized Officer of the Borrower, the Accounts Bank shall, in accordance with the directions set forth therein, cause funds held in the Revenue Account to be withdrawn or transferred to pay the following amounts on the dates and at the priorities indicated below:

 

(i)             first , on each Monthly Date (or, in the case of amounts to pay Operation and Maintenance Expenses for the cost of corn, on any date), to the Operating Account, the amount certified by the Borrower in such Revenue Account Withdrawal Certificate as required to pay Operation and Maintenance Expenses that, in each such case (other than Operation and Maintenance Expenses for the cost of corn), are or will become due and payable during the immediately succeeding calendar month; provided , that the aggregate amount of withdrawals (other than for amounts to pay Operation and Maintenance Expenses for the cost of corn and natural gas) pursuant to this priority first and to priority first of Section 6.01(b) for all calendar months in such Fiscal Year (or, if the Closing Date occurred during such Fiscal Year, for all calendar months since the Closing Date), including amounts proposed to be drawn on such Monthly Date for the immediately succeeding calendar month, does not exceed the Permitted Budgeted Operating Expenses Level for such immediately succeeding calendar month, as certified by the Borrower in such Revenue Account Withdrawal Certificate;

 

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(ii)            second , on each Monthly Date, to the Maintenance Capital Expense Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate as necessary to pay Maintenance Capital Expenses that, in each such case, are or will become due and payable during the immediately succeeding calendar month; provided that such transfer shall require the approval of the Independent Engineer if (A) such Maintenance Capital Expenses are incurred or to be incurred for compliance with any Environmental Law or other applicable Law and (I) would exceed five hundred thousand Dollars ($500,000) or (II) together with all previous transfers to the Maintenance Capital Expense Account pursuant to this clause (A) during the then current Fiscal Year, would exceed, in the aggregate, one million Dollars ($1,000,000), or (B) such Maintenance Capital Expenses are for any other purpose and, taken together with all previous transfers to the Maintenance Capital Expense Account pursuant to this clause (B) during the then current Fiscal Year, would exceed, in the aggregate, five hundred thousand Dollars ($500,000), as certified by the Borrower in such Revenue Account Withdrawal Certificate;

 

(iii)           third , on any date when due and payable, to the Administrative Agent, for the account of the Senior Secured Parties, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as necessary to pay Fees, costs and expenses then due and payable under the Financing Documents;

 

(iv)           fourth , on any date when due and payable, to the Administrative Agent, for the account of the Senior Secured Parties, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as necessary to pay any interest then due and payable under the Financing Documents and any fees, expenses or Net Swap Payments owing to any Interest Rate Protection Provider;

 

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(v)            fifth , on each Monthly Date, when required pursuant to Section 3.10(e)(ii) of the Credit Agreement, to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate, as a payment of the Working Capital Loans to ensure that there are no outstanding Working Capital Loans for a period of ten (10) consecutive Business Days in each calendar year;

 

(vi)           sixth , on any date when required pursuant to Section 3.10(a)(v) or Section 3.10(e)(i) ( Mandatory Prepayment ) of the Credit Agreement, or otherwise at the option of the Borrower pursuant to Section 3.09(d)(ii) ( Optional Prepayment ) of the Credit Agreement, to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, for application as a prepayment of the Working Capital Loans;

 

(vii)          seventh , on each Quarterly Payment Date, to pay to the Administrative Agent, for the account of the Senior Secured Parties, on a pro rata basis, the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as (A) principal amounts due and payable with respect to the Term Loans and, on the Working Capital Loan Maturity Date, with respect to the Working Capital Loans, (B) payments of Swap Termination Value then due and payable by the Borrower with respect to any Interest Rate Protection Agreements;

 

(viii)         eighth , on each Monthly Date, to the Working Capital Reserve Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as equal to the difference between (A) the Working Capital Reserve Required Amount and (B) the funds on deposit in or standing to the credit of the Working Capital Reserve Account on such Monthly Date;

 

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(ix)            ninth , on each Monthly Date, to the Debt Service Reserve Account, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as equal to the difference between (A) the Debt Service Reserve Required Amount and (B) the funds on deposit in or standing to the credit of the Debt Service Reserve Account (including the Stated Amount of any Debt Service Reserve Letter of Credit) on such Monthly Date;

 

(x)             tenth, on each Monthly Date until the expiration of the Warranty Period, to the Contingency Reserve Account, the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent as shall cause the amount on deposit in the Contingency Reserve Account to equal the Contingency Reserve Required Amount at such time;

 

(xi)            eleventh , provided that no Material Default or Event of Default has occurred and is continuing, on each Quarterly Payment Date, to the Second Lien Agent, for the account of the Second Lien Claimholders, in the amount certified in writing by the Borrower (with a copy to the Administrative Agent and the Second Lien Agent) as Current Priority Subordinated Interest for the Quarterly Period ending on such Quarterly Payment Date;

 

(xii)           twelfth , once the Pre-Conversion Prepayment Target has been achieved, on each Quarterly Payment Date, to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, for application as a prepayment of the Term Loans in accordance with Section 3.10(b)(ii) ( Mandatory Prepayment ) of the Credit Agreement in an amount equal to sixty percent (60%) of the cash remaining in the Revenue Account after the transfer required (if any) pursuant to priority eleventh ;

 

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(xiii)          thirteenth , only after the Notice of Security Discharge Date has been delivered, on each January 1 and July 1, to the Second Lien Agent, for the account of the Second Lien Claimholders, on a pro rata basis, as and in the amount certified in writing by the Borrower as principal amounts due and payable with respect to the Subordinated Debt;

 

(xiv)         fourteenth, provided that no Default or Event of Default has occurred and is continuing, on each Quarterly Payment Date, in an amount certified by the Borrower in such Revenue Account Withdrawal Certificate to the Persons or accounts specified in such Revenue Account Withdrawal Certificate (including, if required to be paid directly to any taxing authority, to such taxing authority) for payment of any Permitted Tax Distribution, provided that prior to achievement of the Pre-Conversion Prepayment Target no more than 50% of the cash available at this priority fourteenth shall be applied for such Permitted Tax Distribution;

 

(xv)          fifteenth , to the Administrative Agent in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent:

 

(A)       on each Quarterly Payment Date until the Pre-Conversion Prepayment Target has been achieved, for application as a prepayment of the Term Loans in accordance with Section 3.10(b)(ii) (Mandatory Prepayment) of the Credit Agreement in an amount equal to the cash remaining in the Revenue Account after the transfer required (if any) pursuant to priority fourteenth , provided that the aggregate prepayments pursuant to priority eleventh of Section 6.01(b) and this priority fifteenth shall not exceed twenty-nine million Dollars ($29,000,000), and
 
(B)        on the date on which the Pre-Conversion Prepayment Target is achieved, for application as a prepayment of the Term Loans in an amount equal to 60% of the cash remaining in the Revenue Account after the transfer required (if any) pursuant to subsection (A) above;

 

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(xvi)         sixteenth, on each Quarterly Payment Date, to the Administrative Agent, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, for application as a prepayment of the Term Loans in accordance with Section 3.10(b)(ii) ( Mandatory Prepayment ) of the Credit Agreement in an amount such that after such prepayment the then-outstanding principal amount of the Term Loans is equal to the Target Balance Amount for such Quarterly Payment Date;

 

(xvii)        seventeenth , on each Quarterly Payment Date (A) if the Historical Debt Service Coverage Ratio as of such Quarterly Payment Date is less than 1.5:1.0, to the Administrative Agent, all amounts on deposit in or standing to the credit of the Revenue Account after the transfer required to be made pursuant to priority sixteenth , for application as a prepayment of the Term Loans in accordance with Section 3.10(c) ( Mandatory Prepayment ) of the Credit Agreement, as certified by the Borrower in such Revenue Account Withdrawal Certificate or instructed in writing to the Accounts Bank by the Administrative Agent, or (B) if the Historical Debt Service Coverage Ratio as of such Quarterly Payment Date is greater than or equal to 1.5:1.0 and the Prospective Debt Service Coverage Ratio as of such Quarterly Payment Date is less than 1.5:1.0, as certified by the Borrower in such Revenue Account Withdrawal Certificate or instructed in writing to the Accounts Bank by the Administrative Agent, to the Prepayment Holding Account, all amounts on deposit in or standing to the credit of the Revenue Account after the transfer required pursuant to priority sixteenth ;

 

(xviii)       eighteenth , only after the Notice of Security Discharge Date, on each January 1 and July 1, to the Second Lien Agent, for the account of the Second Lien Claimholders, on a pro rata basis, as and in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate to fund the Bond Revenue Fund, which amount shall be an amount certified by the Borrower;

 

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(xix)          nineteenth , on each Quarterly Payment Date, subject to the satisfaction of the conditions set forth in Section 7.02(s) ( Negative Covenants - Restricted Payments ) of the Credit Agreement, in the amount certified by an Authorized Officer of the Borrower in the Restricted Payment Certificate, to the Persons or accounts specified in the Restricted Payment Certificate, for the payment of interest, fees, expenses and other amounts (including amounts to replenish the Bond Debt Service Reserve Fund or the “Rebate Fund” (as defined in the Bond Indenture) pursuant to the Bond Indenture) then due and owing with respect to the Subordinated Debt; and

 

(xx)           twentieth , subject to the satisfaction of the conditions set forth in Section 7.02(s) ( Negative Covenants—Restricted Payments ) of the Credit Agreement, on, or within thirty (30) days following, each Quarterly Payment Date, as and in the amount certified by an Authorized Officer of the Borrower in a Restricted Payment Certificate.

 

ARTICLE VII

OPERATING ACCOUNT

 

Section 7.01            Operating Account . (a)  Payments into the Operating Account . Funds shall be deposited into the Operating Account pursuant to priority first of Section 6.01(b) ( Revenue Account ) and priority first of Section 6.01(c) ( Revenue Account ) .

 

(b)         Withdrawals from the Operating Account . Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated hereby, and so long as adequate funds are then available in the Operating Account, the Borrower:

 

(i)             may, by written instruction to the Accounts Bank (with a copy to the Collateral Agent and the Administrative Agent), withdraw or transfer funds from the Operating Account from time to time as may be necessary to pay directly any amounts owed by the Borrower for Operation and Maintenance Expenses; and

 

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(ii)            may direct the transfer of funds from time to time to the Local Accounts, with respect to which a Blocked Account Agreement has been executed and is in full force and effect, by delivery of an Operating Account Withdrawal Certificate to the Accounts Bank.

 

(c)          The Borrower shall ensure that the funds on deposit in and standing to the credit of all Local Accounts do not exceed, in the aggregate at any one time, two hundred thousand Dollars ($200,000).

 

ARTICLE VIII

MAINTENANCE CAPITAL EXPENSE ACCOUNT

 

Section 8.01            Maintenance Capital Expense Account . (a) Payments into the Maintenance Capital Expense Account . Funds shall be deposited into the Maintenance Capital Expense Account pursuant to priority second of Section 6.01(b) ( Revenue Account ) and priority second of Section 6.01(c) ( Revenue Account ) .

 

(b)         Withdrawals from the Maintenance Capital Expense Account . Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated hereby, and so long as adequate funds are then available in the Maintenance Capital Expense Account, the Borrower may, by written instruction to the Accounts Bank (with a copy to the Administrative Agent), withdraw or transfer funds from the Maintenance Capital Expense Account from time to time as may be necessary to pay directly any amounts owed by the Borrower for Maintenance Capital Expenses in accordance with the most recent Revenue Account Withdrawal Certificate.

 

ARTICLE IX

WORKING CAPITAL RESERVE ACCOUNT

 

Section 9.01            Working Capital Reserve Account . (a)  Payments into the Working Capital Reserve Account . Funds shall be deposited into the Working Capital Reserve Account in accordance with priority eighth of Section 6.01(b) ( Revenue Account ) , priority eighth of Section 6.01(c) ( Revenue Account ) , priority third of Section 3.09(d)(ii) ( Optional Prepayment ) of the Credit Agreement and priority fourth of Section 3.10(g) ( Mandatory Prepayment ) of the Credit Agreement. Amounts deposited into the Working Capital Reserve Account pursuant to priority second of Section 3.09(d)(ii) ( Optional Prepayment ) of the Credit Agreement and priority third of

 

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Section 3.10(g) ( Mandatory Prepayment ) of the Credit Agreement shall be deposited into the LC Cash Collateral Sub-Account.

 

(b)         Withdrawals from the Working Capital Reserve Account . Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated hereby, the Borrower may direct, by delivery of a Working Capital Reserve Transfer Certificate to the Accounts Bank (with a copy to the Administrative Agent), the transfer or withdrawal of amounts standing to the credit of the Working Capital Reserve Account (other than amounts standing to the credit of the LC Cash Collateral Sub-Account) to the Revenue Account for:

 

(i)             amounts due and owing for Operation and Maintenance Expenses, as certified by the Borrower in such Working Capital Reserve Transfer Certificate, but only to the extent that adequate funds are not available for the payment of such Operation and Maintenance Expenses in the Operating Account.

 

(ii)            amounts due and owing for Maintenance Capital Expenses, as certified by the Borrower in such Working Capital Reserve Transfer Certificate, but only to the extent that adequate funds are not available for the payment of such Maintenance Capital Expenses in the Maintenance Capital Expense Account.

 

(c)          Excess Amount in Working Capital Reserve . If, on any Quarterly Payment Date, the funds on deposit in or standing to the credit of the Working Capital Reserve Account (other than amounts standing to the credit of the LC Cash Collateral Sub-Account) are in excess of the Working Capital Reserve Required Amount, unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of such transfer, the Borrower may direct, by delivery of a Working Capital Reserve Transfer Certificate to the Accounts Bank (with a copy to the Administrative Agent), the transfer to the Revenue Account of an amount equal to the difference between (x) the aggregate amount of all funds on deposit in or standing to the credit of the Working Capital Reserve Account and (y) the Working Capital Reserve Required Amount, as certified by the Borrower and confirmed by the Administrative Agent in such Working Capital Reserve Transfer Certificate.

 

(d)            Following the funding of the LC Cash Collateral Sub-Account, the Borrower or the Administrative Agent may direct in writing, in the case of the Borrower by delivery of a Working Capital Reserve Transfer Certificate to the Accounts Bank (with a copy to the Administrative Agent), the transfer of amounts standing to the credit

 

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of the LC Cash Collateral Sub-Account to pay to the Administrative Agent, for the account of the Working Capital Lenders, the amount of any Working Capital Loans resulting from draws on the Letters of Credit.

 

(e)          If at any time the amounts standing to the credit of the LC Cash Collateral Sub-Account are in excess of the aggregate Maximum Available Amounts under all Letters of Credit then outstanding, the Borrower may direct, by delivery of a Working Capital Reserve Transfer Certificate to the Accounts Bank (with a copy to the Administrative Agent), the transfer to the Revenue Account of an amount equal to the difference between (x) the aggregate total amount of all funds on deposit in or standing to the credit of the LC Cash Collateral Sub-Account and (y) the aggregate of all such Maximum Available Amounts, as certified by the Borrower and confirmed by the Administrative Agent in such Working Capital Reserve Transfer Certificate.

 

ARTICLE X

DEBT SERVICE RESERVE ACCOUNT

 

Section 10.01          Debt Service Reserve Account . (a)  Payments into the Debt Service Reserve Account . Funds shall be deposited into the Debt Service Reserve Account:

 

(i)             on the Conversion Date, pursuant to priority first of Section 2.06(e) ( Funding of Loans ) of the Credit Agreement; and

 

(ii)            pursuant to priority ninth of Section 6.01(c)( Revenue Account ) .

 

provided that, notwithstanding the foregoing, in lieu of cash, the Borrower may cause to be delivered to the Accounts Bank one or more Debt Service Reserve Letters of Credit (each of which shall be accompanied by a Debt Service LC Waiver Letter), the Stated Amounts of which shall be credited to the Debt Service Reserve Account.

 

(b)         Withdrawals from the Debt Service Reserve Account . On any date when the amounts available at priorities third , fourth and seventh as set forth in Section 6.01(c) (Revenue Account ) are insufficient to pay Debt Service then due and owing, the Accounts Bank shall (upon written notification from the Borrower or the Administrative Agent, with a copy to the Administrative Agent or the Borrower, as applicable, setting forth the amount of such shortfall) withdraw funds from the Debt Service Reserve Account to pay to the Administrative Agent, for the account of the Senior Secured Parties, the amount of such shortfall of the Debt Service then due and

 

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payable, which funds shall be applied by the Administrative Agent in the order of priority set forth in priorities third , fourth and seventh in Section 6.01(c) (Revenue Account ) . The Accounts Bank shall promptly notify the Administrative Agent and the Collateral Agent if, at any time, there are insufficient funds (without taking into account any Debt Service Reserve Letters of Credit) standing to the credit of the Debt Service Reserve Account to make the payments required under this Section 10.01(b) .

 

Section 10.02          Debt Service Letter of Credit . Upon the written instruction of the Administrative Agent (which will promptly thereafter send a copy of such instruction to the Borrower), the Collateral Agent shall make a demand in accordance with the provisions of each Debt Service Reserve Letter of Credit, draw all or a portion of the Stated Amount of any Debt Service Reserve Letter of Credit that has been delivered in accordance with this Accounts Agreement, and deposit the funds received into the Debt Service Reserve Account. The Administrative Agent shall instruct the Collateral Agent to make such demand:

 

(a)          if amounts are required to be withdrawn from the Debt Service Reserve Account pursuant to Section 10.01(b) , and the amounts to be so withdrawn exceed the funds, not including the aggregate Stated Amounts of the Debt Service Reserve Letters of Credit standing to the credit of the Debt Service Reserve Account, in the amount necessary to make the payments of Debt Service then due and payable;

 

(b)         in full, if the commercial bank that issued such Debt Service Reserve Letter of Credit is no longer an Acceptable Bank; or

 

(c)          in full, if (A) no less than thirty (30) days prior to the expiry date of each such Debt Service Reserve Letter of Credit, the Collateral Agent has not received notice from the issuing bank that it will extend such expiry date or renew such Debt Service Reserve Letter of Credit and no substitute or replacement letter of credit satisfying the requirements of a “Debt Service Reserve Letter of Credit” has been delivered to the Collateral Agent to replace the Stated Amount of such expiring Debt Service Reserve Letter of Credit and (B) excluding the Stated Amount of such Debt Service Reserve Letter of Credit and the Stated Amount of any other Debt Service Reserve Letter of Credit that similarly could be drawn, an amount equal to the Debt Service Reserve Required Amount is not on deposit in or standing to the credit of the Debt Service Reserve Account on the date of such drawing.

 

Section 10.03          Excess in Debt Service Reserve Account . If, on any Quarterly Payment Date, the funds on deposit in or standing to the credit of the Debt Service Reserve Account (taking into account the Stated Amounts of any Debt Service Reserve Letters of Credit standing to the credit of the Debt Service Reserve Account) are in excess of the Debt Service Reserve Required Amount, unless a Notice of Suspension is

 

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in effect or a Default or Event of Default would occur as a result of such transfer, the Borrower may direct, by delivery of a Debt Service Reserve Release Certificate to the Accounts Bank (with a copy to the Administrative Agent), the transfer to the Revenue Account of an amount equal to the difference between (x) the aggregate total amount of all funds on deposit in or standing to the credit of the Debt Service Reserve Account (taking into account the Stated Amounts of any Debt Service Reserve Letters of Credit standing to the credit of the Debt Service Reserve Account) and (y) the Debt Service Reserve Required Amount, as certified by the Borrower and confirmed by the Administrative Agent in such Debt Service Reserve Release Certificate; provided , that if such difference is positive due to the posting of a Debt Service Reserve Letter of Credit to the Debt Service Reserve Account to replace or substitute for cash then on deposit, such amount may be distributed directly to any Pledgor or such other Affiliate of the Borrower who provided such Debt Service Reserve Letter of Credit (and such distribution shall not be treated as a Restricted Payment for purposes of this Accounts Agreement).

 

ARTICLE XI

PREPAYMENT HOLDING ACCOUNT

 

Section 11.01          Prepayment Holding Account . (a)  Payments into the Prepayment Holding Account . Funds shall be deposited into the Prepayment Holding Account pursuant to priority seventeenth of Section 6.01(c) ( Revenue Account ).

 

(b)         Withdrawals from the Prepayment Holding Account . The Accounts Bank shall withdraw funds from the Prepayment Holding Account upon receipt of written instructions from the Borrower or the Administrative Agent in accordance with the terms set forth below.

 

(i)             Excess Amounts in Prepayment Holding Account . If, on any Quarterly Payment Date, each of the Historical Debt Service Coverage Ratio and the Prospective Debt Service Coverage Ratio are greater than or equal to 1.5:1.0 then, subject to the satisfaction of the conditions set forth in Section 7.02(s) ( Negative Covenants - Restricted Payments ) of the Credit Agreement, the Borrower may submit a Restricted Payment Certificate to the Accounts Bank directing the transfer of amounts on deposit in and standing to the credit of the Prepayment Holding Account for deposit into the Revenue Account.

 

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(ii)            Mandatory Prepayment . If, on any Quarterly Payment Date, the Historical Debt Service Coverage Ratio is less than 1.5:1.0 then all amounts on deposit in and standing to the credit of the Prepayment Holding Account shall, upon the written instruction of the Borrower or the Administrative Agent, be paid to the Administrative Agent, for the account of the Lenders, in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate or otherwise instructed in writing to the Accounts Bank by the Administrative Agent, as a prepayment of the Term Loans (as defined in the Credit Agreement) in accordance with Section 3.10(c) ( Mandatory Prepayment ) of the Credit Agreement.

 

(iii)           Optional Prepayment . On any Interest Payment Date, any amounts on deposit in and standing to the credit of the Prepayment Holding Account may, at the sole option and upon the written instruction of the Borrower, be paid to the Administrative Agent for the account of the Lenders, as a prepayment of the Loans in the amount certified by the Borrower in such Revenue Account Withdrawal Certificate, in accordance with Section 3.09 ( Optional Prepayment ) of the Credit Agreement.

 

ARTICLE XII

INSURANCE AND CONDEMNATION PROCEEDS ACCOUNTS

 

Section 12.01          Insurance and Condemnation Proceeds Accounts . (a)  Payments into the Insurance and Condemnation Proceeds Accounts . Until the Security Discharge Date, the Borrower shall cause all Insurance Proceeds and all Condemnation Proceeds with respect to any Aberdeen Plant to be deposited in or credited to the Aberdeen Insurance and Condemnation Proceeds Account, and with respect to the Huron Plant to be deposited in or credited to the Huron Insurance and Condemnation Proceeds Account.

 

(b)         Withdrawals from the Insurance and Condemnation Proceeds Accounts . The Borrower shall not make, direct, or request the Accounts Bank to make, any withdrawals from any Insurance and Condemnation Proceeds Account except as permitted by this Article XII and provided that no Notice of Suspension has been delivered that has not been withdrawn and no Default or Event of Default would occur as a result of such transfer or withdrawal.

 

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(c)          Amounts of $2,500,000 or Less . The Borrower may apply any Insurance Proceeds and Condemnation Proceeds deposited into any Insurance and Condemnation Proceeds Account in amounts less than or equal to two million five hundred thousand Dollars ($2,500,000) arising from any one claim or any series of claims relating to the same occurrence directly for the replacement or repair of damaged assets to which such Insurance Proceeds or Condemnation Proceeds, as the case may be, relate; provided , that the Borrower delivers to the Administrative Agent and the Accounts Bank, no fewer than five (5) Business Days in advance of any such proposed transfers or withdrawals from such Insurance and Condemnation Proceeds Account, an Insurance and Condemnation Proceeds Request Certificate setting forth proposed instructions for such withdrawals or transfers. An Authorized Officer of the Borrower shall certify that each Insurance and Condemnation Proceeds Request Certificate is being delivered, and the withdrawals specified therein are being directed, in accordance with this Accounts Agreement and the other Transaction Documents, and shall also certify that the directed withdrawals or transfers will be used exclusively for repair or replacement of damaged assets to which such Insurance Proceeds or Condemnation Proceeds, as the case may be, relate.

 

(d)         Amounts in Excess of $2,500,000 but not Exceeding $15,000,000 . Any Insurance Proceeds and Condemnation Proceeds deposited into any Insurance and Condemnation Proceeds Account in amounts greater than two million five hundred thousand Dollars ($2,500,000) but less than or equal to fifteen million Dollars ($15,000,000) arising from any one claim or any series of claims relating to the same occurrence shall:

 

(i)             be applied for repair or replacement of damaged assets to which such Insurance Proceeds or Condemnation Proceeds, as the case may be, relate in accordance with the Borrower’s direction in an Insurance and Condemnation Proceeds Request Certificate delivered to the Administrative Agent and the Accounts Bank if, within sixty (60) days after the occurrence of the Casualty Event or Event of Taking (or such later date as may be acceptable to the Administrative Agent) giving rise to such proceeds, the Borrower delivers a Restoration or Replacement Plan to the Administrative Agent and the Independent Engineer with respect to such Casualty Event or Event of Taking that is based upon, and accompanied by, each of the following:

 

(A)       a description of the nature and extent of such Casualty Event or Event of Taking, as the case may be;

 

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(B)        a bona fide assessment (from a contractor chosen by the Borrower and reasonably acceptable to the Independent Engineer) of the estimated cost and time needed to restore or replace the Project to substantially the same value and general performance capability as prior to such event;
 
(C)        reasonably satisfactory evidence that such Insurance Proceeds or Condemnation Proceeds, as the case may be, are sufficient to make the necessary restorations or replacements;
 
(D)        a certificate of an Authorized Officer of the Borrower certifying that (1) all work contemplated to be done under the Restoration or Replacement Plan is reasonably expected to be done within the time periods, if any, required under any Project Document; (2) all Governmental Approvals necessary to perform the work have been obtained (or are reasonably expected to be obtained without undue delay); and (3) the Project once repaired/restored will continue to perform at the annual levels set forth in the then-current Operating Budget with respect to production volume, yield and utility consumption (or other levels approved by the Required Lenders);
 
(E)        the Casualty Event or Event of Taking, as the case may be (including the non-operation of the Project during any period of repair or restoration) has not resulted or would not reasonably be expected to result in a default giving rise to a termination of, or a materially adverse modification of, one or more of the Governmental Approvals or Project Documents (or, in the case of a default giving rise to a termination of a Project Document, an agreement replacing such Project Document, in form and substance, and with a counterparty, reasonably satisfactory to the Required Lenders, is entered into (together with all applicable Ancillary Documents) within forty-five (45) days thereof (or, such termination could not reasonably be expected to result in a Material Adverse Effect, within sixty (60) days thereof));

 

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(F)        after taking into consideration the availability of such Insurance Proceeds or Condemnation Proceeds, as applicable, and Business Interruption Insurance Proceeds and any additional funded equity contributions for the purpose of covering such costs, there will be adequate amounts available to pay all ongoing expenses including Debt Service during the period of repair or restoration;
 
(G)        construction contractors and vendors of recognized skill, reputation and creditworthiness and reasonably acceptable to the Administrative Agent and the Independent Engineer have executed reconstruction contracts, purchase orders or similar arrangements for the repair, rebuilding or restoration on terms and conditions reasonably acceptable to the Administrative Agent and the Independent Engineer; and
 
(H)        a confirmation by the Independent Engineer of its agreement with the matters set forth in Section 12.01(d)(i)(A)-(G) and its approval of such Restoration or Replacement Plan, which approval will not be unreasonably withheld, conditioned or delayed; or
 

(ii)            Mandatory Prepayment . If (A) the Borrower does not deliver such Restoration or Replacement Plan and the accompanying deliveries referred to in Section 12.01(d)(i) within such sixty (60) day period, or (B) after such Restoration or Replacement Plan is effected, there are excess Insurance Proceeds or Condemnation Proceeds, as the case may be, on deposit in or standing to the credit of such Insurance and Condemnation Proceeds Account, the Accounts Bank shall on the next succeeding Quarterly Payment Date thereafter, upon the written instruction of the Borrower or the Administrative Agent, transfer to the Administrative Agent, for the account of the Lenders, an amount equal to such Insurance Proceeds or Condemnation Proceeds, as the case may be, for mandatory prepayment of the Loans in accordance with Section 3.10(a)(i) or (ii) (as applicable) ( Mandatory Prepayment ) of the Credit Agreement.

 

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(e)          Amounts Exceeding $15,000,000 . Any Insurance Proceeds or Condemnation Proceeds deposited into any Insurance and Condemnation Proceeds Account in amounts greater than fifteen million Dollars ($15,000,000) arising from any one claim or any series of claims relating to the same occurrence shall be applied, at the written instruction of the Administrative Agent, to the Administrative Agent to prepay the Loans or for repair or replacement of damaged assets, as determined by the Required Lenders in their sole discretion.

 

ARTICLE XIII

EXTRAORDINARY PROCEEDS ACCOUNT

 

Section 13.01          Extraordinary Proceeds Account . (a)  Payments into the Extraordinary Proceeds Account . Until the Security Discharge Date, the Borrower shall cause (i) all proceeds of asset disposals (other than proceeds from the sale of Products) that will not be used for replacement in accordance with Section 7.02(f)(i) ( Negative Covenants — Asset Dispositions ) of the Credit Agreement and (ii) all Project Document Termination Payments to be deposited into the Extraordinary Proceeds Account.

 

(b)         Withdrawals from the Extraordinary Proceeds Account . (i)  Asset Disposal . If at any time proceeds of an asset disposal are deposited into the Extraordinary Proceeds Account, then on any Quarterly Payment Date:

 

(A)       if such proceeds are in an amount in the aggregate of less than three million Dollars ($3,000,000) (taken together with any other proceeds of asset disposals deposited in the Extraordinary Proceeds Account during the then-current Fiscal Year) the Borrower may submit an Extraordinary Proceeds Release Certificate to the Accounts Bank, certified by an Authorized Officer of the Borrower, directing the transfer of such funds to the Revenue Account; and
 
(B)        if such proceeds are in an amount equal to or greater than three million Dollars ($3,000,000) (taken together with any other proceeds of asset disposals deposited in the Extraordinary Proceeds Account during the then-current Fiscal Year), such amounts in excess of three million Dollars ($3,000,000) shall be transferred, upon the written instruction of the Borrower or the Administrative Agent, to the Administrative Agent for application as a prepayment of the Loans in

 

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accordance with Section 3.10(a)(iv) ( Mandatory Prepayment ) of the Credit Agreement.
 

(ii)            Project Document Termination Payments . If at any time Project Document Termination Payments are deposited into the Extraordinary Proceeds Account, then on any Quarterly Payment Date:

 

(A)       if such Project Document Termination Payments are in an amount in the aggregate of less than three million Dollars ($3,000,000) (taken together with any other Project Document Termination Payments received during the then-current Fiscal Year), the Borrower may submit an Extraordinary Proceeds Release Certificate to the Accounts Bank, certified by an Authorized Officer of the Borrower, directing the transfer of such Project Document Termination Payments to the Revenue Account; and
 
(B)        if such Project Document Termination Payments are in an amount equal to or greater than three million Dollars ($3,000,000) (taken together with any other Project Document Termination Payments received during the then-current Fiscal Year), such amounts in excess of three million Dollars ($3,000,000) shall be transferred, upon the written instruction of the Borrower or the Administrative Agent, to the Administrative Agent for application as a prepayment of the Loans in accordance with Section 3.10(a)(iii) ( Mandatory Prepayment ) of the Credit Agreement.
 

ARTICLE XIV

CONTINGENCY RESERVE ACCOUNT

 

Section 14.01          Contingency Reserve Account . (a) Payments into the Contingency Reserve Account . Funds shall be deposited into the Contingency Reserve Account pursuant to priority ninth of Section 6.01(b) ( Revenue Account ) and priority third of Section 2.06(e) ( Funding of Loans ) of the Credit Agreement,

 

(b)         Withdrawals from the Contingency Reserve Account . Unless a Notice of Suspension is in effect or a Default or Event of Default would occur as a result of any application of funds contemplated hereby, the Borrower may direct, by

 

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delivery of a Contingency Reserve Transfer Certificate to the Accounts Bank (with a copy to the Administrative Agent) or the Administrative Agent may direct the Accounts Bank to transfer or withdraw amounts standing to the credit of the Contingency Reserve Account in accordance with the terms below.

 

(i)             Project Costs . If, prior to the Conversion Date, at any time from time to time, sufficient amounts are not available in the Construction Budget to pay Project Costs then due and owing, then funds may be transferred from the Contingency Reserve Account to the Construction Account to pay Project Costs, as certified by an Authorized Officer of the Borrower in such Contingency Reserve Transfer Certificate or such written instruction by the Administrative Agent.

 

(ii)            Conversion Date . On the Conversion Date, funds on deposit in the Contingency Reserve Account that are in excess of the Contingency Reserve Required Amount at such time, as certified by an Authorized Officer of the Borrower in such Contingency Reserve Transfer Certificate or such written instruction by the Administrative Agent, (A) upon written notice of either Borrower or Administrative Agent, shall be applied to fund the Debt Service Reserve Account in an amount such that the amount on deposit therein is equal to the Debt Service Reserve Required Amount, and (B) after the application of amounts set forth in clause (A), if any, shall be deposited into the Revenue Account for application in accordance with the priorities set forth in Section 6.01(c) ( Revenue Account ) .

 

(iii)           Warranty Period .

 

(A)       At any time during the Warranty Period, funds on deposit in the Contingency Reserve Account may be withdrawn from the Contingency Reserve Account to pay for Warranty Work, as certified by an Authorized Officer of the Borrower in such Contingency Reserve Transfer Certificate; provided that prior written consent of the Independent Engineer shall be required if the amount withdrawn, individually or in the aggregate relating to the same Warranty Work, exceeds five hundred thousand Dollars ($500,000).

 

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(B)        Upon expiration of the Warranty Period (as defined in the Credit Agreement), any remaining funds on deposit in the Contingency Reserve Accounts shall be transferred to the Revenue Account, as certified by an Authorized Officer of the Borrower in such Contingency Reserve Transfer Certificate or such written instruction by the Administrative Agent.
 

ARTICLE XV

GENERAL PROVISIONS RELATING TO THE PROJECT ACCOUNTS

 

Section 15.01          No Security Interests . The Borrower shall not at any time create or permit to subsist any Lien (other than (a) until the Security Discharge Date, first-priority Liens in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, arising under this Accounts Agreement or the other Security Documents, (b) second-priority Liens in favor of the Second Lien Agent, for the benefit of the Second Lien Claimholders, arising under this Accounts Agreement or the Bond Collateral Documents, and (c) Permitted Liens) on all or any part of any of the Project Accounts or the Account Collateral, or assign, transfer or otherwise dispose of all or any part of its right or title to any of the Project Accounts or the Account Collateral other than in accordance with, or as permitted by, the terms of this Accounts Agreement, or the other Financing Documents.

 

Section 15.02          Borrower Acknowledgments .  (a) The Borrower acknowledges that neither any insufficiency of funds in the Project Accounts (or any of them), nor any inability to apply any funds in the Project Accounts (or any of them) against any or all amounts owing under the Credit Agreement or the Subordinated Loan Agreement, or any other Financing Document or Subordinated Debt Document, shall at any time limit, reduce or otherwise affect the Borrower’s Obligations under the Credit Agreement or any other Financing Document, or the Borrower’s obligations under the Subordinated Loan Agreement or any other Subordinated Debt Document.

 

(b)         Each party to this Accounts Agreement acknowledges that none of the Accounts Bank, the Collateral Agent or any other Senior Secured Party, or the Second Lien Agent or any Second Lien Claimholder, shall incur any obligation or liability in circumstances where there are insufficient funds deposited in or credited to any Project Account to make a payment in full that would otherwise have been made pursuant to the terms of this Accounts Agreement, except (in the case of the Accounts Bank) to the extent that the loss arises directly from the Accounts Bank’s gross negligence or willful misconduct.

 

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Section 15.03          Further Assurances . (a) The Borrower shall, at any time and from time to time at the first demand of the Accounts Bank or the Collateral Agent and at the sole cost and expense of the Borrower, promptly and duly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action, that may be necessary or required under applicable Law or that the Accounts Bank or the Collateral Agent may reasonably request, in order to perfect and protect any pledge or security interest granted or purported to be granted hereunder or to enable each of the Accounts Bank, the Collateral Agent, on behalf of the Senior Secured Parties, to exercise and enforce its rights and remedies hereunder with respect to any Account Collateral.

 

(b)         Without limiting the generality of the foregoing, the Borrower will promptly, with respect to the Account Collateral:

 

(i)             execute or authenticate and file such UCC financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Accounts Bank, the Collateral Agent or the Administrative Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereunder;

 

(ii)            take all action necessary to ensure that the Collateral Agent, for the benefit of the Senior Secured Parties, has control of the Account Collateral as provided in Sections 8-106, 9-104, 9-106 and any other applicable Section of the UCC;

 

(iii)           take all action necessary to ensure that the Collateral Agent, for the benefit of the Senior Secured Parties, has a first-priority perfected security interest in all Account Collateral described in Section 2.07 ( Grant of First-Priority Security Interest ) under the laws of the jurisdiction in which the Borrower is located (within the meaning of Section 9-307 of the UCC);

 

(iv)           deliver to the Collateral Agent or the Administrative Agent evidence that all other action that the Accounts Bank, the Administrative Agent or the Collateral Agent may deem reasonably necessary in order to perfect and protect the security interest created by the Borrower under this Accounts Agreement has been taken.

 

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(c)          No provision in Section 15.03(b) shall be deemed to limit the provisions in Section 16.03(a) .

 

(d)         The Borrower hereby authorizes the Administrative Agent and the Collateral Agent to file one or more UCC financing or continuation statements, and amendments thereto, relating to all or any part of the Account Collateral without the signature of the Borrower where permitted by applicable Law.

 

Section 15.04          UCC Termination Statements . At the request of the Borrower or the Second Lien Agent, upon the Notice of Security Discharge Date, the Collateral Agent will, at the sole cost and expense of the Borrower, file UCC termination statements terminating the existing UCC financing statements filed by the Collateral Agent pursuant to the Financing Documents.

 

ARTICLE XVI

INTEREST AND INVESTMENTS

 

Section 16.01          Investments . (a) Each amount deposited in or credited to a Project Account from time to time shall, from the time it is so deposited or credited until the time it is withdrawn from that Project Account (whether for the purpose of making an investment in Cash Equivalents or otherwise applied in accordance with the terms of this Accounts Agreement), earn interest at such rates as may be agreed from time to time by the Borrower and the Accounts Bank.

 

(b)         Prior to the receipt by the Accounts Bank of a Notice of Suspension, any amounts held by the Accounts Bank in the Project Accounts shall be invested by the Accounts Bank from time to time, at the risk and expense of the Borrower, solely in such Cash Equivalents as an Authorized Officer of the Borrower shall direct in writing (which may be in the form of a standing instruction). The Borrower shall select Cash Equivalents having such maturities as shall cause the Project Accounts to have a cash balance as of any day sufficient to cover the transfers to be made from the Project Accounts on such day in accordance with this Accounts Agreement, the Credit Agreement, the other Financing Documents, the Project Documents and any Additional Project Documents. Upon delivery by the Collateral Agent to the Accounts Bank of a Notice of Suspension and until written revocation of such Notice of Suspension is delivered to the Accounts Bank by the Collateral Agent, any amounts held by the Accounts Bank in the Project Accounts shall be invested by the Accounts Bank from time to time, solely in such Cash Equivalents as the Collateral Agent or the Administrative Agent, in its sole discretion, may direct; provided that the Accounts Bank’s obligation to invest such amounts is conditioned upon receipt by the Accounts Bank of a valid United States Department of the Treasury Internal Revenue

 

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Service tax Form W-9 in accordance with Section 16.03(b) ( Interest and Investment Income ) . Neither the Collateral Agent, the Accounts Bank nor the Administrative Agent shall be liable for any loss resulting from any Cash Equivalents (or any investment or reinvestment therein or liquidation or redemption thereof) from any Project Account or the sale or redemption thereof except to the extent that such loss results solely from the gross negligence or willful misconduct of the Collateral Agent, the Accounts Bank or the Administrative Agent, as the case may be, it being understood and agreed that in no event shall any of the Administrative Agent, the Accounts Bank or the Collateral Agent, as the case may be, be liable for any loss resulting from any investment made, or any sale or redemption of any investment made, in accordance with instructions received from the Borrower, the Collateral Agent or the Administrative Agent, as the case may be, or failure to receive written direction as required hereunder, or in accordance with Section 16.02 ( Sale and Liquidation ) hereof.

 

Section 16.02          Sale and Liquidation . In the event that the cash balance in any of the Project Accounts is as of any day insufficient to cover the transfers to be made from such Project Account on such day (and if advised in writing by the Administrative Agent or the Borrower of such circumstances), the Collateral Agent may (but shall not be obligated to) direct the Accounts Bank, without instructions from the Borrower, to sell or liquidate the Cash Equivalents standing to the credit of such Project Account (without regard to maturity date) in such manner as the Collateral Agent may direct in order to obtain cash at least sufficient to make such transfers and to pay any expenses and charges incurred in connection with effecting any such sale or liquidation, which expenses and charges the Accounts Bank shall be authorized to pay with cash on deposit in such Project Account. Neither the Accounts Bank, the Collateral Agent nor any other Senior Secured Party shall be liable to any Person for any loss suffered because of any such sale or liquidation.

 

Section 16.03          Interest and Investment Income . (a) All interest and other investment income earned from investments in Cash Equivalents made from amounts in any Project Account shall remain in such Project Account until transferred from such Project Account in accordance with the terms of this Accounts Agreement.

 

(b)         It is acknowledged by the parties hereto that all investment income earned on amounts on deposit in or credited to the Project Accounts for all Tax purposes shall be attributed to and be income of the Borrower. The Borrower shall be responsible for determining any requirements for paying Taxes or reporting or withholding any payments for Tax purposes hereunder. The Borrower shall prepare and file all Tax information required with respect to the Project Accounts. The Borrower agrees to indemnify and hold each Senior Secured Party and each Second Lien Claimholder harmless against all liability for Tax withholding and/or reporting for any investment income earned on the Project Accounts and payments in respect thereof. Such

 

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indemnities shall survive the termination or discharge of this Accounts Agreement or resignation of the Accounts Bank. None of the Collateral Agent, the Accounts Bank, the Second Lien Agent, any Senior Secured Party or any Second Lien Claimholder shall have any obligation with respect to the making of or the reporting of any payments for Tax purposes. From time to time, and as reasonably requested by the Accounts Bank, the Borrower shall provide to the Accounts Bank a United States Department of the Treasury Internal Revenue Service tax Form W-9 or other appropriate form required with respect to the withholding or exemption from withholding of income tax on any investment income earned on the Project Accounts. The Accounts Bank shall be entitled to rely on an opinion of legal counsel (which may be counsel to the Borrower) in connection with the reporting of any earnings with respect hereto.

 

Section 16.04          Accounts Information . (a) The Accounts Bank will:

 

(i)             within ten (10) Business Days after the end of the month in which the first deposit is made into any Project Account and within ten (10) Business Days after the end of each month thereafter, provide the Borrower, the Collateral Agent and the Administrative Agent a report with respect to the Project Accounts, setting forth in reasonable detail all deposits to and disbursements from each of the Project Accounts during such month, including the date on which made, and the balances of and any investments in each of the Project Accounts at the end of such month, including information regarding categories, amounts, maturities and issuers of Cash Equivalents; and

 

(ii)            within ten (10) Business Days after receipt of any written request by the Borrower, the Collateral Agent, the Administrative Agent or the Second Lien Agent, provide to the Borrower, the Collateral Agent, the Administrative Agent or the Second Lien Agent, as the case may be, such other information as the Borrower, the Collateral Agent, the Administrative Agent, or the Second Lien Agent, as the case may be, may reasonably specify regarding all Cash Equivalents and any other investments made by the Accounts Bank pursuant hereto and regarding amounts available in the Project Accounts.

 

(b)         The Accounts Bank will maintain all of the Project Accounts and all books and records with respect thereto as may be necessary to record properly all transactions carried out by it under this Accounts Agreement.

 

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(c)          If any Cash Equivalent ceases to be a Cash Equivalent, the Accounts Bank will, as soon as reasonably practicable after becoming aware of such cessation, notify the Collateral Agent and the Borrower in writing of such cessation and, upon the written direction of the Borrower (or, if the Borrower fails to provide direction within three (3) Business Days of the date of the Accounts Bank’s notice, upon the written direction of the Collateral Agent), will cause the relevant investment to be replaced by a Cash Equivalent or by cash; provided that this Section 16.04(c) will not oblige the Accounts Bank to liquidate any investment earlier than its normal maturity date unless:

 

(i)             directed to do so under Section 16.02 ( Sale and Liquidation ) ; or

 

(ii)            the maturity date of the relevant investment exceeds the maturity date that would enable it to continue to qualify as a Cash Equivalent.

 

ARTICLE XVII

DEFAULT AND ENFORCEMENT

 

Section 17.01          Notices of Suspension of Project Accounts . (a) The Collateral Agent may, but shall not be required to, suspend the right of the Accounts Bank and the Borrower to withdraw or otherwise deal with any funds deposited in or credited to the Project Accounts at any time during the occurrence and continuance of an Event of Default by delivering a notice to the Accounts Bank (with a copy to the Borrower, the Administrative Agent and the Bond Trustee) (a “ Notice of Suspension ”).

 

(b)         Notwithstanding any other provision of the Credit Agreement or any other Financing Document, after the issuance by the Collateral Agent of a Notice of Suspension in accordance with Section 17.01(a) and until such time as the Collateral Agent advises the Accounts Bank and the Borrower in writing that it has withdrawn such Notice of Suspension, no amount may be withdrawn by the Accounts Bank from any Project Account, including for investment in Cash Equivalents, without the express prior written consent of the Collateral Agent.

 

(c)          For the avoidance of doubt, the withdrawal of a Notice of Suspension by the Collateral Agent shall not affect any other Notice of Suspension that it may have issued.

 

Section 17.02          Collateral Agent Appointed Attorney-in-Fact . The Borrower hereby irrevocably constitutes and appoints the Collateral Agent and any

 

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officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an interest), with full authority, if a Notice of Suspension has been delivered to the Accounts Bank and until such Notice of Suspension has been withdrawn, to take any action and to execute any and all documents and instruments in the place and stead of the Borrower and in the name of the Borrower or otherwise, that the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Accounts Agreement in a commercially reasonable manner to the extent required by the UCC, without notice to the Borrower, including:

 

(a)          if an Event of Default has occurred and is continuing, to exercise the rights and remedies set forth in this Accounts Agreement and the other Financing Documents;

 

(b)         to take any action that the Collateral Agent may, in its discretion and at the Borrower’s expense, deem necessary or appropriate (i) to perfect, maintain and enforce any security interest or other Lien created in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, (ii) to create, perfect, maintain and enforce any security interest or other Lien granted or purported to be granted hereby or (iii) to otherwise accomplish the purposes of this Accounts Agreement;

 

(c)          to receive, endorse and collect all funds or other property in which the Borrower has an interest and that would constitute Account Collateral under the terms of this Accounts Agreement, in each case representing any proceeds, dividends, interest payments or other distributions constituting Account Collateral or any part thereof and to give full discharge for the same and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed necessary or appropriate by the Collateral Agent for the purpose of collecting any and all of such proceeds, dividends, payments or other distributions;

 

(d)         to pay or discharge Taxes and Liens levied or placed on the Account Collateral;

 

(e)          (i) to direct any party liable for any payment under or with respect to any of the Account Collateral to make payment of any and all moneys due or to become due thereunder or with respect thereto directly to the Collateral Agent or as the Collateral Agent may direct, (ii) to ask or make, demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any of the Account Collateral, (iii) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Account Collateral or any part thereof and to enforce any other right in respect of any of the Account Collateral, (iv) to defend any suit, action or proceeding brought against the Borrower with respect to any of the

 

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Account Collateral and (v) to settle, compromise or adjust any suit, action or proceeding described in Section 17.02(e)(iii) and (iv)  and, in connection therewith, to give such discharges or releases as the Collateral Agent may deem appropriate;

 

(f)          (i) to execute, in connection with any sale, lease, license or other disposition permitted to be made by the Collateral Agent hereunder, any endorsements, assignments, transfer statements or other instruments of conveyance or transfer with respect to the Account Collateral, and to file or register the same if required by applicable Law; and

 

(g)         to communicate in its own name with any party to any agreement or instrument included in the Account Collateral, at any reasonable time, with regard to any matter relating to such agreement or instrument.

 

Section 17.03          Enforcement . (a) Notwithstanding any other provision of the Credit Agreement or any other Financing Document, the Collateral Agent or its designee may, on behalf of the Senior Secured Parties, at any time during the occurrence and continuance of an Event of Default, and following delivery of a Notice of Suspension that has not been withdrawn (provided that any failure to deliver such notice shall not affect the validity of any actions taken under this Section 17.03(a) ) take enforcement action with respect to the Account Collateral, as provided in Article VI ( Remedies Upon a Security Event of Default ) of the Security Agreement. Without limitation and in addition to any and all rights with respect to the Account Collateral under the Credit Agreement or any other Financing Document, the Collateral Agent may take enforcement action by:

 

(i)             personally, or by attorneys, taking possession of the Account Collateral or any part thereof, from the Accounts Bank, the Borrower or any other Person that then has possession of any part thereof with or without notice or process of law;

 

(ii)            instructing any obligor, guarantor or counterparty to any agreement, instrument or other obligation in respect of or relating to the Borrower or the Account Collateral to make any payment required by the terms of such agreement, instrument or obligation directly to the Collateral Agent or the Administrative Agent, for the benefit of the Senior Secured Parties;

 

(iii)           taking possession of the Account Collateral or any part thereof by directing the Accounts Bank or the Borrower, as

 

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the case may be, to deliver the same to the Collateral Agent, for the benefit of the Senior Secured Parties, at any place or places designated by the Collateral Agent, it being understood that the Accounts Bank’s and the Borrower’s obligations to so deliver the Account Collateral are of the essence of this Accounts Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent, for the benefit of the Senior Secured Parties, shall be entitled to a decree requiring specific performance by the Accounts Bank or the Borrower, as the case may be, of such obligations;

 

(iv)           foreclosing on the Account Collateral as herein provided or in any manner permitted by applicable Law (including through any permitted non-judicial foreclosure) either concurrently or in such order as the Collateral Agent may determine without affecting the rights or remedies to which the Collateral Agent, for the benefit of the Senior Secured Parties, may be entitled under this Accounts Agreement, the Credit Agreement, or any other Financing Document. The Borrower hereby waives, to the extent permitted by applicable Law, notice and judicial hearing in connection with the Collateral Agent’s taking possession or commencing any collection, recovery, receipt, appropriation, repossession, retention, set-off, sale, leasing, licensing, conveyance, assignment, transfer, liquidation, or other disposition of or realization upon any or all of the Account Collateral, including any and all prior notice and hearing for any prejudgment remedy or remedies and any right to any such notice which the Borrower would otherwise have under applicable Law;

 

(v)            withdrawing any and all cash and liquidating any and all Cash Equivalents that are part of the Account Collateral and applying such cash, the liquidation proceeds of Cash Equivalents and other cash, if any, then held as Account Collateral in accordance with Section 17.04 ( Application of Proceeds ) ;

 

(vi)           selling, assigning or otherwise liquidating the Account Collateral, or any part thereof, at a public or private sale, for cash, upon credit or for future delivery, and at such

 

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prices as the Collateral Agent may deem satisfactory, and taking possession of the proceeds of any such sale or liquidation.

 

(b)         Notwithstanding anything to the contrary in this Accounts Agreement, the Credit Agreement, any other Financing Document or the Subordinated Debt Documents, the Borrower acknowledges that if an Event of Default has occurred and is continuing, and following delivery of a Notice of Suspension that has not been withdrawn (provided that any failure to deliver such notice shall not affect the validity of any actions taken under this Section 17.03(b) ), the Collateral Agent, on behalf of the Senior Secured Parties, is entitled to apply amounts deposited in or credited to any Project Account (other than the Bond Proceeds Sub-Account) as contemplated in Section 17.04 ( Application of Proceeds ) .

 

(c)          The Accounts Bank shall promptly comply with any instruction given by the Collateral Agent as contemplated by Section 2.01 ( Appointment ) (without reference to any inconsistent request or instruction from the Borrower or otherwise).

 

(d)         The Collateral Agent may, during the continuance of an Event of Default, and at any time following the delivery of a Notice of Suspension and until such notice has been withdrawn (provided that any failure to deliver such notice shall not affect the validity of any actions taken under this Section 17.03 ), exercise its rights under this Section 17.03 as frequently, and as many times, as it considers appropriate.

 

Section 17.04          Application of Proceeds . Upon the occurrence and during the continuation of an Event of Default, the proceeds of any sale of, or other realization upon, all or any part of the Account Collateral shall be applied in accordance with Section 4.2 of the Intercreditor Agreement. The Borrower shall remain liable for any deficiency in accordance with the respective Financing Documents to which it is a party.

 

Section 17.05          Collateral Agent’s Discretionary Powers . Nothing in this Article XVII shall impair the right of the Collateral Agent in its discretion to take or omit to take any action deemed proper by the Collateral Agent and which action or omission is consistent with any express written direction of the Administrative Agent or with the express provisions of this Accounts Agreement. The Collateral Agent shall have the right at any time to seek instructions from the Administrative Agent concerning the administration of this Accounts Agreement, and to request, and receive, direction from the Administrative Agent regarding the enforcement actions set forth in Section 17.03 ( Enforcement ) .

 

Section 17.06          Regarding the Collateral Agent . The Collateral Agent shall be afforded all of the rights, powers, protections, immunities and indemnities set forth in

 

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the Credit Agreement and the Security Agreement as if the same were specifically set forth herein.

 

ARTICLE XVIII

THE ACCOUNTS BANK

 

Section 18.01          Duties of the Accounts Bank and Securities Intermediary . (a) The Accounts Bank, acting as Securities Intermediary, will have the obligations of a securities intermediary under Article 8 of the UCC, and acting as a bank with respect to the Project Accounts, will have the obligations of a bank under Article 9 of the UCC. The Accounts Bank will also have those duties and responsibilities expressly set forth in this Accounts Agreement, and no additional duties, responsibilities, obligations or liabilities shall be inferred from the provisions of this Accounts Agreement or imposed on the Accounts Bank. The Accounts Bank will act at the written direction of the Collateral Agent, the Administrative Agent and, as expressly provided in this Accounts Agreement, the Borrower, but will not be required to take any action that is contrary to this Accounts Agreement or applicable Law or that, in its reasonable judgment, would involve it in expense or liability, unless it has been furnished with adequate indemnity and/or security against such expense or liability. The Accounts Bank will have no responsibility to ensure the performance by any other party of its duties and obligations hereunder. The Accounts Bank will use the same care with respect to the safekeeping and handling of property held in the Project Accounts as the Accounts Bank uses in respect of property held for its own sole benefit. The provisions of this Article XVIII are solely for the benefit of the Accounts Bank, the Collateral Agent and the Senior Secured Parties.

 

(b)         In performing its functions and duties under this Accounts Agreement, the Accounts Bank will act solely as the depository of the Collateral Agent, for the benefit of the Senior Secured Parties, and as Securities Intermediary or as a bank, as the case may be, with respect to the Project Accounts for the benefit of the Collateral Agent, for the benefit of the Senior Secured Parties. The Accounts Bank does not assume and will not be deemed to have assumed any obligation toward or relationship of agency or trust with or for the Borrower or any Person other than the Collateral Agent. None of the Senior Secured Parties, the Second Lien Agent, any Second Lien Claimholder or the Borrower will have any rights against the Accounts Bank hereunder, other than for the Accounts Bank’s gross negligence or willful misconduct. Except as otherwise expressly provided in this Accounts Agreement, the Borrower will not have any right to direct the Accounts Bank to distribute or allocate any funds, instruments, securities, financial assets or other assets in the Project Accounts or to withdraw or transfer any funds, instruments, securities, financial assets or other assets from the Project Accounts. Except as otherwise expressly provided in this Accounts Agreement,

 

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the Collateral Agent, on behalf of the Senior Secured Parties, will have the sole right to issue directions and instructions to the Accounts Bank, acting as Securities Intermediary or bank, as the case may be, in accordance with this Accounts Agreement, and to issue entitlement orders with respect to the Project Accounts. It is expressly understood and agreed that any investment made with funds held in the Project Accounts may be made only in accordance with the express provisions of Section 16.01 ( Investments ) and, when an investment is so made, it is expressly understood and agreed that such investment was made with the permission of the Collateral Agent in the exercise of its exclusive possession of, and dominion and control over, the Project Accounts, which it maintains through the Accounts Bank. The Accounts Bank shall not in any way whatsoever be liable for any loss or depreciation in the value of any investments made pursuant to the terms of this Accounts Agreement.

 

Section 18.02          Exculpatory Provisions . (a) Neither the Accounts Bank nor any of its directors, officers, employees or agents will have any duties or obligations except those expressly set forth herein or required by applicable law. Without limiting the generality of the foregoing, the Accounts Bank shall not:

 

(i)             be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

 

(ii)            have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Accounts Bank is required to exercise as directed in writing by the Collateral Agent, the Administrative Agent or the Required Lenders; provided that the Accounts Bank shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Accounts Bank to liability or that is contrary to any Financing Document or applicable Law; and provided further that no such direction given to the Accounts Bank that in the sole judgment of the Accounts Bank imposes, or purports to impose, or might reasonably be expected to impose upon the Accounts Bank any obligation or liability not set forth herein or arising hereunder shall be binding upon the Accounts Bank unless the Accounts Bank, in its sole discretion, accepts such direction;

 

(iii)           except as expressly set forth herein, have any duty to disclose, nor shall the Accounts Bank be liable for any

 

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failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Accounts Bank or any of its Affiliates in any capacity; or

 

(iv)           be required to institute any legal proceedings arising out of or in connection with, or otherwise take steps to enforce, this Accounts Agreement other than on the instructions of the Required Lenders or the Administrative Agent;

 

(b)         Neither the Accounts Bank nor any of its directors, officers, employees or agents shall be liable for any action taken or not taken by it (i) with the prior written consent or at the request of the Collateral Agent, the Administrative Agent or the Required Lenders, (ii) as may be reasonably necessary, or as the Accounts Bank may believe in good faith to be necessary, under the circumstances as provided in Section 2.01 ( Appointment by Collateral Agent ) , Section 2.02 ( Appointment by Second Lien Agent ) and Section 2.03 ( Limitation of Liability ) or (iii) in the absence of its own gross negligence or willful misconduct.

 

(c)          Neither the Accounts Bank nor any of its directors, officers, employees or agents shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Accounts Agreement, the Credit Agreement, or any other Financing Document, (ii) the contents of any certificate, report, opinion or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein (including the use of proceeds) or the occurrence or continuance of any Default or Event of Default, (iv) the validity, enforceability, effectiveness, genuineness or admissibility in evidence of this Accounts Agreement, the Credit Agreement, any other Financing Document, or any other agreement, instrument or document, or the perfection or priority of any Lien or security interest created or purported to be created by any Security Document (or title to or rights in any collateral under any Security Document), or (v) the satisfaction of any condition set forth in ARTICLE VI ( Conditions Precedent ) of the Credit Agreement or elsewhere herein or therein, other than to confirm receipt of items expressly required to be delivered to the Accounts Bank.

 

(d)         The Accounts Bank may, unless and until it shall have received directions from the Required Lenders or the Administrative Agent, take such action or refrain from taking such action in respect of a Default or Event of Default of which the Accounts Bank has been advised in writing by the Required Lenders or the Administrative Agent as it shall reasonably deem advisable in the best interests of the Lenders (but shall not be obligated to do so).

 

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Section 18.03          Reliance by Accounts Bank . The Accounts Bank shall be entitled to rely upon, and shall not (nor shall any of its directors, officers, employees or agents) incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Accounts Bank also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. The Accounts Bank may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Accounts Bank may at any time and from time to time solicit written instructions in the form of directions from the Administrative Agent, the Collateral Agent or the Required Lenders or an order of a court of competent jurisdiction, as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Accounts Agreement.

 

Section 18.04          Written Instructions; Notices . (a) Notwithstanding anything in this Accounts Agreement, the Credit Agreement, any other Financing Document or any Subordinated Debt Document to the contrary, the Accounts Bank shall have no obligation to (i) make any payment, transfer or withdrawal from any Project Account until it has received written direction to make such payment, transfer or withdrawal from the Administrative Agent, the Collateral Agent or the Borrower as set forth herein or (ii) determine whether any payment, transfer or withdrawal from any Project Account made in accordance with any written direction from the Administrative Agent, the Collateral Agent or the Borrower complies with the terms of this Accounts Agreement. The Accounts Bank shall have no liability for, nor any responsibility or obligation to confirm, the use or application by the Borrower, the Collateral Agent or the Administrative Agent or any other recipient of amounts withdrawn or transferred from any Project Account.

 

(b)         Except as otherwise provided in this Accounts Agreement, the Accounts Bank shall take action under this Accounts Agreement only as it shall be directed in writing by the Collateral Agent or the Administrative Agent. In each case that the Accounts Bank may or is required under the other Financing Documents to take any action (an “ Accounts Bank Action ”), including without limitation to make any determination or judgment, to give consents, to exercise rights, powers or remedies or otherwise to act hereunder, under any other Financing Document, the Accounts Bank may seek direction from the Collateral Agent or the Administrative Agent and shall be entitled to refrain from such Accounts Bank Action unless and until it has received such direction and shall not incur any liability to any Person by reason of so refraining.

 

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Section 18.05          Resignation or Removal of Accounts Bank . (a)  The Accounts Bank may resign from the performance of all its functions and duties hereunder at any time by giving thirty (30) days’ prior notice to the Borrower and the Collateral Agent. The Accounts Bank may be removed (i) at any time by the Administrative Agent or the Required Lenders, or (ii)  in the event of a material breach by the Accounts Bank of its duties hereunder, by the Borrower in consultation with the Administrative Agent. Such resignation or removal shall take effect upon the appointment of a successor Accounts Bank, in accordance with this Section 18.05 .

 

(b)         Upon the notice of resignation by the Accounts Bank or upon the removal of the Accounts Bank pursuant to Section 18.05(a) , the Administrative Agent shall appoint a successor Accounts Bank hereunder, who shall be a commercial bank having a combined capital and surplus of at least two hundred fifty million Dollars ($250,000,000). So long as no Event of Default has occurred and is continuing, such appointment shall be subject to the Borrower’s approval (such approval not to be unreasonably withheld or delayed).

 

(c)          If no successor Accounts Bank has been appointed by the Administrative Agent within thirty (30) days after the date such notice of resignation was given by the Accounts Bank or the date on which the Administrative Agent, the Required Lenders or the Borrower elected to remove the Accounts Bank, pursuant to Section 18.05(a) , any Senior Secured Party may petition any court of competent jurisdiction for the appointment of a successor Accounts Bank. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor Accounts Bank who shall serve as Accounts Bank hereunder until such time, if any, as the Administrative Agent appoints a successor Accounts Bank, as provided above.

 

(d)         Upon the acceptance of a successor’s appointment as Accounts Bank hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Accounts Bank, and the retiring (or removed) Accounts Bank shall be discharged from all of its duties and obligations hereunder. After the retirement or removal of the Accounts Bank hereunder, the provisions of this Article XVIII shall continue in effect for the benefit of the retiring (or removed) Accounts Bank in respect of any actions taken or omitted to be taken by it while the retiring or removed Accounts Bank was acting as Accounts Bank.

 

(e)          The retiring or removed Accounts Bank will promptly transfer all of the Project Accounts and the Account Collateral to the possession or control of the successor Accounts Bank and will, at the sole cost and expense of the Borrower, execute and deliver such notices, instructions and assignments as may be reasonably necessary or desirable to transfer the rights of the Accounts Bank, together with all records and

 

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reports, with respect to the Project Accounts and the Account Collateral to the successor Accounts Bank.

 

Section 18.06          No Amendment to Duties of Accounts Bank Without Consent . The Accounts Bank shall not be bound by any waiver, amendment, supplement or modification of this Accounts Agreement that affects its rights or duties hereunder or thereunder unless the Accounts Bank shall have given its prior written consent, in its capacity as Accounts Bank, thereto.

 

ARTICLE XIX

REPRESENTATIONS AND WARRANTIES

 

Section 19.01          Representations and Warranties . The Borrower represents and warrants as of the date of this Accounts Agreement, as of the date of each Funding Notice, on each Funding Date and on the Conversion Date that:

 

(a)          it is the legal and beneficial owner of the Account Collateral free and clear of any Lien, claim, encumbrance, option or right of others, except for the first-priority security interest and other rights created under or provided for in this Accounts Agreement and the other Financing Documents, the Bond Liens and other Permitted Liens, and has the power and authority to pledge the Account Collateral pledged by it hereunder. It has not authorized the filing of any effective financing statement or other instrument similar in effect covering all or any part of the Account Collateral, except (i) as filed in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, pursuant to this Accounts Agreement or the other Financing Documents, and (ii) as filed or to be filed, subsequent to such filing, in respect of the Bond Liens. To the best of its knowledge, no effective financing statement or other instrument similar in effect covering all or any part of the Account Collateral or listing the Borrower or any trade name of the Borrower as debtor is on file in the applicable recording office, except (i) as filed in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, relating to the Financing Documents, or (ii) as filed or to be filed, subsequent to such filing, in respect of the Bond Liens, subject to Section 7.02(b) ( Negative Covenants—Liens ) of the Credit Agreement and to the Intercreditor Agreement, and it has not entered into, and shall not enter into, any security control agreement or other agreement similar in effect, in each case covering all or any part of the Account Collateral, except (i) as may have been entered into in favor of the Collateral Agent, for the benefit of the Senior Secured Parties, relating to this Accounts Agreement or the other Financing Documents or (ii) as entered into, or to be entered into, in favor of the Second Lien Agent, for the benefit of the Second Lien Claimholders, pursuant to the Bond Indenture, subject to Section 7.02(b) ( Negative Covenants — Liens ) of the Credit Agreement and to the Intercreditor Agreement;

 

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(b)         on or prior to the date of the first Funding Notice all filings, registrations, notifications and recordings, if any, necessary or appropriate to create, preserve, protect and perfect the first-priority security interest granted by the Borrower to the Collateral Agent, for the benefit of the Senior Secured Parties, hereby in respect of the Account Collateral will have been made, and such first-priority security interest granted to the Collateral Agent, for the benefit of the Senior Secured Parties, pursuant to this Accounts Agreement in and to the Account Collateral will constitute a valid and enforceable security interest therein that, to the extent such security interest may be perfected under the UCC, will be perfected and that will be subject to no prior security interest that can be perfected under the UCC;

 

(c)          until the Security Discharge Date, the Borrower will not execute or authorize to be filed in any public office any UCC financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Account Collateral, except for (i) the filings or registrations made in respect of the Financing Documents and (ii) the filings or registrations made or to be made, subsequent to such filings, in respect of the Bond Liens.

 

(d)         except for the filings, registrations, notifications and recordings referred to in Section 19.01(b) , no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for (i) the grant by the Borrower of the pledges and security interests granted hereunder or for the execution, delivery or performance of this Accounts Agreement by the Borrower, (ii) the perfection or maintenance of the pledges and security interests created hereunder (including the first-priority nature of the pledge and security interest in favor of the Collateral Agent for the benefit of the Senior Secured Parties), or (iii) the exercise by the Collateral Agent, on behalf of the Senior Secured Parties, and the Accounts Bank of their respective rights provided for in this Accounts Agreement or the remedies in respect of the Account Collateral pursuant to this Accounts Agreement;

 

(e)          except for the rights of the Collateral Agent, for the benefit of the Senior Secured Parties, granted hereunder or pursuant hereto, and the second-priority rights of the Second Lien Agent, for the benefit of the Second Lien Claimholders, pursuant to the Subordinated Bond Documents and subject to Section 7.02 ( Negative Covenants ) of the Credit Agreement and to the Intercreditor Agreement, it does not know of and has not received written notice of any right or claim to or interest in (including any adverse claim) any Account Collateral by any Person other than the Borrower; and

 

(f)          its exact legal name is Heartland Grain Fuels, L.P., it is duly organized and validly existing as a limited partnership under the laws of the State of

 

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Delaware, and its chief executive office is located at the address provided for the Borrower in Section 20.10 ( Notices and Other Communications ).

 

ARTICLE XX

MISCELLANEOUS

 

Section 20.01          Rights of Second Lien Agent and Second Lien Claimholders . (a) Upon the delivery by the Administrative Agent to the Accounts Bank of written notice that the Security Discharge Date has occurred (the “ Notice of Security Discharge Date ”):

 

(i)             all references to withdrawals from the Project Accounts relating to payments to the Senior Secured Parties shall have no force and effect;

 

(ii)            the Collateral Agent and the Administrative Agent shall cease to have any rights hereunder, except for their respective rights under Article XVIII ( The Accounts Bank ) and this Article XX ( Miscellaneous) , and shall cease to have any obligations hereunder;

 

(iii)           each reference in Section 2.04(b) ( Project Accounts ), Section 2.05 ( Representations, Warranties and Covenants of Accounts Bank ), Section 2.06(b) ( Project Accounts as Deposit Account ) , Section 2.09 ( Control and Perfection of Account Collateral ) , Section 2.11 ( Agreement to Hold in Trust ), Section 3.02(d), (g), (h), (i), (j) and (k) ( Deposits into and Withdrawals from Project Accounts ) , Section 15.01 ( No Security Interests ) , Section 15.03 ( Further Assurances ) , Section 15.04 ( UCC Termination Statements ) , Section 16.01 ( Investments ) , Section 16.02 ( Sale and Liquidation ) , Section 16.04 ( Accounts Information ) , Article XVII ( Default and Enforcement ) , Article XVIII ( The Accounts Bank ) , and Section 19.01 ( Representations and Warranties ) to (A) the Collateral Agent and the Administrative Agent shall be deemed a reference to the Second Lien Agent and (B) Senior Secured Parties shall be deemed a reference to Second Lien Claimholders and Accounts Bank;

 

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(b)         This Agreement shall terminate if (i) the Security Discharge Date has occurred and (ii) the Accounts Bank has received a notice in writing from the Borrower confirming that no default or event of default has occurred and is continuing under the Bond Indenture. Upon termination of this Agreement, all Funds in the Project Accounts shall be released to the Borrower.

 

Section 20.02          Amendments, Etc . No amendment or waiver of any provision of this Accounts Agreement and no consent to any departure by the Borrower shall be effective unless in writing signed by the Collateral Agent and, in the case of an amendment, the Borrower, the Collateral Agent, the Administrative Agent and the Accounts Bank (and, after the Notice of Security Discharge Date, the Second Lien Agent), and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , that no amendment, waiver or consent shall (i) unless in writing and signed by the Accounts Bank in addition to the Collateral Agent, affect the rights or duties of, or any fees or other amounts payable to, the Accounts Bank under this Accounts Agreement, or (ii) unless in writing and signed by the Second Lien Agent, affect the rights or duties of the Second Lien Agent under this Accounts Agreement.

 

Section 20.03          Applicable Law; Jurisdiction; Etc. (a)  GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(b)         SUBMISSION TO JURISDICTION . EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS ACCOUNTS AGREEMENT, OR ANY OTHER FINANCING DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER

 

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JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS ACCOUNTS AGREEMENT OR IN ANY OTHER FINANCING DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY SENIOR SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS ACCOUNTS AGREEMENT, ANY OTHER FINANCING DOCUMENT AGAINST THE BORROWER, THE ACCOUNTS BANK OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)          WAIVER OF VENUE . EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS ACCOUNTS AGREEMENT OR ANY OTHER FINANCING DOCUMENT IN ANY COURT REFERRED TO IN SECTION 20.03(b) . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)         Appointment of Process Agent and Service of Process . The Borrower hereby irrevocably appoints C T Corporation System with an office on the date hereof at 111 Eighth Avenue, New York, New York 10011, as its agent to receive on behalf of itself and its property services of copies of the summons and complaint and any other process that may be served in any such action or proceeding in the State of New York. If for any reason the Process Agent shall cease to act as such for the Borrower, the Borrower hereby agrees to designate a new agent in New York City on the terms and for the purposes of this Section 20.03 reasonably satisfactory to the Collateral Agent, on behalf of the Senior Secured Parties. Such service may be made by mailing or delivering a copy of such process to the Borrower in care of the Process Agent at the Process Agent’s above address, and the Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by the air mailing of copies of such process to the Borrower at its then effective notice addresses pursuant to Section 20.10 ( Notices and Other Communications ) .

 

(e)          Immunity . To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby

 

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irrevocably and unconditionally waives such immunity in respect of its obligations under this Accounts Agreement, the other Financing Documents and, without limiting the generality of the foregoing, agrees that the waivers set forth in this Section 20.03(e) shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

 

(f)          WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS ACCOUNTS AGREEMENT, ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS ACCOUNTS AGREEMENT, THE OTHER FINANCING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.03 .

 

Section 20.04          Assignments . The provisions of this Accounts Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Collateral Agent and the Administrative Agent (and, after the Notice of Security Discharge Date, the Second Lien Agent), and the Accounts Bank may not assign or delegate any of its rights or obligations under this Accounts Agreement except pursuant to Section 18.05 ( Resignation or Removal of Accounts Bank ) .

 

Section 20.05          Benefits of Accounts Agreement . Nothing in this Accounts Agreement or any other Financing Document, express or implied, shall give to any Person, other than the parties hereto, the Senior Secured Parties and their respective successors and assigns permitted under this Accounts Agreement or any other Financing Document, Participants to the extent provided in Section 10.03 ( Assignments ) of the Credit Agreement, Second Lien Claimholders and their respective successors and assigns permitted under this Accounts Agreement or any Subordinated Debt Document, and Related Parties of the Administrative Agent, the Collateral Agent, the Accounts Bank and the Second Lien Agent any benefit or any legal or equitable right or remedy under or by reason of this Accounts Agreement.

 

77


 

Section 20.06          Costs and Expenses . (a)  The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Accounts Bank, the Administrative Agent and the Collateral Agent (including all reasonable fees, costs and expenses of counsel for the Accounts Bank, the Administrative Agent and the Collateral Agent), in connection with the preparation, negotiation, execution and delivery of this Accounts Agreement and the administration and maintenance of the Project Accounts (whether or not the transactions contemplated hereby are consummated); (ii) all reasonable and documented out-of-pocket expenses incurred by the Collateral Agent, the Administrative Agent and the Accounts Bank (including all reasonable fees, costs and expenses of counsel for Collateral Agent, the Administrative Agent and the Accounts Bank), in connection with any amendments, modifications or waivers of the provisions of this Accounts Agreement (whether or not the transactions contemplated hereby are consummated); (iii) all reasonable and documented out-of-pocket expenses incurred by the Accounts Bank, the Administrative Agent and the Collateral Agent (including all reasonable fees, costs and expenses of counsel for Accounts Bank, the Administrative Agent and the Collateral Agent), in connection with the administration of this Accounts Agreement (whether or not the transactions contemplated hereby are consummated); and (iv) all out-of-pocket expenses incurred by the Accounts Bank, the Administrative Agent and the Collateral Agent (including all fees, costs and expenses of counsel for any of the Accounts Bank, the Administrative Agent and the Collateral Agent), in connection with the enforcement or protection of their rights in connection with this Accounts Agreement, including their rights under this Section 20.06(a) , including in connection with any workout, restructuring or negotiations in respect of the Obligations.

 

(b)         Subject to the terms of the Intercreditor Agreement, the Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Second Lien Agent (including all reasonable fees, costs and expenses of counsel for the Second Lien Agent), in connection with the preparation, negotiation, execution and delivery of this Accounts Agreement and the administration and maintenance of the Project Accounts (whether or not the transactions contemplated hereby are consummated); (ii) all reasonable and documented out-of-pocket expenses incurred by the Second Lien Agent (including all reasonable fees, costs and expenses of counsel for the Second Lien Agent), in connection with any amendments, modifications or waivers of the provisions of this Accounts Agreement (whether or not the transactions contemplated hereby are consummated); (iii) all reasonable and documented out-of-pocket expenses incurred by the Second Lien Agent (including all reasonable fees, costs and expenses of counsel for the Second Lien Agent), in connection with the administration of this Accounts Agreement (whether or not the transactions contemplated hereby are consummated); and (iv) all out-of-pocket expenses incurred by the Second Lien Agent (including all fees, costs and expenses of counsel for the Second Lien Agent), in connection with the enforcement or protection of its rights in connection

 

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with this Accounts Agreement, including its rights under this Section 20.06(b) , including in connection with any workout, restructuring or negotiations in respect of the Subordinated Debt.

 

Section 20.07          Counterparts; Effectiveness . This Accounts Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Accounts Agreement shall become effective when it has been executed by the Collateral Agent and when the Collateral Agent has received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Accounts Agreement by telecopy or portable document format (“pdf”) shall be effective as delivery of a manually executed counterpart of this Accounts Agreement.

 

Section 20.08          Indemnification by the Borrower . (a)  In addition to the indemnity by Borrower set forth in Section 20.10(f) ( Notices and Other Communications ) , the Borrower hereby agrees to indemnify the Collateral Agent (and any sub-agent thereof), the Administrative Agent (and any sub-agent thereof), the Accounts Bank and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including all reasonable fees, costs and expenses of counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of:

 

(i)             the execution or delivery of this Accounts Agreement or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby;

 

(ii)            any funds deposited in or credited to any Project Account or the use or proposed use of the proceeds therefrom; and

 

(iii)           any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party, the GP Pledgor or any of its shareholders, directors or creditors, the Borrower or any of its partners or creditors, and in each case regardless of whether any Indemnitee is a party thereto and whether or not any of the

 

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transactions contemplated hereunder, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee.

 

provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

 

(b)         The Borrower hereby agrees, subject to the terms of the Intercreditor Agreement, to indemnify the Second Lien Agent and each Related Party thereof (each such Person being called an “ Second Lien Agent Indemnitee ”) against, and hold each Second Lien Agent Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including all reasonable fees, costs and expenses of counsel for any Second Lien Agent Indemnitee), incurred by any Second Lien Agent Indemnitee or asserted against any Second Lien Agent Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of:

 

(i)             the execution or delivery of this Accounts Agreement or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby;

 

(ii)            any funds deposited in or credited to any Project Account or the use or proposed use of the proceeds therefrom; and

 

(iii)           any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party, the GP Pledgor or any of its shareholders, directors or creditors, the Borrower or any of its partners or creditors, and in each case regardless of whether any Second Lien Agent Indemnitee is a party thereto and whether or not any of the transactions contemplated hereunder, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Second Lien Agent Indemnitee;

 

80


 

provided that such indemnity shall not, as to any Second Lien Agent Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Second Lien Agent Indemnitee.

 

Section 20.09          No Waiver; Cumulative Remedies . No failure by any Senior Secured Party, the Accounts Bank, the Administrative Agent, the Collateral Agent or the Second Lien Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder, or under any other Financing Document, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Financing Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Section 20.10          Notices and Other Communications . (a)  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 20.10(b) ), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or electronic mail as follows:

 

If to the Borrower:

 

 

 

 

 

Heartland Grain Fuels, L.P.

 

10201 Wayzata Blvd, Suite 250

 

Minneapolis, MN 55305

 

Attention:

Chief Executive Officer

 

Telephone:

763-226-2701

 

Facsimile:

763-226-2725

 

E-mail:

rstephenson@advancedbioenergy.com

 

 

 

If to the Accounts Bank:

 

 

 

 

Amarillo National Bank

 

P.O. Box 1

 

Amarillo, Texas 79105

 

(or, for delivery by overnight courier, to:

 

410 S. Taylor

 

Amarillo, Texas 79101)

 

Attention:

Craig Sanders, Executive Vice President

 

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Telephone:

806-378-8244

 

Facsimile:

806-345-1663

 

E-mail:

craig.sanders@anb.com

 

 

 

If to the Collateral Agent:

 

 

 

 

 

WestLB AG, New York Branch

 

1211 Avenue of the Americas

 

New York, NY 10036

 

Attention: Thomas Brensic

 

Telephone:

212 597-1153

 

Facsimile:

212 597-1490

 

Email:

Thomas_Brensic@westlb.com

 

Group e-mail:

NYC_Documents_Groups@WestLB.com

 

 

 

If to the Administrative Agent:

 

 

 

 

WestLB AG, New York Branch

 

1211 Avenue of the Americas

 

New York, NY 10036

 

Attention:

Andrea Bailey

 

Telephone:

(212) 597-1158

 

Facsimile:

(212) 302-7946

 

E-mail:

NYC_Agency_Services@WestLB.com

 

 

 

If to the Second Lien Agent:

 

 

 

 

Wells Fargo Bank, N.A.

 

Corporate Trust & Escrow Services

 

MAC N9311-115

 

625 Marquette Ave. 11 th Floor

 

Minneapolis, MN 55479

 

Attention:

Stephen R. Gubrud

 

Telephone:

(612) 667-9090

 

Facsimile:

(612) 667-2160

 

E-mail:

Steven.R.Gubrud@wellsfargo.com

 

(b)         Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices

 

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delivered through electronic communications to the extent provided in Section 20.10(d) shall be effective as provided in Section 20.10(d) .

 

(c)          Notices and other communications to the Borrower, the Collateral Agent, the Administrative Agent or the Accounts Bank hereunder may be delivered or furnished by electronic communication (including e-mail and internet or intranet websites). Each of the Collateral Agent, the Administrative Agent, the Accounts Bank or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

(d)         Unless otherwise prescribed, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “ return receipt requested ” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not received during the normal business hours of the recipient, such notice or communication shall be deemed to have been received at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in Section 20.10(a) of notification that such notice or communication is available and identifying the website address therefor.

 

(e)          Each of the Borrower, the Collateral Agent, the Administrative Agent, the Accounts Bank and the Second Lien Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.

 

(f)          The Collateral Agent, the Administrative Agent, the Accounts Bank and the Second Lien Agent shall be entitled to rely and act upon any written notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Collateral Agent, the Administrative Agent, the Accounts Bank, the Second Lien Agent and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Collateral Agent, the

 

83


 

Administrative Agent, the Accounts Bank or the Second Lien Agent may be recorded by the Collateral Agent, the Administrative Agent, the Accounts Bank or the Second Lien Agent, and each of the parties hereto hereby consents to such recording.

 

Section 20.11          Patriot Act Notice . The Accounts Bank hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Accounts Bank to identify the Borrower in accordance with the Patriot Act.

 

Section 20.12          Severability . If any provision of this Accounts Agreement or any other Financing Document is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Accounts Agreement, the other Financing Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 20.13          Survival . Notwithstanding anything in this Accounts Agreement to the contrary, Article XIX ( Representations and Warranties ) and Section 20.06 ( Costs and Expenses ) and  20.08 ( Indemnification by the Borrower ) shall survive any termination of this Accounts Agreement. In addition, each representation and warranty made hereunder, in any other Financing Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Accounts Bank, the Collateral Agent, the Administrative Agent, each other Senior Secured Party, the Second Lien Agent and each other Second Lien Claimholder, regardless of any investigation made by the Accounts Bank, the Collateral Agent, the Administrative Agent, each other Senior Secured Party, the Second Lien Agent and each other Second Lien Claimholder or on their behalf and notwithstanding that the Accounts Bank, the Collateral Agent, the Administrative Agent, each other Senior Secured Party, the Second Lien Agent or each other Second Lien Claimholder may have had notice or knowledge of any Default or Event of Default at the time of the Funding, and shall continue in full force and effect as long as any Loan, any other Obligation hereunder or under any other Financing Document or obligation under the Subordinated Debt Documents shall remain unpaid or unsatisfied.

 

Section 20.14          Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out

 

84


 

of, in connection with, or as a result of, this Accounts Agreement, any other Financing Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Accounts Agreement, the other Financing Documents or the transactions contemplated hereby or thereby.

 

Section 20.15          Waiver of Litigation Payments . To the extent that the Borrower may, in any action, suit or proceeding brought in any of the courts referred to in Section 20.03(b) ( Applicable Law; Jurisdiction; Etc. ) or elsewhere arising out of or in connection with this Accounts Agreement or any other Financing Document to which it is a party, be entitled to the benefit of any provision of law requiring any Lender or any Agent in such action, suit or proceeding to post security for the costs of such Person or to post a bond or to take similar action, each such Person hereby irrevocably waives such benefit, in each case to the fullest extent now or in the future permitted under the laws of New York or, as the case may be, the jurisdiction in which such court is located.

 

(Remainder of page intentionally blank. Next page is signature page.)

 

85


 

IN WITNESS WHEREOF, the parties hereto have caused this Accounts Agreement to be executed by their respective officers as of the day and year first above written.

 

 

HEARTLAND GRAIN FUELS, L.P.,
as the Borrower

 

By:

Dakota Fuels, Inc.

 

Its:

General Partner

 

 

 

 

 

 

 

By:

/s/ Revis L. Stephenson III

 

 

 Name:

Revis L. Stephenson III

 

 Title:

Chairman

 


 

 

AMARILLO NATIONAL BANK,
as the Accounts Bank

 

 

 

 

By:

/s/ Craig L. Sanders

 

 

 Name:

Craig L. Sanders

 

 Title:

Executive Vice President

 

 

 

 

 

 

 

AMARILLO NATIONAL BANK,
as the Securities Intermediary

 

 

 

 

By:

/s/ Craig L. Sanders

 

 

 Name:

Craig L. Sanders

 

 Title:

Executive Vice President

 


 

 

WESTLB AG, NEW YORK BRANCH,
as the Collateral Agent

 

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 Name:

Michael Pantelogianis

 

 Title:

Director

 

 

 

 

 

 

 

By:

/s/ Paul Vastola

 

 

 Name:

Paul Vastola

 

 Title:

Director

 

 

 

 

 

 

 

WESTLB, AG, NEW YORK BRANCH,
as the Administrative Agent

 

 

 

By:

/s/ Michael Pantelogianis

 

 

 Name:

Michael Pantelogianis

 

 Title:

Director

 

 

 

 

 

 

 

By:

/s/ Paul Vastola

 

 

 Name:

Paul Vastola

 

 Title:

Director

 


 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE OF THE BROWN COUNTY, SOUTH DAKOTA SUBORDINATE SOLID WASTE FACILITIES REVENUE BONDS (HEARTLAND GRAIN FUELS, L.P. ETHANOL PLANT PROJECT) SERIES 2007A ,
as the Second Lien Agent

 

 

 

 

 

 

 

By:

/s/ Steven Gubrud

 

 

 

 Name:

Steven Gubrud

 

 

 Title:

Vice President

 

EXHIBIT 10.3

 

 

BOND TRUST INDENTURE

 

Between

 

Brown County, South Dakota

 

And

 

Wells Fargo Bank, National Association

 

as Bond Trustee

 

 

Dated as of October 1, 2007

 

 

$19,000,000

 

Brown County, South Dakota
Subordinate Solid Waste Facilities Revenue Bonds
(Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

GRANTING CLAUSES

3

 

 

 

ARTICLE I

DEFINITIONS

5

Section 1.1

Definitions

5

Section 1.2

Interpretation

28

 

 

 

ARTICLE II

THE SERIES 2007A BONDS

29

Section 2.1

Authorized Amount of Series 2007A Bonds

29

Section 2.2

Issuance of Series 2007A Bonds

29

Section 2.3

Execution; Limited Obligation

30

Section 2.4

Authentication

31

Section 2.5

[Intentionally Deleted]

32

Section 2.6

Form of Bonds and Temporary Bonds

32

Section 2.7

Delivery of Series 2007A Bonds

32

Section 2.8

Mutilated, Lost, Stolen or Destroyed Series 2007A Bonds

33

Section 2.9

Bond Register; Transfer and Exchange of Series 2007A Bonds; Persons Treated as Owners

33

Section 2.10

Cancellation

34

Section 2.11

Book-Entry Only System

34

Section 2.12

Successor Securities Depository; Transfers Outside Book-Entry Only System

36

Section 2.13

Payments and Notices to Cede & Co

36

 

 

 

ARTICLE III

APPLICATION OF SERIES 2007A BOND PROCEEDS AND REQUIRED FUND DEPOSITS; EXPENSE FUND; PROJECT FUND; REBATE FUND

37

Section 3.1

Deposit of Funds

37

Section 3.2

Expense Fund

37

Section 3.3

Project Fund

37

Section 3.4

Rebate Fund

39

 

 

 

ARTICLE IV

REVENUES AND FUNDS

40

Section 4.1

Source of Payment of Series 2007A Bonds

40

Section 4.2

Revenue Fund

40

Section 4.3

Interest Fund

40

Section 4.4

Bond Sinking Fund

40

Section 4.5

Debt Service Reserve Fund

41

Section 4.6

Redemption Fund

43

Section 4.7

Investment of Funds

43

Section 4.8

Trust Funds

44

Section 4.9

Excluded Funds; Transfers to Rebate Fund

44

 

i


 

 

 

Page

 

 

 

ARTICLE V

REDEMPTION OF SERIES 2007A BONDS

45

Section 5.1

Redemption Dates and Prices

45

Section 5.2

Bond Sinking Fund Deposits - Mandatory Deposits

47

Section 5.3

Notice of Redemption

47

 

 

 

ARTICLE VI

GENERAL COVENANTS

49

Section 6.1

Payment of Principal and Interest

49

Section 6.2

Performance of Covenants; Legal Authorization

49

Section 6.3

Ownership; Instruments of Further Assurance

49

Section 6.4

Recording and Filing

49

Section 6.5

Books and Records

50

Section 6.6

Bond Register

50

Section 6.7

Rights Under the Loan Agreement

50

Section 6.8

Designation of Additional Paying Agents

50

Section 6.9

Arbitrage; Compliance with Tax Exemption Agreement

50

 

 

 

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

51

Section 7.1

Extension of Payment; Penalty

51

Section 7.2

Events of Default

51

Section 7.3

Acceleration

52

Section 7.4

Remedies; Rights of Bondholders

52

Section 7.5

Direction of Proceedings by Bondholders

53

Section 7.6

Appointment of Receivers

53

Section 7.7

Application of Moneys

53

Section 7.8

Remedies Vested in Bond Trustee

55

Section 7.9

Rights and Remedies of Bondholders

55

Section 7.10

Termination of Proceedings

56

Section 7.11

Waiver of Events of Default

56

Section 7.12

Borrower’s Rights of Possession and Use of Its Property

56

Section 7.13

Waiver of Redemption; Effect of Sale of Trust Estate

56

Section 7.14

Notice of Default

57

 

 

 

ARTICLE VIII

THE BOND TRUSTEE

58

Section 8.1

Acceptance of the Trusts

58

Section 8.2

Fees, Charges and Expenses of Bond Trustee and any Additional Paying Agent

60

Section 8.3

Notice to Issuer and the Bondholders if Default Occurs

61

Section 8.4

Good Faith Reliance

61

Section 8.5

Dealings in Series 2007A Bonds

61

Section 8.6

Several Capacities

61

Section 8.7

Intervention by Bond Trustee

61

Section 8.8

Successor Bond Trustee by Merger or Consolidation

62

Section 8.9

Bond Trustee Required; Eligibility

62

 

ii


 

 

 

Page

 

 

 

Section 8.10

Resignation by the Bond Trustee

62

Section 8.11

Removal of the Bond Trustee

62

Section 8.12

Appointment of Successor Bond Trustee by the Bondholders; Temporary Bond Trustee

63

Section 8.13

Judicial Appointment of Successor Trustee

63

Section 8.14

Concerning Any Successor Bond Trustees

63

Section 8.15

Bond Trustee Protected in Relying Upon Resolution, Etc

64

Section 8.16

Successor Bond Trustee as Trustee of Funds, Paying Agent and Bond Registrar

64

 

 

 

ARTICLE IX

SUPPLEMENTAL BOND INDENTURES

65

Section 9.1

Supplemental Bond Indentures Not Requiring Consent of Bondholders

65

Section 9.2

Supplemental Bond Indentures Requiring Consent of Bondholders

66

 

 

 

ARTICLE X

AMENDMENTS TO THE LOAN AGREEMENT

68

Section 10.1

Amendments, Etc. to Loan Agreement Not Requiring Consent

68

Section 10.2

Amendments, Etc. to Loan Agreement Requiring Consent of the Bondholders

68

 

 

 

ARTICLE XI

SATISFACTION OF THIS BOND INDENTURE

70

Section 11.1

Defeasance

70

Section 11.2

Liability of Issuer Not Discharged

71

Section 11.3

Provision for Payment of Portion of the Series 2007A Bonds

71

Section 11.4

When Advance Refunding is Not Permitted and Special Conditions for Refundings

72

 

 

 

ARTICLE XII

MANNER OF EVIDENCING OWNERSHIP OF SERIES 2007A BONDS

73

Section 12.1

Proof of Ownership

73

 

 

 

ARTICLE XIII

MISCELLANEOUS

74

Section 13.1

Limitation of Rights

74

Section 13.2

Unclaimed Moneys

74

Section 13.3

Severability

74

Section 13.4

Notices

75

Section 13.5

Bond Trustee as Paying Agent and Registrar

75

Section 13.6

Counterparts

75

Section 13.7

Applicable Law

75

Section 13.8

Immunity of Officers, Employees and Members of Issuer

75

Section 13.9

Parties Interested Hereunder

76

Section 13.10

Continuing Disclosure

76

Section 13.11

The Intercreditor Agreement

76

 

iii


 

EXHIBIT A (FORM OF SERIES 2007A BOND)

A-1

 

 

EXHIBIT B PROJECT DESCRIPTION

B-1

 

 

EXHIBIT C INTEREST PAYMENT SCHEDULE

C-1

 

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THIS BOND TRUST INDENTURE (this “Bond Indenture”), dated as of October 1, 2007, between the BROWN COUNTY, SOUTH DAKOTA, a public body corporate and politic and a political subdivision, created and existing under the laws of the State of South Dakota (the “Issuer”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Bond Trustee”), duly established, existing and authorized to accept and execute trusts of the character herein set out under and by virtue of the laws of the United States of America. Capitalized terms used but not defined in the following recitals and granting clauses shall have the meanings given such terms in Article I hereof.

 

W I T N E S S E T H:

 

WHEREAS , the Issuer is a public body corporate and politic and a political subdivision duly and validly created and existing under the laws and constitution of the State of South Dakota and has all powers granted under the provisions of South Dakota Codified Laws Chapter 9-54, as supplemented and amended (the “Act”); and

 

WHEREAS, pursuant to the Act, the Issuer is authorized and empowered, among other things, to issue its revenue bonds for the purpose of financing “pollution control facilities” (within the meaning of the Act) within the territorial jurisdiction of the Issuer; and

 

WHEREAS, simultaneously with the execution and delivery of this Bond Indenture, the Issuer and Heartland Grain Fuels, L.P., a limited partnership organized and existing under the laws of the State of Delaware (the “Borrower”) which operates an ethanol production facility (the “Facility”) located in Brown County at 38469-133 nd   Street, Aberdeen, South Dakota 57401, have entered into a Loan Agreement (the “Loan Agreement”), pursuant to which the Borrower covenants, among other things, to make loan repayments in amounts and at times which will be sufficient to pay when due the principal of, premium, if any, and interest on the revenue bonds herein authorized; and

 

WHEREAS , the Borrower has requested the Issuer to issue its revenue anticipation certificates and lend the proceeds thereof to the Borrower for the purpose of providing funds which will be used, together with certain funds of the Borrower, to provide the amounts necessary to (i) pay the cost of the acquisition, construction and equipping of improvements to and expansion of the Facility consisting of certain Solid Waste Disposal Facilities (as herein defined which constitute a project within the meaning of the Act (the “Project”), including reimbursement to the Borrower of certain moneys previously spent with respect to the Project, (ii) fund a debt service reserve, (iii) pay interest on the revenue bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of said revenue bonds; and

 

WHEREAS, the Issuer is authorized under the Act to issue its revenue bonds for the aforesaid purposes and the Issuer has determined that the public interest will be best served by the issuance of its revenue bonds in order to lend funds to the Borrower for such purposes; and

 

WHEREAS, the Issuer has determined that it will issue its revenue anticipation certificates, to be known as Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A (the “Series

 

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2007A Bonds”), pursuant to the provisions of this Bond Indenture, for the purpose of providing the amounts necessary, together with certain funds of the Borrower, to (i) pay the costs of the Project, (ii) fund a debt service reserve, (iii) pay interest on the Series 2007A Bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds; and

 

WHEREAS , the execution and delivery of this Bond Indenture and the issuance of the Series 2007A Bonds have been in all respects duly and validly authorized by a resolution duly adopted by the Issuer; and

 

WHEREAS , the Series 2007A Bonds will be issued in substantially the form set forth in Exhibit A hereto, with necessary and appropriate variations, omissions and insertions as permitted or required by this Bond Indenture; and

 

WHEREAS all things necessary to make the Series 2007A Bonds, when authenticated by the Bond Trustee and issued as in this Bond Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Bond Indenture a valid assignment and pledge of the payments and prepayments of the Borrower under the Loan Agreement to be applied to the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds and a valid assignment of the rights of the Issuer under the Loan Agreement (excluding Unassigned Rights), have been done and performed, and the creation, execution and delivery of this Bond Indenture, and the creation, execution and issuance of the Series 2007A Bonds, subject to the terms hereof, have in all respects been duly authorized;

 

NOW, THEREFORE, THIS BOND INDENTURE WITNESSETH:

 

That the Issuer in consideration of the premises and of the purchase of the Series 2007A Bonds and of other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds and the performance and observance of all of the covenants and conditions herein or therein contained, has executed and delivered this Bond Indenture and has conveyed, granted, assigned, transferred, pledged, set over and confirmed, and by these presents does hereby convey, grant, assign, transfer, pledge, set over and confirm, unto the Bond Trustee, its successor or successors and its or their assigns forever, a security interest in the property hereinafter described (said property being herein sometimes referred to as the “Trust Estate”) to wit:

 

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GRANTING CLAUSES

 

DIVISION I

 

All right, title and interest of the Issuer in and to the Loan Agreement and the amounts payable to the Issuer thereunder (excluding Unassigned Rights);

 

DIVISION II

 

All right, title and interest of the Bond Trustee in and to the Bond Collateral Documents and all amounts realized from the enforcement thereof (excluding with respect to Unassigned Rights);

 

DIVISION III

 

Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Issuer, the Borrower, or anyone on their behalf to the Bond Trustee, subject to the terms thereof, including without limitation funds of the Borrower held by the Bond Trustee in any of the funds and accounts established hereunder or otherwise as security for the Series 2007A Bonds and the Bond Proceeds Sub-Account established pursuant to the Accounts Agreement;

 

EXCEPTED PROPERTY

 

There is, however, expressly excepted and excluded from the lien and operation of this Bond Indenture amounts held by the Bond Trustee in the Rebate Fund established by this Bond Indenture;

 

TO HAVE AND TO HOLD, all and singular, the properties and the rights and privileges hereby conveyed, assigned and pledged by the Issuer or intended so to be, unto the Bond Trustee and its successors and assigns forever, in trust, nevertheless, for the equal and pro rata benefit and security of each and every holder of the Series 2007A Bonds issued and to be issued hereunder, without preference, priority or distinction as to participation in the benefit and protection hereof of one Series 2007A Bond over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as herein otherwise expressly provided, so that each and all of such Series 2007A Bonds shall have the same right, lien and privilege under this Bond Indenture and shall be equally secured hereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery hereof and were expressed to mature on one and the same date;

 

PROVIDED, NEVERTHELESS, and these presents are upon the express condition that if the Issuer or its successors or assigns shall well and truly pay or cause to be paid the principal of such Series 2007A Bonds with interest according to the provisions set forth in the Series 2007A Bonds and each of them or shall provide for the payment or redemption of such Series 2007A Bonds by depositing or causing to be deposited with the Bond Trustee the entire amount of funds or securities requisite for payment or redemption thereof when and as authorized by the provisions hereof, and shall also pay or cause to be paid all other sums payable hereunder by the

 

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Issuer, then these presents and the estate and rights hereby granted shall cease, determine and become void, and thereupon the Bond Trustee, on payment of its lawful charges and disbursements then unpaid, on demand of the Issuer and upon the payment of the cost and expenses thereof, shall duly execute, acknowledge and deliver to the Issuer such instruments of satisfaction or release as may be necessary or proper to discharge this Bond Indenture, including if appropriate any required discharge of record, and if necessary shall grant, convey, reassign and deliver to the Issuer, its successors or assigns, all and singular the property, rights, privileges and interests by it hereby granted, conveyed, assigned and delivered, and all substitutes therefor, or any part thereof, not previously disposed of or released as herein provided; otherwise this Bond Indenture shall be and remain in full force.

 

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto that all Series 2007A Bonds are to be issued, authenticated and delivered, and that all the trust estate is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and its successors, does hereby covenant and agree to and with the Bond Trustee and its respective successors in said trust, for the benefit of those who shall hold the Series 2007A Bonds, or any of them as follows:

 

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ARTICLE I

 

DEFINITIONS

 

Section 1.1                          Definitions . The following words and terms as used herein shall have the following meanings herein and in the Loan Agreement, unless the context or use indicates another or different meaning or intent:

 

“ ABE Pledge Agreement” means that certain Pledge and Security Agreement, dated as of October 1, 2007 among, Advanced BioEnergy, ABE Heartland, LLC, and the Bond Trustee, as amended or supplemented from time to time.

 

“Aberdeen Expansion” means the expansion of the Aberdeen Facility financed in part by the Senior Credit Facilities and the Series 2007A Bonds and includes the Project.

 

“Aberdeen Facility” means the existing ethanol production facility owned by the Borrower in the City of Aberdeen, Brown County, South Dakota.

 

“ Aberdeen Grain Elevator Lease ” means that certain Lease Agreement, dated as of October 1, 2007, between the Borrower and South Dakota Wheat Growers Association, relating to the grain elevator for the Aberdeen Facility.

 

“Aberdeen Senior Mortgage” means that certain Mortgage — Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the collateral agent specified therein for the benefit of the Senior Lenders relating to the Aberdeen Facility.

 

“Aberdeen Subordinate Mortgage” means that certain Subordinate Mortgage — Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Bond Trustee relating to the Aberdeen Facility.

 

“Aberdeen Subordination, Non-Disturbance and Attornment Agreement ” means that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of October 1, 2007 among the Bond Trustee as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Aberdeen Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“Accounts Agreement” means that certain Accounts Agreement by and among the Borrower, the Accounts Bank, the collateral agent as set forth therein, the administrative agent as set forth therein and the Bond Trustee.

 

“Accounts Bank” means Amarillo National Bank, not its individual capacity, but solely as depository bank and securities intermediary under the Accounts Agreement, and includes each other Person that may, from time to time, be appointed as successor Accounts Bank pursuant to and in accordance with the Accounts Agreement.

 

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“Act” means South Dakota Codified Laws Chapter 9-54 as supplemented and amended.

 

“ Additional Facility Document ” means each contract, agreement, letter agreement or other instrument to which the Borrower becomes a party after the date hereof, other than any document under which the Borrower (a) could not reasonably be expected to have obligations or liabilities in the aggregate in excess of two million Dollars ($2,000,000), or be entitled to receive revenues in the aggregate in excess of two million Dollars ($2,000,000), in either case in value in any twelve (12) month period and (b) a termination of which could not reasonably be expected to result in a Material Adverse Effect; provided , that for the purposes of this definition, any series of related transactions (other than transactions, including hedging transactions, relating to the sale of Products or the purchase of corn and natural gas and Interest Rate Protection Agreements) shall be considered as one transaction, and all contracts, agreements, letter agreements or other instruments in respect of such transactions shall be considered as one contract, agreement, letter agreement or other instrument, as applicable.

 

“Administrative Agent”  means West LB, not in its individual capacity but solely as administrative agent for the Senior Lenders under the Senior Credit Agreement and the other Financing Documents, and includes each other Person that may, from time to time, be appointed as successors Administrative Agent pursuant to the Senior Credit Agreement.

 

“Advanced BioEnergy” means Advanced BioEnergy, LLC a Delaware limited liability company, which currently owns 100% of the Equity Interests in the Parent Company, and its successors and assigns and any surviving, resulting or transferee entity.

 

“Affiliate” of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person (a) possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise or (b) owns at least ten percent (10%) of the Equity Interests in such Person.

 

“Ancillary Documents” means, with respect to each Additional Facilities Document, the following;

 

(i)                                     each security instrument and agreement necessary or desirable to grant to the Bond Trustee a perfected Lien (subject only to Permitted Liens) in such Additional Facilities Document and all property interests received by the Borrower in connection therewith;

 

(ii)                                  all recorded UCC financing statements and other filings required to perfect such Lien;

 

(iii)                               if reasonably requested by the Bond Trustee, opinions of counsel for the Borrower addressing such matters relating to such document, each applicable Bond Collateral Document and Lien;

 

(iv)                              certified evidence of the authorization of such Additional Facility Document by the Borrower.

 

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“Authorized Investments” means any of the following investments which at the time are legal investments under the laws of the State:

 

(v)                                Government Obligations;

 

(vi)                             Obligations of agencies of the United States government issued by the Federal Land Banks, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, and the Central Bank for Cooperatives;

 

(vii)                          Direct obligations of, and obligations fully guaranteed by, any of the fifty states of the United States of America rated a minimum of “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service (such rating requirement can be met by an attached letter of credit from any bank meeting the requirements stated in clause (e) below or by municipal bond insurance);

 

(viii)                       Indebtedness of any county or other local government body within the United States of America rated at least “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service (such rating requirement can be met by an attached letter of credit from any bank meeting the requirements stated in clause (e) below or by municipal bond insurance);

 

(ix)                               Indebtedness of any corporation rated “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service;

 

(x)                                  Certificates of deposit, banker’s acceptances, trust deposits, demand deposits, including interest bearing money market accounts, or time deposits of any commercial bank, branch or Edge Act (12 USC 611 et seq.) branch which is a member of the Federal Reserve System, including the Trustee or any of its affiliates, has a net worth of at least $100 million and whose short term bank deposits have an “A” prefix by S&P or any equivalent rating by any equivalent rating service;

 

(xi)                               Repurchase agreements or reverse repurchase agreements with financial institutions whose commercial paper is “A1” or whose debt rating is “AA” by S&P or an equivalent rating by an equivalent rating service or any bank who meets the requirements as stated in clause (e) above, provided that in all cases the market value of the collateral used for such transactions must be adequate to insure safety, liquidity and preservation of capital: “AAA” 102%, “AA” 110%;

 

(xii)                           Securities and Exchange Commission Rule 2a 7 money market funds with a net asset value of one dollar and a parent company rating of “A1” or better by S&P or any equivalent rating by any equivalent rating service, including, without limitation, any mutual fund for which the Bond Trustee or an affiliate of the Bond Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Bond Trustee or an affiliate of the Bond Trustee receives fees from such funds for services rendered, (b) the Bond Trustee charges and collects fees for services rendered pursuant to the Bond Indenture, which fees are separate from the fees received from such

 

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funds, and (c) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates; and

 

(xiii)                        any other obligations or securities permitted by the Senior Credit Facilities.

 

“Authorized Officer” means (i) with respect to any Person that is a corporation, the chief executive officer, the chief operating officer, the president, any vice president, the treasurer or the chief financial officer of such Person, (ii) with respect to any Person that is a partnership, an Authorized Officer of a general partner of such Person, (iii) with respect to any Person that is a limited liability company, any manager, the president, any vice president, the treasurer or the chief financial officer of such Person, or an Authorized Officer of the managing member of such Person, or (iv) with respect to any Person, such other representative of such Person who, in each such case, has been named as an Authorized Officer on a certificate of incumbency of such Person delivered to the Bond Trustee on or after the date hereof.

 

“Blocked Account Agreement” means the “Blocked Account Agreement” as defined in the Senior Credit Agreement.

 

“ Bond Accounts” means the funds and accounts established and maintained under the Bond Indenture.

 

“ Bond Collateral Documents” means the Bond Indenture, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge, the ABE Pledge Agreement and any other documents granting, or relating to the grant, of security for the payment of amounts due under the Loan Agreement and the Series 2007A Bonds.

 

“Bond Documents” means the Series 2007A  Bonds, the Loan Agreement, the Bond Collateral Documents, the Bond Resolution and any other documents entered into in connection with, or relating to, the Series 2007A Bonds and the transactions contemplated by the issuance thereof.

 

“Bond Proceeds Withdrawal Certificate”  means a certificate substantially in the form of the “Bond Proceeds Withdrawal Certificate” attached as Exhibit K to the Accounts Agreement.

 

“ Bond Resolution” means the resolution of the Issuer authorizing the issuance of the Series 2007A Bonds and the related transactions and documents.

 

“Bondholder” , “Holder” , “Owner” and “Registered Owner” mean with respect to the Series 2007A Bonds the registered owner of any Series 2007A Bond and does not mean any beneficial owner of the Series 2007A Bonds whether through the book-entry only system of DTC or otherwise.

 

“ Bond Counsel ” means Briggs and Morgan, Professional Association or any other nationally recognized municipal bond counsel selected by the Issuer or by the Borrower with the consent of the Issuer.

 

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“Bond Indenture” means this Bond Trust Indenture between the Issuer and the Bond Trustee, as it may from time to time be amended or supplemented.

 

“Bond Proceeds Sub-Account” means the account so named established pursuant to the Accounts Agreement solely for the deposit of proceeds of the Series 2007A Bonds, and interest earnings thereon, from the Project Fund as permitted or directed by the Bond Indenture held under the Accounts Agreement solely for the payment of Costs of the Project as defined in the Bond Indenture and the Tax Exemption Agreement.

 

“Bond Register” means the registration books of the Issuer kept by the Bond Trustee (in its capacity as Registrar) to evidence the registration and transfer of the Series 2007A Bonds.

 

“Bond Sinking Fund” means the fund created in Section 4.4 hereof.

 

“Bond Trustee” means Wells Fargo Bank, National Association, as trustee, or any successor trustee under this Bond Indenture.

 

“Bond Year” means any twelve-month period beginning January 1 of a calendar year and ending on December 31 of the succeeding calendar year. For the purpose of calculating debt service on the Series 2007A Bonds payable in any Bond Year, principal and interest payable on the Series 2007A Bonds on January 1 of any Bond Year shall be deemed to be payable during the preceding Bond Year.

 

“Borrower” means Heartland Grain Fuels, L.P., a Delaware limited partnership and its successors and assigns and any surviving, resulting or transferee entity.

 

“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in the State, the State of New York or the state in which the principal corporate trust office of the Bond Trustee is located are authorized by law or executive order to close or (b) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to close.

 

“Capitalized Lease Liabilities” of any Person means all monetary obligations of such Person under any leasing or similar arrangement that, in accordance with GAAP, would be classified as capitalized leases on a balance sheet of such Person or otherwise disclosed as such in a note to such balance sheet and, for purposes of the Financing Documents, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“Cash Equivalents” means:

 

(a)                                   readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof, or obligations unconditionally guaranteed by the full faith and credit of the government of the United States, in each case maturing within one (1) year from the date of acquisition thereof;

 

(b)                                  securities issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than one (1) year from the date of acquisition thereof and, at the time of acquisition,

 

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having a rating of AA- or higher from S&P or Aa3 or higher from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(c)                                   investments in commercial paper maturing within one hundred eighty (180) days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

 

(d)                                  investments in certificates of deposit, banker’s acceptances and time deposits maturing within two hundred and seventy (270) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America, any State thereof, any country that is a member of the Organization for Economic Co-Operation and Development or any political subdivision thereof, that has a combined capital and surplus and undivided profits of not less than five hundred million Dollars $(500,000,000);

 

(e)                                   fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (d) of this definition; and

 

(f)                                     investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (e) of this definition.

 

“Cash Flow” means, for any period, the sum (without duplication) of the following:  (i) all cash paid to the Borrower during such period in connection with the Ethanol Marketing Agreement, Co-Product Marketing Agreement and any other sales of Products, (ii) all interest and investment earnings paid to the Borrower or the Project Accounts during such period on amounts on deposit in the Project Accounts, (iii) all cash paid to the Borrower during such period as business interruption insurance proceeds, and (iv) all other cash paid to the Borrower during such period; provided, however, that Cash Flow shall not include any proceeds of the Senior Credit Facilities or any other Indebtedness incurred by the Borrower; insurance proceeds; condemnation proceeds; the any equity contribution; proceeds from any disposition of assets of the Facilities or the Borrower (other than Products); tax refunds; amounts received, whether by way of a capital contribution or otherwise, from any holders of Equity Interests of the Borrower; and any other extraordinary or non-cash income or receipt of the Borrower under GAAP.

 

“Cash Flow Available for Debt Service” means, for any period, an amount equal to the amount of Cash Flow deposited in the “Revenue Account” established under the Accounts Agreement during such period minus all amounts paid during such period pursuant to priorities first and second of Section 6.01(c) of the Accounts Agreement so long as the Accounts Agreement is in effect and thereafter means, for any period, an amount equal to Cash Flow minus all amounts paid by the Borrower for Operation and Maintenance Expenses and Maintenance Capital Expenses.

 

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“Change Order” means, with respect to an Expansion, each “Change Order” (if any) as described in the respective Design-Build Agreement.

 

“Closing Date” means the date on which all the conditions set forth in the Senior Credit Facilities as to closing and first funding have been satisfied or waived.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to the Code herein shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations relating to the Code or the sections thereof specifically referenced.

 

“Collateral” means all assets of and Equity Interests in the Borrower, whether now owned or hereafter acquired, upon which a Lien is purported to be created by any Bond Collateral Document then in effect or contemplated to be in effect.

 

“Collateral Agent” means WestLB, not in its individual capacity but solely in its capacity as collateral agent for the Senior Secured Parties under the Financing Documents, and includes each other Person that may, from time to time, be appointed as successor Collateral Agent pursuant to Section 9.06 (Resignation or Removal of Agent) of the Credit Agreement.

 

“ Commodity Hedging Arrangements ” means any arrangement to hedge the price of corn purchases, ethanol sales, Distillers Grains sales or natural gas purchases.

 

“ Commodity Risk Management Plans ” means risk management plans prepared by the Borrower setting forth terms and conditions relating to any Commodity Hedging Arrangements from time to time proposed to be entered into by the Borrower, including any updates made to such risk management.

 

“Construction Budget ” means the budget attached the Senior Credit Facilities that sets forth all categories of costs and expenses required in connection with the development, construction, start-up, and testing of the Aberdeen Expansion, including all construction costs, all costs under the Design-Build Agreement, all interest, taxes and other carrying costs related to the construction loans, and costs related to the construction of the facilities described under the Aberdeen Expansion Documents, as updated from time to time in accordance the Senior Credit Facilities.

 

“Contest” means, with respect to any matter or claim involving any Person, that such Person is contesting such matter or claim in good faith and by appropriate proceedings timely instituted; provided that the following conditions are satisfied:  (a) such Person has posted a bond or cash collateral (or other security acceptable to the Senior Lenders so long as the Senior Credit Facilities are in effect or, thereafter, the Bond Trustee) for the full amount of such claim (or such lower amount as is acceptable to the Senior Lenders so long as the Senior Credit Facilities are in effect or, thereafter, the Bond Trustee); (b) during the period of such contest, the enforcement of any contested item is effectively stayed; (c) none of such Person or any of its officers, directors or employees, or any Senior Lender, the Bond Trustee, the Issuer or nay Bondholder or their respective officers, directors or employees, is or would reasonably be expected to become subject to any criminal liability or sanction in connection with such contested items; and (d) such contest and any resultant failure to pay or discharge the claimed or assessed amount during the

 

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pendency of such contest does not, and could not reasonably be expected to (i) result in a Material Adverse Effect or (ii) involve a material risk of the sale, forfeiture or loss of, or the creation, existence or imposition of any Lien on, any of the Collateral.

 

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“ Conversion Date ” means the Business Day upon which (i) all the conditions precedent set forth in the Senior Credit Facilities for the conversion from a construction loan to a term loan shall have been satisfied (or waived in accordance with the terms of the Senior Credit Facilities) and (ii) the construction loans are converted to term loans.

 

“Co-Product Marketing Agreement” means that certain Co-Product Marketing Agreement, dated as of May 9, 2007, between the Borrower and Dakotaland Feeds, LLC.

 

“Costs of the Project” means all costs of acquiring, constructing and equipping the Project which are permitted by the Act and consist of Solid Waste Disposal Facilities, and, without intending to limit or restrict any proper definition of such costs under any applicable law, shall include:

 

(a)                                   subject to the reimbursement restrictions contained in the Code, payment to the Borrower of such amounts, if any, as are necessary to reimburse the Borrower in full for all advances and payments made by it or for its account, with respect to the Project for expenditures in connection with the acquisition of any property required for the Project, the preparation of the plans and specifications (including any preliminary study or planning of the Project), or any aspect thereof and any reports or analyses concerning the Project, and all real or personal property deemed necessary in connection with the Project, or any one or more of said expenditures (including architectural, engineering and supervisory services);

 

(b)                                  payment for labor, services, materials and supplies used or furnished in the acquisition, construction and equipping of the Project, all as provided in the plans and specifications, payment for the cost of the acquisition, construction and installation of facilities, and all real and personal property deemed necessary in connection with the Project and payment for the miscellaneous expenses incidental to any of the foregoing items;

 

(c)                                   payment of any other costs and expenses relating to the acquisition, construction and equipping of the Project, including interest on the Series 2007A Bonds during construction of the Project, or the authorization, issuance and sale of the Series 2007A Bonds;

 

(d)                                  the cost of any indemnity and surety bonds to secure deposits in the Project Fund, taxes or other municipal or governmental charges lawfully levied or assessed during construction upon the Project or any property acquired therefor, and premiums on insurance, if any, in connection with the Project, during construction; and

 

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(e)                                   any obligation or expense hereafter incurred by the Borrower for any of the foregoing purposes.

 

“Dakota Fuels” means Dakota Fuels, Inc., a Delaware corporation, which is the general partner of the Borrower.

 

“Date of Taxability” means the date on which a Determination of Taxability exists by expiration of any appeal period or unsuccessful conclusion of any appeal or contest.

 

“Debt Service” means, for any period, with respect to the Senior Credit Facilities or the Loan Agreement, as the case may be, the sum of (i) all fees and (iii) principal payments of the Loans (excluding the Required Cash Sweep and any other mandatory prepayments) scheduled to become due and payable during such period to the Senior Lenders or the Bond Trustee as the case may be and ,with respect to the Senior Credit Facilities only, all payments due by the Borrower pursuant to Section 4.03 (Increased Eurodollar Loan Costs) and Section 4.07(a) (Taxes) of the Senior Credit Facilities with respect to such scheduled principal, interest and fees.

 

“Debt Service Requirements” means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, a mandatory prepayment or otherwise) and interest on Outstanding Series 2007A Bonds.

 

“Debt Service Reserve Fund” means the fund created by Section 4.5 hereof.

 

“Debt Service Reserve Requirement” means an amount equal to the lesser of (i) the Maximum Annual Debt Service Requirement on the Series 2007A Bonds, (ii) 10% of the Proceeds of the Series 2007A Bonds or (iii) 125% of the average annual debt service on the Series 2007A Bonds.

 

“Defaulted Interest” means interest on the Series 2007A Bonds which is payable but not duly paid on the date due.

 

“Deferred Approvals” has the meaning provided in the Senior Credit Agreement.

 

“Design-Build Agreement ” means each of the design build agreements for the Aberdeen Expansion specified in the Senior Credit Facilities.

 

“Distillers Grains” means any form of distillers grain products (including syrup) marketed by the Borrower from time to time.

 

“Determination of Taxability ” means the issuance of a statutory notice of deficiency by the Internal Revenue Service, or ruling of the National Office or any District Office, or a final decision by any court of competent jurisdiction that interest on the Series 2007A Bonds is includible in the gross income of the recipient under Section 103 and related sections of the Code and regulations thereunder as in effect at the date of issuance of the Series 2007A Bonds, for any reason other than a change of law or that the Holder is a substantial user or a related person under Section 147(a), provided that the period for a contest or appeal, if any, of such action,

 

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ruling or decision has expired without any such appeal or contest having been instituted, or, if instituted, such contest or appeal has been unsuccessfully concluded.

 

“DTC” means The Depository Trust Company, a New York corporation, and its successors and assigns.

 

“DTC Participant” or “DTC Participants” means securities brokers and dealers, banks, trust companies, clearing corporations and certain other corporations which have access to the DTC system.

 

“Environmental Affiliate” means any Person, only to the extent of, and only with respect to matters or actions of such Person for which, the Borrower could reasonably be expected to have liability as a result of the Borrower retaining, assuming, accepting or otherwise being subject to liability for Environmental Claims relating to such Person, whether the source of the Borrower’s obligation is by contract or operation of Law.

 

“Environmental Approvals” means any Governmental Approvals required under applicable Environmental Laws.

 

“Environmental Claim” means any written notice, claim, demand or similar written communication by any Person alleging potential liability or requiring or demanding regulatory compliance or remedial or responsive measures (including potential liability for investigatory costs, cleanup, remediation and mitigation costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties) in each such case (x) either (i) with respect to environmental contamination-related liabilities or obligations with respect to which the Borrower could reasonably be expected to be responsible that are, or could reasonably be expected to be, in excess of two hundred thousand Dollars ($200,000) in the aggregate, or (ii) that has or could reasonably be expected to result in a Material Adverse Effect and (y) arising out of, based on or resulting from (i) the presence, release or threatened release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such Person; (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Laws or Environmental Approvals; or (iii) personal injury or damage to property as a result of exposure to Materials of Environmental Concern.

 

“Environmental Laws” means all Laws applicable to the Facilities relating to pollution or protection of human health, safety or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including Laws relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise applicable to the Facilities relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, management, remediation or handling of Materials of Environmental Concern.

 

“Environmental Site Assessment Report” means, a Phase I environmental site assessment report prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent, which report shall comply with ASTM standard 1527-05 (with such modifications thereto as may reasonably be requested by the Borrower and are reasonably acceptable to the Administrative Agent), and a Phase II environmental site assessment

 

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reasonably acceptable to the Senior Lenders, addressing any recognized environmental conditions or other areas of concern identified in the relevant Phase I report if in the reasonable determination of the Senior Lenders, acting in consultation with the Independent Engineer, a Phase II assessment is warranted.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination, in each such case including all voting rights and economic rights related thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.

 

“ERISA Affiliate” means any Person, trade or business that, together with the Borrower, is or was treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

“Escrow Obligations” means (i)  Government Obligations, (ii) certificates evidencing a direct ownership interest in Government Obligations or in future interest or principal payments thereon held in a custody account by a custodian satisfactory to the Bond Trustee, and (iii) obligations of any state of the United States of America or any political subdivision, public instrumentality or public Issuer of any such state which are fully secured by and payable solely from Government Obligations held pursuant to an escrow agreement satisfactory to the Bond Trustee.

 

“Ethanol Marketing Agreement” means that certain Ethanol Marketing Agreement dated as of November 30, 2000, between the Borrower and Williams Ethanol Services, Inc. D/B/A  Williams Bio-Energy, N/K/A Aventine Renewable Energy, Inc., as amended March 31, 2003 and December 1, 2006.

 

“Event of Abandonment” means any of the following shall have occurred: (i) the abandonment by the Borrower of the development, construction, operation or maintenance of the Facilities for a period of more than sixty (60) consecutive days (other than as a result of force majeure, an any taking, exercise of rights of eminent domain, public improvement, inverse condemnation, condemnation or similar action of or proceeding by any Governmental Authority relating to any material part of the Project with, any Equity Interests of the Borrower, or any other assets thereof, or any event that causes the Facilities, or any materials portion thereof, to be damaged, destroyed, or rendered unfit for normal use for any reason), (ii) the suspension of all or substantially all of the Borrower’s activities with respect to the Facilities, other than as the result of such force majeure, taking or casualty, for a period of more than sixty (60) consecutive days,

 

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or (iii) any written acknowledgement by the Borrower of a final decision to take any of the foregoing actions.

 

“Expansions” means the Aberdeen Expansion and the Huron Expansion.

 

“Expense Fund” means the fund created in Section 3.2 hereof.

 

“Facilities” means the Aberdeen Facility, the Aberdeen Expansion, the Huron Facility and the Huron Expansion, if undertaken.

 

“Facilities Documents” means the documents related to the Facilities defined as the “Project Documents” in the Senior Credit Facilities.

 

“Facilities Parties” means each Person (other than the Borrower or the Parent Company) who is a party to a Facilities Document.

 

“Final Completion Date” means with respect to the Aberdeen Expansion, the date (which shall occur on or before the Conversion Date Certain) on which the conditions in the Senior Credit Agreement have been satisfied, as certified by each of the Borrower and the Independent Engineer in a Final Completion Certificate.

 

“Final Completion Certificate” means (a) a certificate of the Independent Engineer, (b) a certificate of the Borrower, in each case in the form required by the Senior Credit Facilities and confirming that the Final Completion Date has occurred.

 

“Financial Model” means the pro forma financial statements and projections of revenue and expenses and cash flows with respect to the Borrower and the Facilities for the period from September 1, 2007 through the Fiscal Year ended December 31, 2022, attached to the Senior Credit Facilities, as the same may be updated by the Borrower.

 

“Financial Officer” means, with respect to any Person, the controller, treasurer or chief financial officer of such Person.

 

“Financing Documents” means the “Financing Documents” relating to the Senior credit Facilities as defined in the Senior Credit Agreement together with the Bond Documents.

 

“First Lien Agent” has the meaning provided in the Intercreditor Agreement.

 

“First Lien Claimholders” means, at any relevant time, the holders of First Lien Obligations at such time, including the First Lien Lenders, the First Lien Administrative Agent, the First Lien Agent, the Accounts Bank and Counterparties under the First Lien Hedge Agreements as defined in the Intercreditor Agreement.

 

“Fiscal Year” means any period of twelve (12) consecutive calendar months ending on September 30.

 

“Fiscal Quarter” means any quarter of a Fiscal Year.

 

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“Funding Notice” means a request for funding of the Senior Credit Facilities for a construction or working capital or upon conversion to the term loan as further defined in the Senior Credit Agreement.

 

“GAAP” means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.

 

“Government Obligations” means direct obligations of the United States of America and obligations on which the timely payment of principal and interest is fully guaranteed by the United States of America.

 

“Governmental Approval” means any authorization, consent, approval, license, lease, ruling, permit, certification, exemption, filing for registration by or with any Governmental Authority.

 

“Governmental Authority” means any nation, state, sovereign, or government, any federal, regional, state, local or political subdivision and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).

 

“Historical Debt Service Coverage Ratio” or “HDSCR” means, as of any Quarterly Payment Date, for the four (4) Fiscal Quarters immediately preceding (and not including the then-current Fiscal Quarter) such Quarterly Payment Date (or, if less than four (4) Fiscal Quarters have elapsed since the Conversion Date, for such number of full Fiscal Quarters that has elapsed since the Conversion Date), the ratio of (i) Cash Flow Available for Debt Service during such period to (ii) Debt Service on the Senior Credit Facilities or the Loan Agreement, as the case may be, during such period.

 

“Huron Expansion” means the expansion of the Huron Facility if undertaken and if financed in part by the Senior Lenders.

 

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“Huron Facility” means the existing ethanol production facility owned by the Borrower in Huron, South Dakota.

 

“Huron Grain Elevator Lease” means that certain Lease Agreement, dated as of October 1, 2007, between the Borrower and South Dakota Wheat Growers Association, relating to the grain elevator for the Huron Facility.

 

“Huron Ground Lease” means that certain Ground Lease, dated as of May 1, 1998, between the Borrower as Lessee and Farmland Industries, Inc. as Lessor, as assigned to Land O’Lakes Farmland Feed LLC (n/k/a Land O’Lakes Purina Feed LLC) pursuant to an Assignment and Assumption of Ground Lease dated July 16, 2004, and as amended by the First Amendment to Lease dated as of February 10, 2006, between Land O’Lakes Purina Feed, LLC and the Borrower.

 

“Huron Senior Mortgage” means that certain Mortgage – One Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Collateral Agent for the benefit of the Senior Lenders relating to the Huron Facility.

 

“Huron Subordinate Mortgage” means that certain, Subordinate Mortgage – One Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Bond Trustee relating to the Huron Facility.

 

“Huron Subordination, Non-Disturbance and Attornment Agreement” means that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of October 1, 2007, among the Bond Trustee as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Huron Grain Elevator Lease, including all schedules, exhibits and attachments thereto.

 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(g)                                  all obligations of such Person for or in respect of moneys borrowed or raised, whether or not for cash by whatever means (including acceptances, deposits, discounting, letters of credit, factoring, and any other form of financing which is recognized in accordance with GAAP in such Person’s financial statements as being in the nature of a borrowing or is treated as “off-balance sheet” financing);

 

(h)                                  all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(i)                                      all obligations of such Person for the deferred purchase price of property or services;

 

(j)                                      all obligations of such Person under conditional sale or other title retention agreements relating to property or assets acquired by such Person (even though the

 

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rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property or are otherwise limited in recourse);

 

(k)                                   the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(l)                                      all Capitalized Lease Liabilities;

 

(m)                                net obligations of such Person under any Swap Contract;

 

(n)                                  all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

 

(o)                                  all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

 

“Independent Engineer” means the engineer or other expert selected by the Senior Lenders to review construction of the Aberdeen Expansion and draw requests for proceeds of the Senior Loan and draw request for the proceeds of the Series 2007A Bonds.

 

“Independent Engineer Certificate” means a certificate of the Independent Engineer substantially in the form of the “Independent Engineer’s Certificate attached as Exhibit L to the Accounts Agreement.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of October 1, 2007 by and between the Borrower, the Parent Company, the Administrative Agent and the Bond Trustee.

 

“Interest Fund” means the fund created in Section 4.3 hereof.

 

“Interest Payment Date” means with respect to the Series 2007A Bonds each January 1 and July 1, commencing January 1, 2008; provided that, if such day shall not be a Business Day, payment shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due.

 

“Interest Rate Protection Agreement” means each interest rate swap, collar, put, or cap, or other interest rate protection arrangement, with a Qualified Counterparty, in each such

 

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case that is reasonably satisfactory to the Administrative Agent and is entered into in accordance with the Senior Credit Facilities.

 

“Law” means, with respect to any Governmental Authority, any constitutional provision, law, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, common law, holding, injunction, Governmental Approval or requirement of such Governmental Authority. Unless the context clearly requires otherwise, the term “Law” shall include each of the foregoing (and each provision thereof) as in effect at the time in question, including any amendments, supplements, replacements, or other modifications thereto or thereof, and whether or not in effect as of the date of this Agreement.

 

“Leased Premises” means those certain leased premises described in the Huron Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator Lease.

 

“Letter of Representations” means the Blanket Issuer Letter of Representations from the Issuer to DTC.

 

“Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, bailment, conditional sales or title retention agreement, lien (statutory or otherwise), charge against or interest in property, in each case of any kind, to secure payment of a debt or performance of an obligation.

 

“Loan Agreement” means the Loan Agreement relating to the Series 2007A Bonds, dated as of the date hereof, between the Borrower and the Issuer, as it may from time to time be amended or supplemented.

 

“Local Account” means any local bank account (other than the Project Accounts and the Bond Accounts) in the name of the Borrower.

 

“Maintenance Capital Expenses” means all expenditures by the Borrower for regularly scheduled (or reasonably anticipated) major maintenance of the Facilities, Prudent Ethanol Operating Practice and vendor and supplier requirements constituting major maintenance (including teardowns, overhauls, capital improvements, replacements and/or refurbishments of major components of the Facilities).

 

“Mandatory Sinking Fund Redemption” has the meaning given such term in Section 5.1 hereof.

 

“Material Adverse Effect” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, property, condition (financial or otherwise), prospects, or operations of the Borrower or the Facilities taken as a whole, (ii) the ability of the Borrower, any Pledgor, any Project Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement to perform its material obligations under any Transaction Document to which it is a party, (iii) creation, perfection or priority of the Liens granted, or purported to be granted, in favor, or for the benefit, of the Collateral Agent pursuant to the Security Documents or (iv) the rights or remedies of any Senior Secured Party under any Financing Document.

 

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“Materials of Environmental Concern” means chemicals, pollutants, contaminants, wastes, toxic substances and hazardous substances, any toxic mold, radon gas or other naturally occurring toxic or hazardous substance or organism and any material that is regulated in any way, or for which liability is imposed, pursuant to an Environmental Law.

 

“Maximum Annual Debt Service Requirement” means the largest total Debt Service Requirements for the current or any succeeding Bond Year.

 

“Mortgaged Property” means all real property right, title and interest of the Borrower that is subject to the Subordinate Mortgage.

 

“Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

 

“Necessary Project Approvals” has the meaning set forth in the Senior Credit Facilities.

 

“Net Worth” of any Person means, as of any given date, the aggregate of capital, surplus and retained earnings (including any cumulative translation adjustment) of such Person as would be shown on a consolidated balance sheet of such Person prepared as of such date in accordance with generally accepted accounting principles which may be in part established with respect to asset value by an appraisal firm established in accordance with generally accepted accounting principles.

 

“Obligations” means and includes all loans, advances, debts, liabilities, Indebtedness and obligations, howsoever arising, owed to the Agents, the Lender or any Senior Secured Party of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower of any Insolvency or Liquidation Proceeding naming the Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such (including the Interest Rate Protection Agreement), proceeding, pursuant to the terms of this Agreement or any of the other Financing Documents including all principal, interest, fees, charges, expenses, attorneys’ fees, costs and expenses, accountants’ fees and Consultants’ fees payable by the Borrower hereunder or thereunder.

 

“Officer’s Certificate” means a certificate signed, in the case of a certificate delivered by a corporation, by the President, any Vice-President or any other officer authorized to sign by resolution of the governing body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person, in either case whose authority to execute such Certificate shall be evidenced to the satisfaction of the Bond Trustee for the purpose of this Bond Indenture.

 

“Operating Budget” means the operating budget required to be prepared pursuant to the Senior Credit Facilities or the Loan Agreement, as the case may be.

 

“Operating Budget Category” means, at any time with respect to each Operating Budget, each line item set forth in such Operating Budget in effect at such time.

 

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“Operating Statement” means an operating statement with respect to the Facilities, in substantially the form required by the Senior Credit Facilties.

 

“Operation and Maintenance Expenses” means, for any period, the sum without duplication of all (i) reasonable and necessary expenses of administering, managing and operating, and generating Products for sale from, the Facilities and maintaining it in good repair and operating condition, (ii)  costs associated with the supply and transportation of all corn, natural gas, electricity and other supplies and raw materials to the Facilities and distribution and sale of Products from the Facilities that the Borrower is obligated to pay, (iii) all reasonable and necessary insurance costs (other than insurance premiums that are paid as costs of the Aberdeen Expansion), (iv) property, sales and franchise taxes to the extent that the Borrower is liable to pay such taxes to the taxing authority (other than taxes imposed on or measured by income or receipts) to which the Facilities, may be subject (or payment in lieu of such taxes to which the Facilities may be subject), (v) reasonable and necessary costs and fees incurred in connection with obtaining and maintaining in effect the Necessary Project Approvals, (vi) reasonable and arm’s-length legal, accounting and other professional fees attendant to any of the foregoing items during such period, (vii) the reasonable costs of administration and enforcement of the Transaction Documents, (viii) costs incurred pursuant to the Permitted Commodity Hedging Arrangements, and (ix) all other costs and expenses included in the then-current Operating Budget. In no event shall cost of Aberdeen Expansion or Maintenance Capital Expenses be considered Operation and Maintenance Expenses.

 

“Outstanding” means, with respect to the Series 2007A Bonds, all Series 2007A Bonds which have been duly authenticated and delivered by the Bond Trustee under this Bond Indenture, except:

 

(a)                                   Series 2007A Bonds cancelled after purchase in the open market or because of payment at or redemption prior to maturity;

 

(b)                                  Series 2007A Bonds for the payment or redemption of which cash or Government Obligations shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Series 2007A Bonds) in accordance with this Bond Indenture; provided that if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee shall have been filed with the Bond Trustee;

 

(c)                                   Series 2007A Bonds in lieu of which others have been authenticated under this Bond Indenture; and

 

(d)                                  Series 2007A Bonds owned by the Borrower, the Parent Company or affiliate thereof.

 

“Parent Company” means ABE Heartland, LLC, a Delaware limited liability company, which currently owns, directly or indirectly, 100% of the Equity Interests in the Borrower and its successors and assigns and any surviving, resulting or transferee entity.

 

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“Paying Agent” means the Bond Trustee and the bank or banks, if any, designated pursuant to this Bond Indenture to receive and disburse the principal of and interest and premium, if any, on the Series 2007A Bonds.

 

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

 

“Permitted Commodity Hedging Arrangements” means those Commodity Hedging Arrangements entered into by the Borrower in accordance with the provisions of the Senior Credit Facilities.

 

“Permitted Liens” means Liens identified in the Senior Credit Facilities as “Permitted Liens”.

 

“Permitted Tax Distribution” means, with respect to any distributee that is required to pay tax as a result of its direct or indirect ownership of the Borrower, an amount equal to forty percent (40%) of such distributee’s estimated share of the taxable income of the Borrower (after netting or otherwise taking account of a distributee’s shares of the income, loss, deduction and credit associated with the distributee’s interest in the Borrower) that the distributee is reasonably expected to have to report for income tax purposes for the Fiscal Quarter distributed to the extent necessary to fund a distributee’s timely payment to a Governmental Authority of tax liability (including estimated payments thereof) and subject to correction as described below.

 

“Person” means any natural person, firm, joint venture, association, partnership, business trust, corporation, public body, agency or political subdivision thereof or any other separately existing agency.

 

“ Plan” means an employee pension benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV of ERISA or Section 412 of the Code that is sponsored or maintained by the Borrower or any ERISA Affiliate, or in respect of which the Borrower or any ERISA Affiliate has any obligation to contribution or liability.

 

“Proceeds” means (a) if the first offering price of the Series 2007A Bonds minus the compensation paid to the underwriter (the “Net Price”) is equal to or greater than 98% of the aggregate principal amount of the Series 2007A Bonds, an amount equal to the original aggregate principal amount of the Series 2007A Bonds or (b) if the net price is less than 98% of the original aggregate principal amount of the Series 2007A Bonds, an amount equal to the net price.

 

“Products” means ethanol, Distillers Grains, and any other co product or by-product produced in connection with the production of ethanol at the Project.

 

“Project” means the improvements, modifications, expansions and equipment purchases to be made for the Aberdeen Facility which constitute Solid Waste Facilities, the cost of which are to be financed, in whole or in part, with a portion of the proceeds of the Series 2007A Bonds, the plans and specifications for which are on file with the Borrower.

 

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“Project Accounts ” has the meaning provided in Section 1.01 of the Accounts Agreement.

 

“Project Fund” means the fund created in Section 3.3 hereof.

 

“Prospective Debt Service Coverage Ratio” or “PDSCR” means, for any Quarterly Payment Date, for the Fiscal Quarter including such Quarterly Payment Date and the three (3) Fiscal Quarters immediately following such Quarterly Payment Date, the ratio of (i) Cash Flow Available for Debt Service projected for such period to (ii) Debt Service on the Senior Credit Facilities or the Loan Agreement, as the case may be, projected for such period, in each case based on the then-current Operating Budget approved in accordance with the Senior Credit Facilities, as the same has been updated (if necessary) to reflect the then-current projections for commodity prices.

 

“Prudent Ethanol Operating Practice” means those reasonable practices, methods and acts that (i) are commonly used in the region where the Facilities is located to manage, operate and maintain ethanol production, distribution, equipment and associated facilities of the size and type that comprise the Facilities safely, reliably, and efficiently and in compliance with applicable Laws, manufacturers’ warranties and manufacturers’ and licensor’s recommendations and guidelines, and (ii) in the exercise of reasonable judgment, skill, diligence, foresight and care are expected of an ethanol plant operator, in order to efficiently accomplish the desired result consistent with safety standards, applicable Laws, manufacturers’ warranties, manufacturers’ recommendations and, in the case of the Facilities, the Project Documents. Prudent Ethanol Operating Practice does not necessarily mean one particular practice, method, equipment specifications or standard in all cases, but is instead intended to encompass a broad range of acceptable practices, methods, equipment specifications and standards.

 

“Quarterly Payment Date” means each March 31, June 30, September 30 and December 31.

 

“Purchase Contract” means the contract for the purchase of the Series 2007A Bonds among the Issuer, the Borrower and the purchasers named therein.

 

“Rebate Fund” means the Rebate Fund created by Section 3.4 of this Bond Indenture.

 

“Record Date” means the fifteenth day of the month (whether or not a Business Day) next preceding an Interest Payment Date.

 

“Redemption Fund” means the fund created in Section 4.6 hereof.

 

“Registrar” means the Bond Trustee as bond registrar for the Series 2007A Bonds.

 

“Required Cash Sweep” means each mandatory prepayment of the Loans made pursuant to Section 3.10 (Mandatory Prepayment) of the Senior Credit Facilities.

 

“Restricted Payments” means any (a) dividend or other distribution (whether in cash, securities or other property), or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption,

 

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retirement, defeasance, acquisition, cancellation or termination of any Equity Interests of the Borrower, or on account of any return of capital to any holder of any such Equity Interest in, or any other Affiliate of, the Borrower, or any option, warrant or other right to acquire any such dividend or other distribution or payment, (b) any payment of fees (other than corporate overhead costs, expenses or any other payments pursuant to the Administrative Services Agreement) for any management, consultancy or administrative services, to any Person who owns, directly or indirectly, any Equity Interest in the Borrower, or any Affiliate of any such Person, or (c) any payment of indemnification obligations pursuant to the Borrower L.P. Agreement; provided that any Permitted Tax Distributions shall not constitute Restricted Payments.

 

“Revenue Fund” means the fund created by Section 4.2 of this Bond Indenture.

 

“Senior Credit Agreement” means that certain Credit Agreement, dated as of October 1, 2007, among the Borrower, each of the lenders from time to time party thereto, the Administrative Agent, WestLB AG, New York Branch, as collateral agent, issuing bank, lead arranger, sole book runners and syndicate agent.

 

“Senior Credit Facilities” means the construction loan, the term loan, and the working capital loan to be made by the Senior Lenders to the Borrower to finance a portion of the Expansions and to refinance certain existing debt of the Borrower relating to the Facilities, which are secured by the Senior Mortgage, the Senior Security Agreement and the Senior Equity Pledge Agreement.

 

“Senior Equity Pledge Agreement” means that certain Pledge and Security Agreement dated as of October 1, 2007 by and among the Parent Company, ABE Heartland, LLC and the collateral agent set forth therein, as amended or supplemented from time to time.

 

“Senior Lenders” means WestLB and the other lenders from time to time party to the loan agreement in respect of the Senior Credit Agreement.

 

“Senior Mortgage” means the Aberdeen Senior Mortgage and the Huron Senior Mortgage.

 

“Senior Secured Parties” means the Lenders, the Agents and any Interest Rate Protection Provider as defined in the Credit Agreement.

 

“Senior Security Agreement” means that certain Assignment and Security Agreement dated September, 2007 from the Borrower to the Senior Lenders, as amended or supplemented from time to time.

 

“Series 2007A Bonds ” means the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A, to be issued by the Issuer pursuant to the terms and conditions of this Bond Indenture.

 

“Site” means, with respect to each Facility those certain parcels described in the Senior Credit Facilities with respect to such Facility.

 

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“SNDAs” means each of the Aberdeen Subordination, Non-Disturbance and Attornment Agreement and the Huron Subordination, Non-Disturbance and Attornment Agreement.

 

“Solid Waste Disposal Facilities” means “Solid Waste Disposal Facilities” as defined by the Code and regulations thereunder for the purposes of Section 142(a)(6) of the Code.

 

“S&P” means Standard &Poor’s Rating Group.

 

“Special Interest Payment Date” means the date, which need not be an Interest Payment Date, fixed by the Bond Trustee pursuant to the Bond Indenture for the payment of Defaulted Interest to Holders as of the Special Record Date.

 

“Special Record Date” means the fifteenth day (whether or not a Business Day) before a Special Interest Payment Date.

 

“State” means the State of South Dakota.

 

“Subordinate Equity Pledge Agreement” means that certain Subordinate Pledge and Security Agreement dated as of October 1, 2007 among the Parent Company, Dakota Fuels, the Borrower and the Bond Trustee as amended or supplemented from time to time.

 

“Subordinate Mortgage” means the Aberdeen Subordinate Mortgage and the Huron Subordinate Mortgage.

 

“Subordinate Security Agreement” means that certain Subordinate Assignment and Security Agreement dated as of October 1, 2007 from the Borrower to the Bond Trustee as amended or supplemented from time to time.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement and (c) for the avoidance of doubt, includes the Permitted Commodity Hedging Arrangements and any Interest Rate Protection Agreements and excludes any contract for the physical sale or purchase of any commodity.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts (including any Permitted Commodity Hedging Arrangements or any Interest Rate Protection Agreements), after taking into account the effect of any legally enforceable netting agreement

 

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relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, in accordance with the terms of the applicable Swap Contract, or, if no provision is made therein, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“Tax” or “Taxes” means any present or future taxes (including income, gross receipts, license, payroll, employment, excise, severance, stamp, documentary, occupation, premium, windfall profits, environmental, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, ad valorem, alternative or add-on minimum, estimated, or other tax of any kind whatsoever), levies, imposts, duties, fees or charges (including any interest, penalty, or addition thereof) imposed by any government or any governmental agency or instrumentality or any international or multinational agency or commission.

 

“Tax Exemption Agreement” means that certain Tax Exemption Agreement and Certificate, dated the date of delivery of the Series 2007A Bonds, among the Borrower, the Issuer, the Bond Trustee and the Accounts Bank.

 

“Taxable Rate” means that variable rate of interest which adjusts the first day of each calendar quarter in each year (January 1, April 1, July 1 and October 1) and is equal to the sum of (i) the rate of interest published as the London Interbank Offered Rate (LIBOR) with a term of three (3) months as of the first day of each calendar quarter or following Business Day if such first day is not a Business Day, and (ii) plus 350 basis points.

 

“ Termination Event ” means (i) a reportable event within the meaning of Section 4043(c) of ERISA with respect to any Plan, (ii) the initiation of any action by the Borrower, any ERISA Affiliate or any Plan fiduciary to terminate any Plan (other than a standard termination under Section 4041(b) of ERISA) or the treatment of an amendment to any Plan as a termination under Section 4041(e) of ERISA, (iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to terminate any Plan or to appoint a trustee to administer any Plan, (iv) the withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan during a plan year in which the Borrower or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of twenty percent (20%) of any Multiemployer Plan participants who are employees of the Borrower or any ERISA Affiliate, (v) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan, or (vi) the Borrower or any ERISA Affiliate is in default (as defined in Section 4219(c)(5) of ERISA) with respect to payments to any Multiemployer Plan.

 

“Title Continuation” means a written notice issued by the title insurance company (including their local title insurance abstractors) confirming the status of title as set forth in the Title Insurance Policy, which indicates that, there has been no change in the title of title to the Mortgaged Property and no Liens or survey exceptions (in the case of any updated or “as-built” survey that has been issued) not theretofore approved by the Senior Lenders, which written

 

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notice shall contain no recorded mechanic’s liens except as approved by the Required Lenders or as otherwise subject to a Contest.

 

“Transaction Documents” means, collectively, the Financing Documents and the Facilities Documents.

 

“Trust Estate” means the trust estate defined in the granting clauses hereof.

 

“Unassigned Rights” means the right of the Issuer to receive payment of its fees and expenses, the Issuer’s right to indemnification under the Loan Agreement, the Issuer’s right to execute and deliver supplements and amendments to the Loan Agreement.

 

“Unfunded Benefit Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all accrued benefits calculated on an accumulated benefit obligation basis and based upon the actuarial assumptions used for accounting purposes (i.e., those determined in accordance with FASB statement No.35 and used in preparing the Plan’s financial statements) exceeds (ii) the fair market value of all Plan assets allocable to such benefits, determined as of the then most recent actuarial valuation report for such Plan.

 

“Written Request” means, with respect to the Issuer, a request in writing by the Chairman, County Auditor or other authorized officer of the Issuer; with respect to the Bond Trustee, a request in writing signed by an authorized officer of the Bond Trustee; with respect to the Borrower or the Parent Company, a request in writing signed by the Chief Executive Officer, President, Chief Financial Officer or any Vice President of the Borrower or the Parent Company, and with respect to the issuer, the Bond Trustee, the Borrower and the Parent Company, as the case may be, any other officers designated to sign such requests by official action of the appropriate entity.

 

Section 1.2                          Interpretation . Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles. Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. All references in this Bond Indenture to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Bond Indenture as originally executed. The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Bond Indenture as a whole and not to any particular Article, Section or other subdivision unless the context indicates otherwise.

 

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ARTICLE II

 

THE SERIES 2007A BONDS

 

Section 2.1                          Authorized Amount of Series 2007A Bonds . No bonds may be issued under the provisions of this Bond Indenture except in accordance with this Article. The total principal amount of Series 2007A Bonds that may be issued is hereby expressly limited to $19,000,000

 

Section 2.2                          Issuance of Series 2007A Bonds . The Series 2007A Bonds shall be designated “Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A”.

 

The Series 2007A Bonds shall be issuable only as registered bonds in the denominations of $5,000 and integral multiples thereof. Unless the Issuer shall otherwise direct, the Series 2007A Bonds shall be numbered from R-1 upward. The CUSIP number of 115433AA2 shall be set forth on the Bond.

 

The Series 2007A Bonds shall be dated as of the date of issuance and delivery thereof, shall bear interest at the rate of eight and one-quarter percent (8.25%) per annum (except to the extent to which the Bonds bear interest at the Taxable Rate pursuant to Section 5.1 hereof), calculated on the basis of a 360-day year of twelve 30-day months, payable on each Interest Payment Date, and shall mature on January 1, 2017 and be subject to Mandatory Sinking Fund Redemption as set forth in Section 5.2 hereof on January 1 in the years and in the amounts as follows:

 

Principal
Amount

 

Due in
the Year

 

$

5,840,000.00

 

2016

 

6,320,000.00

 

2017

 

6,840,000.00

 

2018

*

 

* Final Maturity

 

Each Series 2007A Bond shall, except as provided in this Section 2.2, bear interest from the Interest Payment Date next preceding the date of authentication of such Series 2007A Bond to which interest on the Series 2007A Bonds has been paid, unless (i) such date of authentication is an Interest Payment Date to which interest has been paid, in which case from such Interest Payment Date, (ii) such date of authentication is after the Record Date with respect to an Interest Payment Date and prior to such Interest Payment Date, in which case from such Interest Payment Date or (iii) no interest has been paid on the Series 2007A Bonds, in which case from the date of issuance and delivery thereof.

 

The person in whose name any Series 2007A Bond is registered at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the

 

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interest payable on such Interest Payment Date notwithstanding any registration of transfer or exchange subsequent to such Record Date and prior to such Interest Payment Date.

 

The principal of and interest on the Series 2007A Bonds shall be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts and such principal shall be payable upon presentation at the principal corporate trust office of the Bond Trustee. Payment of the interest on any Series 2007A Bond shall be made to the Person appearing on the Bond Register as the Registered Owner thereof as of the close of business of the Bond Trustee on the Record Date for such interest payment and shall be paid (i) by check or draft of the Bond Trustee mailed on the applicable Interest Payment Date to the registered owner at such owner’s address as it appears on the Bond Register or at such other address as is furnished to the Bond Trustee in writing by such Owner not less than 15 days prior to the Interest Payment Date or (ii) as to any Owner of $1,000,000 or more in aggregate principal amount of the Series 2007A Bonds who so elects, by wire transfer of funds to such wire transfer address within the continental United States as the Registered Owner shall have furnished in writing to the Bond Trustee no later than the Record Date, which wire instructions shall remain in effect until Bond Trustee is notified to the contrary.

 

Defaulted Interest with respect to any Series 2007A Bond shall cease to be payable to the Owner of such Series 2007A Bond on the relevant Record Date and, except as hereinafter provided, shall be payable to the Owner in whose name such Series 2007A Bond is registered at the close of business of the Bond Trustee on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner. The Borrower shall notify the Bond Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Series 2007A Bond and the date of the proposed payment (which date shall be such, as will enable the  Bond Trustee to comply with the next sentence hereof) and, at the same time, the Borrower or the Obligated Group shall deposit with the Bond Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Bond Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the owners of the Series 2007A Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds, the Bond Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which date will be fifteen (15) days prior to the date of the proposed payment. The Bond Trustee shall promptly notify the Borrower of such Special Record Date and, in the name and at the expense of the Borrower, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, not less than 10 days prior to such Special Record Date to each Owner of a Series 2007A Bond entitled to such notice at the address of such Owner as it appears on the Bond Register. Such Defaulted Interest shall be paid to the Owners of the Series 2007A Bonds in whose names the Series 2007A Bonds on which such Defaulted Interest is to be paid are registered on such Special Record Date.

 

Section 2.3                          Execution; Limited Obligation . The Series 2007A Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of the Chair of the County Commission and attested by the manual or facsimile signature of (or such other officer as may be designated by the Issuer), shall have impressed or printed by facsimile thereon the corporate seal of the Issuer, if required by law, and shall be countersigned by an attorney actually residing in

 

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the State and duly licensed to practice in the State. The facsimile signatures of said officers shall have the same force and effect as if such officers had manually signed each of said Series 2007A Bonds. In case any officer whose signature or facsimile signature shall appear on the Series 2007A Bonds shall cease to be such officer before the delivery of such Series 2007A Bonds, such signature or facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery.

 

The Series 2007A Bonds shall be limited obligations of the Issuer payable solely from (a) amounts payable under the Loan Agreement (except for Unassigned Rights), (b) amounts derived from the enforcement of the Bond Collateral Documents (except for amounts with respect to Unassigned Rights) amounts on deposit in the funds to the extent herein provided and (c) income from the temporary investment of any of the foregoing. So long as the Senior Credit Facilities are outstanding, all funds available to the Borrower to make loan repayments (including Unassigned Rights) and all amounts derived from the enforcement of the Bond Collateral Documents are subject to prior liens in favor of the Senior Lenders and are subject to the provisions of the Accounts Agreements ant the Intercreditor Agreement. The Series 2007A Bonds shall be a valid claim of the respective Owners thereof only against the funds established under this Bond Indenture and other moneys held by the Bond Trustee for the benefit of the Series 2007A Bonds and the payments  due or to become due upon or under the Loan Agreement (except for Unassigned Rights), all of which are hereby assigned and pledged hereunder for the equal and ratable payment of the Series 2007A Bonds and shall be used for no other purpose than to pay the principal of, premium, if any, and interest on the Series 2007A Bonds, except as may be otherwise expressly authorized in this Bond Indenture. The Series 2007A Bonds do not constitute a debt or liability of the State or of any political subdivision thereof or a pledge of the faith and credit of the State or any political subdivision thereof. The issuance of the Series 2007A Bonds under the provisions of the Act does not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment, and such Series 2007A Bonds and interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof within the meaning of the Constitution or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof. Neither the State nor any political subdivision thereof shall in any event be liable for the payment of the principal of or interest on the Series 2007A Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer. No breach by the Issuer of any such pledge, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any political subdivision thereof. No covenant or agreement in the Series 2007A Bonds or in this Bond Indenture and no obligation herein imposed upon the Issuer and no breach thereof shall constitute or give rise to or impose upon the Issuer a general liability or a charge upon its general credit or property other than the trust estate, as provided herein.

 

Section 2.4                          Authentication . No Series 2007A Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Bond Indenture unless and until a certificate of authentication on such Series 2007A Bond shall have been duly executed by the Bond Trustee, and such executed certificate of the Bond Trustee upon any such Series 2007A Bond shall be conclusive evidence that such Series 2007A Bond has been authenticated and delivered under this Bond Indenture. The Bond Trustee’s certificate of authentication on any

 

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Series 2007A Bond shall be deemed to have been executed by it if signed by an authorized officer or signatory of the Bond Trustee, but it shall not be necessary that the same officer or signatory sign the certificate of authentication on all of the Series 2007 Bonds issued hereunder.

 

Section 2.5                          [Intentionally Deleted]

 

Section 2.6                          Form of Bonds and Temporary Bonds . The Series 2007A Bonds shall be substantially in the form set forth in Exhibit A hereto with such appropriate variations, omissions and insertions as are permitted or required by this Bond Indenture or deemed necessary by the Bond Trustee and the Issuer.

 

Series 2007A Bonds may be initially issued in temporary form exchangeable for definitive Series 2007A Bonds when ready for delivery. The temporary Series 2007A Bonds shall be of such denomination or denominations as may be determined by the Issuer and may contain such reference to any of the provisions of this Bond Indenture as may be appropriate. Every temporary Series 2007A Bond shall be executed by the Issuer and be authenticated by the Bond Trustee upon the same conditions and in substantially the same manner as the definitive Series 2007A Bonds. If the Issuer issues temporary Series 2007A Bonds, it will execute and furnish definitive Series 2007A Bonds without delay and thereupon the temporary Series 2007A Bonds may be surrendered for cancellation in exchange therefor at the principal corporate trust office of the Bond Trustee, and the Bond Trustee shall authenticate and deliver in exchange for such temporary Series 2007A Bonds an equal aggregate principal amount of definitive Series 2007A Bonds of the same Series and maturity of authorized denominations. Until so exchanged, the temporary Series 2007A Bonds shall be entitled to the same benefits under this Bond Indenture as definitive Series 2007A Bonds authenticated and delivered hereunder.

 

Section 2.7                          Delivery of Series 2007A Bonds . Upon the execution and delivery of this Bond Indenture, the Issuer shall execute and deliver to the Bond Trustee and the Bond Trustee shall authenticate the Series 2007A Bonds and deliver them to the purchasers as may be directed by the Issuer as hereinafter in this Section 2.7 provided.

 

Prior to the delivery by the Bond Trustee of any of the Series 2007A Bonds there shall be filed with or delivered to the Bond Trustee and the Issuer:

 

(a)                                   a copy, duly certified by the Chair of the County Commission or the County Auditor of the Issuer, of the resolutions adopted and approved by the Issuer authorizing the execution and delivery of the Purchase Contract, the Loan Agreement, this Bond Indenture, and the Tax Exemption Agreement and the issuance and sale of the Series 2007A Bonds;

 

(b)                                  copies, duly certified by the Secretary or an Assistant Secretary of the Borrower of the resolutions adopted and approved by the Borrower authorizing the execution of or approving the, the Loan Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge Agreement and the Tax Exemption Agreement and approving this Bond Indenture and the issuance and sale of the Series 2007A Bonds;

 

(c)                                   an original executed counterpart of this Bond Indenture, the Loan Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge Agreement and the Tax Exemption Agreement;

 

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(d)                                  a request and authorization to the Bond Trustee on behalf of the Issuer and signed by its Chair (or such other officer as may be designated by the Issuer) to authenticate and deliver the Series 2007A Bonds to the purchasers therein identified upon payment to the Bond Trustee, but for the account of the Issuer, of the net proceeds from the sale of the Series 2007A Bonds;

 

(e)                                   the approving opinion of Bond Counsel;

 

(f)                                     an opinion of counsel to the Borrower as to the valid authorization, execution and delivery of the Loan Agreement and other related documents and as to such other matters as reasonably requested; and

 

(g)                                  such other closing documents and opinions of counsel as the Bond Trustee or the Issuer may reasonably specify.

 

Section 2.8                          Mutilated, Lost, Stolen or Destroyed Series 2007A Bonds . In the event any temporary or definitive Series 2007A Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the Bond Trustee may authenticate a new Series 2007A Bond of like form, date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Series 2007A Bond, such mutilated Series 2007A Bond shall first be surrendered to the Bond Trustee, and in the case of any lost, stolen or destroyed Series 2007A Bond, there shall be first furnished to the Issuer and the Bond Trustee evidence of such loss, theft or destruction satisfactory to the Issuer and the Bond Trustee, together with indemnity satisfactory to them. In the event any such Series 2007A Bond shall have matured, instead of issuing a replacement Series 2007A Bond the Issuer may pay the same without surrender thereof. The Issuer and the Bond Trustee may charge the holder or owner of such Series 2007A Bond with their reasonable fees and expenses in this connection.

 

Section 2.9                          Bond Register; Transfer and Exchange of Series 2007A Bonds; Persons Treated as Owners . The Bond Register shall be kept by the Bond Trustee at its principal corporate trust office. At reasonable times and under reasonable regulations established by the Bond Trustee, the Bond Register may be inspected and copied by the Issuer.

 

Upon surrender for registration of transfer of any Series 2007A Bond at the principal corporate trust office of the Bond Trustee, the Issuer shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Series 2007A Bond or Series 2007A Bonds of the same maturity and of authorized denomination for the aggregate principal amount which the Registered Owner is entitled to receive. Any Series 2007A Bond or Series 2007A Bonds may be exchanged at said office of the Bond Trustee for a like aggregate principal amount of Series 2007A Bond or Series 2007A Bonds of the same maturity of other authorized denominations. The execution by the Issuer of any Series 2007A Bond shall constitute full and due authorization of such Series 2007A Bond, and the Bond Trustee shall thereby be authorized to authenticate, date and deliver such Series 2007A Bond.

 

All Series 2007A Bonds presented for registration of transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in

 

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form and with guaranty of signature satisfactory to the Bond Trustee, duly executed by the Registered Owner or by such Owner’s duly authorized attorney.

 

No service charge shall be imposed for any exchange or registration of transfer of Series 2007A Bonds. The Issuer and the Bond Trustee may, however, require payment by the person requesting an exchange or registration of transfer of Series 2007A Bonds of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto, except in the case of the issuance of a Series 2007A Bond or Series 2007A Bonds for the unredeemed portion of a Series 2007A Bond surrendered for redemption.

 

The Issuer and the Bond Trustee shall not be required to register the transfer of or exchange any Series 2007A Bond after notice calling such Series 2007A Bond or portion thereof for redemption has been given or during the 15-day period next preceding the first mailing of such notice of redemption of Series 2007A Bonds of the same maturity.

 

New Series 2007A Bonds delivered upon any registration of transfer or exchange shall be valid obligations of the Issuer, evidencing the same debt as the Series 2007A Bonds surrendered, shall be secured by this Bond Indenture and shall be entitled to all of the security and benefits hereof to the same extent as the Series 2007A Bond surrendered.

 

The Issuer and the Bond Trustee may treat the Registered Owner of any Series 2007A Bond as the absolute owner thereof for all purposes, whether or not such Series 2007A Bond shall be overdue, and shall not be bound by any notice, actual or constructive, to the contrary. All payments of or on account of the principal of and premium, if any, and interest on any such Series 2007A Bond as  herein provided shall be made only to or upon the written order of the registered owner thereof or his legal representative, but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2007A Bond to the extent of the sum or sums so paid.

 

Section 2.10                   Cancellation . Any Series 2007A Bond surrendered for the purpose of payment or retirement or for exchange or registration of transfer or for replacement pursuant to Section 2.8 or Section 2.9 hereof, shall be cancelled upon surrender thereof to the Bond Trustee or any Paying Agent. If the Issuer or the Borrower shall acquire any of the Series 2007A Bonds, the Issuer or the Borrower shall deliver such Series 2007A Bonds to the Bond Trustee for cancellation and the Bond Trustee shall cancel the same. Any such Series 2007A Bonds cancelled by any Paying Agent other than the Bond Trustee shall be promptly transmitted by such Paying Agent to the Bond Trustee. A certificate identifying all Series 2007A Bonds so cancelled shall be delivered by the Bond Trustee to the Issuer and to the Borrower. Cancelled Series 2007A Bonds may be destroyed by the Bond Trustee unless instructions to the contrary are received from the Issuer or the Borrower.

 

Section 2.11                   Book-Entry Only System . The Series 2007A Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such Series 2007A Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC, and except as provided in Section 2.12 hereof, all of the outstanding Series 2007A Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.

 

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With respect to Series 2007A Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the Issuer, the Bond Trustee and the Borrower shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Series 2007A Bonds. Without limiting the immediately preceding sentence, the Issuer, the Bond Trustee and the Borrower shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Series 2007A Bonds, (ii) the delivery to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any notice with respect to the Series 2007A Bonds, including any notice of redemption, (iii) the payment to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any amount with  respect to principal of or interest on, the Series 2007A Bonds or (iv) any consent given by DTC as registered owner. So long as the certificates for the Series 2007A Bonds are not issued pursuant to Section 2.12 hereof, the Issuer and the Bond Trustee may treat DTC or any successor securities depository as, and deem DTC or any successor securities depository to be, the absolute owner of the Series 2007A Bonds for all purposes whatsoever, including without limitation (i) the payment of principal, premium, if any, and interest on the Series 2007A Bonds, (ii) giving notice of redemption and other matters with respect to the Series 2007A Bonds, (iii) registering transfers with respect to the Series 2007A Bonds and (iv) the selection of Series 2007A Bonds for redemption. Notwithstanding any other provision of this Bond Indenture to the contrary, the Issuer, the Bond Trustee and any Paying Agent shall be entitled to treat and consider the Person in whose name each Series 2007A Bond is registered in the Bond Register as the absolute owner of such Series 2007A Bond for the purpose of payment of principal, premium, if any, and interest with respect to such Series 2007A Bond, for the purpose of giving notices of redemption and other matters with respect to such Series 2007A Bond, for the purpose of registering transfers with respect to such Series 2007A Bond, and for all other purposes whatsoever. The Bond Trustee and any Paying Agent shall pay all principal of, premium, if any, and interest on the Series 2007A Bonds only to or upon the order of the respective Bondholders, as shown in the Bond Register as provided in this Bond Indenture, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to payment of principal of and interest on the Series 2007A Bonds to the extent of the sum or sums so paid. No Person other than a Bondholder, as shown in the Bond Register, shall receive a Series 2007A Bond certificate evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest pursuant to this Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Bond Indenture with respect to interest checks or drafts being mailed to the registered owner at the close of business on the Record Date, the word “Cede & Co.” in this Bond Indenture shall refer to such new nominees of DTC; and upon receipt of such a notice the Bond Trustee shall promptly deliver a copy of the same to any Paying Agent. Except as provided in Section 2.12 hereof, the Series 2007A Bonds may be transferred, in whole but not in part, only to DTC or to Cede & Co., or to a successor securities depository selected or approved by the Issuer or to a nominee of such successor securities depository. If at any time DTC notifies the Issuer that it is unwilling or unable to continue as securities depository with respect to the Series 2007A Bonds, or if at any time DTC shall no longer be registered or in good standing under the Securities  Exchange Act of 1934, as amended, or other applicable statute or regulation and a

 

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successor securities depository is not appointed by the Issuer within 90 days after the Issuer receives notice or becomes aware of such condition, as the case may be, then the Issuer shall execute and the Bond Trustee shall authenticate and deliver certificates representing the Series 2007A Bonds as provided in Section 2.12.

 

Section 2.12                   Successor Securities Depository; Transfers Outside Book-Entry Only System . The Bondholders have no right to a depository for the Series 2007A Bonds. The Issuer or the Bond Trustee may remove DTC or any successor thereto for cause at any time. In such event, the Issuer shall (i) appoint a successor securities depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Series 2007A Bond certificates to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Series 2007A Bond certificates and transfer one or more separate Series 2007A Bond certificates to DTC Participants having Series 2007A Bonds credited to their DTC accounts. In such event, the Series 2007A Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Series 2007A Bonds shall designate, in accordance with the provisions of this Bond Indenture.

 

The Issuer has executed the Letter of Representations in connection with the issuance of its bonds. The Letter of Representations is for the purpose of effectuating the book-entry only system of DTC and shall not be deemed to amend, supersede or supplement the terms of this Bond Indenture which are intended to be complete without reference to the Letter of Representations. In the event of any conflict between the terms of the Letter of Representations and the terms of this Bond Indenture, the terms of this Bond Indenture shall control. DTC may exercise the rights of a Bondholder hereunder only in accordance with the terms hereof applicable to the exercise of such rights.

 

Section 2.13                   Payments and Notices to Cede & Co. Notwithstanding any other provision of this Bond Indenture to the contrary, so long as a Series 2007A Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Series 2007A Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations. The Bond Trustee shall request in each notice sent to Cede & Co. pursuant to the terms of this Bond Indenture that Cede & Co. forward or cause to be forwarded such notice to the DTC Participants.

 

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ARTICLE III

 

APPLICATION OF SERIES 2007A BOND PROCEEDS
AND REQUIRED FUND DEPOSITS; EXPENSE FUND; PROJECT FUND;
REBATE FUND

 

Section 3.1                          Deposit of Funds . The Issuer, for and on behalf of, and as a loan to, the Borrower, shall deposit with the Bond Trustee all amounts required to be paid to the Bond Trustee by the Borrower from its available funds other than the Series 2007A Bond proceeds and all of the net proceeds from the sale of the Series 2007A Bonds, and the Bond Trustee shall, out of such proceeds, as may be further specified by a Written Request of the Borrower delivered to the Bond Trustee upon delivery of the Series 2007A Bonds:

 

(a)                                   Deposit $366,000.00 from monies paid to the Bond Trustee by the Borrower consisting of available funds of the Borrower other than proceeds of the Series 2007A Bonds and $380,000.00 from the proceeds of the Series 2007A Bonds to the credit of the Expense Fund; provided that, pursuant to a Written Request of the Borrower delivered to the Bond Trustee, all or any portion of said amount may be paid directly from bond proceeds for payment of any item which is authorized by Section 3.2 to be paid from the Expense Fund; provided, however, no more than two percent (2%) of the proceeds of the Series 2007A Bonds shall be used to pay cots of issuance of the Series 2007A Bonds.

 

(b)                                  Deposit to the credit of the Debt Service Reserve Fund the sum of $1,900,000.00 which will be sufficient to satisfy the Debt Service Reserve Requirement; and

 

(c)                                   Deposit the balance ($16,720,000.00) of the proceeds of the Series 2007A Bonds (including $1,136,437.50 representing capitalized interest on the Series 2007A Bonds) to the Project Fund.

 

Section 3.2                          Expense Fund . The Issuer hereby establishes with the Bond Trustee a separate account to be known as the “Series 2007A Expense Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project” (the “Expense Fund”). A deposit to the credit of the Expense Fund will be made pursuant to Section 3.1(a) hereof. Amounts on deposit in the Expense Fund shall be disbursed upon the Written Request of the Borrower for the payment of expenses for any recording, trustee’s fees and expenses, accounting and legal fees, financing costs (including costs of acquiring investments for the funds and escrows), and other fees and expenses incurred or to be incurred by or on behalf of the Issuer or the Borrower in connection with or incident to the issuance and sale of the Series 2007A Bonds. At such time as the Bond Trustee is furnished with a Written Request stating that all such fees and expenses have been paid, and in no event later than December 31, 2007, the Bond Trustee shall transfer any moneys remaining in the Expense Fund to the Project Fund.

 

Section 3.3                          Project Fund . The Issuer hereby establishes with the Bond Trustee a separate account to be known as the “Series 2007A Project Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Project Fund”). Proceeds of the Series 2007A Bonds shall be deposited to the credit in the Project Fund pursuant to Section 3.1(c) hereof. Immediately upon deposit of such proceeds, the Bond Trustee shall transfer the amount of $15,583,562.50 to the

 

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Accounts Bank for deposit to the Bond Proceeds Sub-Account held by the Accounts Bank pursuant to the terms of the Accounts Agreement. The Bond Trustee shall retain $1,136,437.50 in the Project Fund to be applied to the payment of interest on the Series 2007A Bonds as set forth in (a) below of this Section 3.3 The Bond Trustee shall direct the disbursement of funds by the Accounts Bank from the Bond Proceeds Sub-Account upon the procedures set forth in (a) below.

 

(a)                                   Disbursements from the Project Fund . In order to obtain disbursement of amounts in the Bond Proceeds Sub-Account, the Borrower shall submit a separate Bond Proceeds Withdrawal Certificate to the Bond Trustee and shall request the certificate of the Independent Engineer as required below. Upon review and execution, the Bond Trustee shall submit the Bond Proceeds Withdrawal Certificate to the Administrative Agent and the Independent Engineer to authorize and direct the withdrawal of the amount set forth in the Bond Proceeds Withdrawal Certificate by the Accounts Bank, from the Bond Proceeds Sub-Account. If there are insufficient funds in the Bond Proceeds Sub-Account, the Bond Trustee may, so long as all requirements for disbursement from the Bond Proceeds Sub-Account have been met, disburse moneys on deposit in the Project Fund in order to pay the Costs of the Project set forth in such Bond Proceeds Withdrawal Certificate. The Bond Trustee may not disburse amounts in the Project Fund required to pay interest for other Costs of the Project.

 

To the extent that the Borrower leases from third parties or otherwise provides equipment for the Project from sources other than funds on deposit in the Project Fund or the Bond Proceeds Sub-Account, the costs thereof shall not be included in the costs referred to above.

 

In addition, on December 25, 2007 and on June 25, 2008, the Bond Trustee shall transfer from the Project Fund to the Interest Fund the amount of capitalized interest set forth on Exhibit C hereto with respect to the applicable Interest Payment Date, which transferred amount shall be applied to pay interest on the Series 2007A Bonds on the applicable Interest Payment Date pursuant to Section 4.3 hereof. The amount of $1,136,437.50 shall be reserved for and used solely to pay interest on the Series 2007A Bonds. Investment earning on such amount may be used to pay other Costs of the Project under the disbursement procedures set forth above

 

(b)                                  Completion Certificate . Within 120 days after the substantial completion of the Facilities, the Borrower has agreed in the Loan Agreement to cause a completion certificate of an Independent Engineer to be delivered to the Bond Trustee, which certificate shall state that based upon periodic visits to the site, such Independent Engineer has generally become familiar with the progress and quality of the work on the Project and has determined that in general the work on the Project and the Facilities have been completed in compliance with the contract documents relating thereto, and to deliver to the Bond Trustee a completion certificate of the Borrower, which certificate shall state that substantial completion has occurred and that all Costs of the Project to be paid from the Project Fund have been included in Written Requests previously submitted to the Bond Trustee which have been paid by the Bond Trustee and directing the Bond Trustee to apply any amount remaining in the Project Fund to the mandatory redemption of Series 2007A Bonds upon completion as required by Section 5.1 hereof.

 

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Substantial completion of the Project shall be deemed to have occurred when the Borrower is able to occupy and utilize all portions of the Facilities in the manner in which and for the purposes for which the same were intended, with no significant impairment of the utility thereof to the Borrower for such purposes.

 

(c)                                   Disposition of Project Fund Moneys After Completion . If after payment by the Bond Trustee of all orders theretofore tendered to the Bond Trustee under the provisions of subparagraph (a) of this Section 3.3 and after receipt by the Bond Trustee of the completion certificates described in subparagraph (b) of this Section 3.3 there shall remain any balance of moneys in the Project Fund, such moneys shall be transferred to the Bond Sinking Fund; provided, however, that the Borrower shall have obtained an opinion of Bond Counsel that such transfer will not impair the exclusion from federal income taxation of the interest on any of the Series 2007A Bonds.

 

Section 3.4                          Rebate Fund. There is hereby established with the Bond Trustee a “Series 2007A Rebate Fund- Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Rebate Fund”) which shall be held separate and apart from all other moneys of the Bond Trustee. Moneys in the Rebate Fund are neither pledged to nor available to be used to pay debt service on the Series 2007 Bonds. Deposits to be made to the Rebate Fund and other provisions relating thereto are set forth in the Tax Exemption Agreement.

 

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ARTICLE IV

REVENUES AND FUNDS

 

Section 4.1                          Source of Payment of Series 2007A Bonds . The Series 2007A Bonds herein authorized and all payments to be made by the Issuer thereon and into the various funds established under this Bond Indenture are not general obligations of the Issuer but are limited obligations payable solely from (i) amounts payable under the Loan Agreement pledged hereunder (other than Unassigned Rights), (ii) amounts on deposit in the Funds created hereunder to the extent herein provided and (iii) certain income from the temporary investment of any of the foregoing.

 

Section 4.2                          Revenue Fund . The Issuer hereby establishes with the Bond Trustee, and agrees to maintain so long as any of the Series 2007A Bonds are outstanding, a separate account to be known as the “Series 2007A Revenue Fund – Heartland Grain Fuels, L.P. Revenue Fund” (the “Revenue Fund”). The Bond Trustee shall deposit all amounts received for payment of the Series 2007A Bonds to the Revenue Fund for transfer to the Interest Fund, the Bond Sinking Fund, the Debt Service Reserve Fund and the Redemption Fund as set forth in this Article.

 

Section 4.3                          Interest Fund . The Issuer hereby establishes with the Bond Trustee, and agrees to maintain so long as any of the Series 2007A Bonds are outstanding, a separate account to be known as the “Series 2007A Interest Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Interest Fund”).

 

On or before December 31, 2007 the Bond Trustee shall deposit in the Interest Fund from amounts on deposit in the Revenue Fund, an amount which, (after taking into account the amount to be transferred from the Project Fund to the Interest Fund on the twenty-fifth day of the month preceding each Interest Payment Date representing that portion of the capitalized interest which is to be applied to the payment of interest on the Series 2007A Bonds on the next succeeding Interest Payment Date, as such amount is set forth on Exhibit C hereto) will be sufficient to pay the interest to become due on the series 2007A Bonds on January 1, 2008. On or before each Quarterly Payment date after December 31, 2007, commencing March 31, 2008, the Bond Trustee shall deposit in the Interest Fund from amounts on deposit in the Revenue Fund, an amount which (after taking into account said available amount of capitalized interest) will be equal to not less than one-half of the interest to become due on the Series 2007A Bonds on the next succeeding Interest Payment Date. No such deposit need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Interest Fund. If any such Quarterly Payment Day is not a Business Day, the deposit herein required to be made shall be made on the next preceding Business Day or so long as the Accounts Agreement is in effect, such Business Day as directed in the Accounts Agreement. Moneys on deposit in the Interest Fund, other than income earned thereon which is to be transferred to other funds created under this Bond Indenture, shall be applied by the Bond Trustee to pay interest on the Series 2007A Bonds as it becomes due.

 

Section 4.4                          Bond Sinking Fund . The Issuer hereby establishes with the Bond Trustee and agrees to maintain so long as any of the Series 2007A Bonds are outstanding, a separate

 

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account to be known as the “Series 2007A Bond Sinking Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Bond Sinking Fund”).

 

On or before each Quarterly Payment Date, commencing March 31, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Bond Sinking Fund, from amounts on deposit in the Revenue Fund, an amount which is not less than one-fourth of the principal of the Series 2007A Bonds next to become due, whether at maturity or by Mandatory Sinking Fund Redemption. No such deposit need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Bond Sinking Fund. If any such Quarterly Payment Date day is not a Business Day, the deposit herein required to be made shall be made on the next preceding Business Day.

 

Moneys on deposit in the Bond Sinking Fund, other than income earned thereon which is to be transferred to other funds created under this Bond Indenture, shall be applied by the Bond Trustee to pay principal on the Series 2007A Bonds as it becomes due whether at maturity or by Mandatory Sinking Fund Redemption. In lieu of such payment, the Bond Trustee may, at the written request of the Borrower, purchase in the open market an equal principal amount of Series 2007A Bonds of the maturity to be paid or which is subject to Mandatory Sinking Fund Redemption at prices not exceeding the principal amount of the Series 2007A Bonds being purchased plus accrued interest, with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Series 2007A Bonds to be paid or redeemed on any date shall be reduced by the principal amount of Series 2007A Bonds of the maturity required to be paid or redeemed which are acquired by the Borrower and delivered to the Bond Trustee for cancellation.

 

Section 4.5                          Debt Service Reserve Fund . The Issuer hereby establishes with the Bond Trustee and agrees to maintain so long as any of the Series 2007A Bonds are Outstanding, a separate account to be known as the “Series 2007A Debt Service Reserve Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Debt Service Reserve Fund”). An initial deposit to the credit of the Debt Service Reserve Fund is to be made under the provisions of Section 3.1(b) hereof.

 

The Debt Service Reserve Fund shall be maintained in an amount equal to the Debt Service Reserve Requirement. Funds on deposit in the Debt Service Reserve Fund shall be used to make up any deficiencies in the Interest Fund and Bond Sinking Fund (in the order listed). The amount of any deficiency created pursuant to such use of said funds shall be restored to the Debt Service Reserve Fund from loan repayments to be made by the Borrower in not more than 4 consecutive substantially equal quarterly installments (the first such installment to be made on the Quarterly Payment Date following the month in which such deficiency is created) as provided in Article IV of the Loan Agreement.

 

On the first business day of January, 2008, and on the first business day of each January thereafter (each a “Valuation Date”), while any Series 2007A Bonds are Outstanding, the Trustee shall determine the aggregate value on such date of the Authorized Investments then held in the Debt Service Reserve Fund on the basis of the lower of cost or market value plus accrued interest. If such value, together with any cash then held in said Fund, is less than the Debt

 

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Service Reserve Requirement, the Trustee shall immediately notify the Issuer and the Borrower of the amount of such deficiency, and subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, the Borrower shall restore the amount of said deficiency to the Debt Service Reserve Fund from loan repayments to be made by the Borrower not later than one month after the date of such valuation in one monthly deposit pursuant to Article IV of the Loan Agreement. If the value of the securities on deposit in the Debt Service Reserve Fund on any Valuation Date, together with any cash then held therein, exceeds such requirement, such excess shall be transferred to the Bond Sinking Fund at the direction of the Borrower but, in any event, not less than annually. No deficiency shall be deemed to have occurred within the meaning of this paragraph if moneys have been transferred to the Bond Sinking Fund from the Debt Service Reserve Fund and the Borrower is repaying the same pursuant to the provisions of the second paragraph of this Section 4.5.

 

In lieu of the deposit of moneys in the Debt Service Reserve Fund, the Issuer, at the direction of the Borrower, may cause to be so credited a surety bond, an insurance policy or a letter of credit payable to the Issuer for the benefit of the owners of the Series 2007A Bonds in an amount equal to the Debt Service Reserve Requirement or the difference between the Debt Service Reserve Requirement and the amounts then on deposit in the Debt Service Reserve Fund with respect to the Series 2007A Bonds. The surety bond, insurance policy or letter of credit shall be payable (upon the giving of notice as required thereunder) on any date on which moneys will be required to be withdrawn from the Debt Service Reserve Fund and applied to the payment of the principal of or interest on the Series 2007A Bonds and such withdrawals cannot be made by amounts credited to the Debt Service Reserve Fund. The insurer providing such surety bond or insurance policy shall be an insurer whose municipal bond insurance policies insuring the payment, when due, of the principal of and interest on municipal bond issues results in such issues being rated in the highest rating category by either Standard & Poor’s Rating Services, a Division of The McGraw Hill Companies (“S&P”), or Moody’s Investors Service, Inc. (“Moody’s”), or their successors, or any insurer who holds the highest policyholder ratings accorded insurers by A. M. Best & Co. or any comparable service. The letter of credit issuer shall be a bank or trust company which is rated not lower than the highest rating category by S&P and Moody’s, or their successors, and the letter of credit itself shall be rated in the highest category of either such rating agency. If a disbursement is made pursuant to a surety bond, an insurance policy or a letter of credit provided pursuant to this paragraph, the Borrower shall be obligated either (i) to reinstate the maximum limits of such surety bond, insurance policy or letter of credit or (ii) to deposit funds into the Debt Service Reserve Fund in accordance with the first paragraph of this Section 4.5, or a combination of such alternatives, as shall result in the amount credited to the Debt Service Reserve Fund equaling the Debt Service Reserve Requirement for the Series 2007A Bonds.

 

If the issuer of a surety bond, insurance policy or letter of credit on deposit in the Debt Service Reserve Fund shall cease to have a rating described in the immediately preceding paragraph, the Borrower shall use reasonable efforts to replace such surety bond, insurance policy or letter of credit with one issued by an issuer having a rating so described, but shall not be obligated to pay, or commit to pay, increased fees, expenses or interest in connection with such replacement or to make deposits in the Debt Service Reserve Fund in lieu of replacing such surety bond, insurance

 

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policy or letter of credit with another, and such surety bond, insurance policy or letter of credit shall fully satisfy the Debt Service Reserve Requirement notwithstanding such decrease in rating.

 

To the extent the Issuer or the Borrower deposits funds in the Debt Service Reserve Fund, other funds on deposit therein may be transferred to the Bond Sinking Fund, so long as the Debt Service Reserve Fund is maintained in an amount which is not less than the Debt Service Reserve Requirement.

 

Section 4.6                          Redemption Fund . The Issuer hereby establishes with the Bond Trustee and agrees to maintain so long as any of the Series 2007A Bonds are outstanding a separate account to be known as the “Series 2007A Redemption Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Optional Redemption Fund”). In the event of (i) prepayment by or on behalf of the Borrower of amounts payable on the Loan Agreement or (ii) deposits with the Bond Trustee by the Borrower or the Issuer of moneys from any other source for redeeming Series 2007A Bonds (other than a Mandatory Sinking Fund Redemption), except as otherwise provided in this Bond Indenture, such moneys shall be deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall be used first, to make up any deficiencies existing in the Interest Fund and the Bond Sinking Fund (in that order) and second, for the redemption or purchase of Series 2007A Bonds in accordance with the provisions of Article V hereof.

 

Section 4.7                          Investment of Funds . (a)  Upon receipt of a Written Request of the Borrower filed with the Bond Trustee, moneys consisting of proceeds of the Series 2007A Bonds, if any, and all investment earnings thereon in the Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Project Fund, Expense Fund and Redemption Fund shall be invested in Authorized Investments, and all remaining moneys in said funds shall be invested in Qualified Investments specified by the Borrower. Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are reasonably anticipated to be required. If the Borrower fails to give such direction and file such written request with the Bond Trustee, moneys in such funds shall be invested in Government Obligations, maturing not more than fourteen days after the day such investment is made. As and when any amounts invested pursuant to this Bond Indenture may be needed for disbursements from the Bond Sinking Fund, the Interest Fund, the Debt Service Reserve Fund, the Expense Fund, the Project Fund or the Redemption Fund, the Bond Trustee shall cause a sufficient amount of such investments to be sold or otherwise converted into cash to the credit of such fund. The Bond Trustee may rely upon an Officer’s Certificate of the Borrower in determining whether any investments constitute Authorized Investments and comply with the investment restrictions in this Bond Indenture and the Tax Exemption Agreement. The Bond Trustee, when authorized by the Borrower, may trade with itself in the purchase and sale of securities for such investment; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained herein and in the Tax Exemption Agreement. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. Gains from investments shall be credited to and held in, and losses shall be charged to, the fund or account from which the investment is made.

 

(b)                                  All investment earnings on amounts in the Project Fund shall be credited to the Project Fund. Other than the Project Fund, all income in excess of the

 

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requirements of the funds specified in subsection (a) of this Section derived from the investment of moneys on deposit in any such funds shall be deposited in the following funds, in the order listed:

 

(i)                                 The Debt Service Reserve Fund to the extent necessary to maintain the amount required therein.

 

(ii)                              The Bond Sinking Fund and the Interest Fund (in that order) to the extent, with respect to the Bond Sinking Fund, of the amount required to be deposited in the Bond Sinking Fund to make the next required principal payment on the Series 2007A Bonds if such payment is scheduled to occur within 13 months of the date of such deposit, and to the extent, with respect to the Interest Fund, of the amounts required to be deposited in the Interest Fund necessary to make any interest payments on the Series 2007A Bonds occurring within 13 months of the date of such deposit; and

 

(iii)                           The balance, if any, in the Redemption Fund.

 

Section 4.8                          Trust Funds . All moneys received by the Bond Trustee under the provisions of this Bond Indenture shall, except as provided in Section 4.9 hereof, be trust funds under the terms hereof for the benefit of all Series 2007A Bonds outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Issuer or the Borrower. Such moneys shall be held in trust and applied in accordance with the provisions of this Bond Indenture.

 

Section 4.9                          Excluded Funds; Transfers to Rebate Fund . The foregoing provisions of this Article IV notwithstanding, (i) the Rebate Fund shall not be considered a part of the “trust estate” created by this Bond Indenture and (ii) the Bond Trustee shall be permitted to transfer moneys on deposit in any of the trust funds established under this Article IV to the Rebate Fund in accordance with the provisions of the Tax Exemption Agreement.

 

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ARTICLE V

 

REDEMPTION OF SERIES 2007A BONDS

 

Section 5.1                          Redemption Dates and Prices . The Series 2007A Bonds are callable for redemption prior to maturity (herein  referred to as “Extraordinary Optional Redemption”) pursuant to this Section 5.1 in the event of damage to or destruction of the Facilities or any part thereof or condemnation or sale consummated under threat of condemnation of the Facilities or any part thereof, if the Net Proceeds of insurance, condemnation or sale received in connection therewith exceed $5,000,000, but only to the extent of funds provided for in Section 4.7 of the Loan Agreement; and pursuant to the Loan Agreement the Borrower elects to have all or a portion of such Net Proceeds applied to the prepayment of the Series 2007A Bonds. If so called for redemption, Series 2007A Bonds shall be subject to redemption by the Issuer at the direction of the Borrower, in whole or in part at any time, and if in part by maturities designated by the Borrower (less than all of a single maturity to be selected by lot in such manner as may be determined by the Bond Trustee) at the principal amount thereof plus accrued and unpaid interest thereon to the redemption date and without premium from the Net Proceeds from such insurance, or condemnation award or such sale, but not in excess of the amount of such Net Proceeds applied to such purpose.

 

Outstanding Series 2007A Bonds are also subject to redemption prior to maturity (herein referred to as “Optional Redemption”) on or after January 1, 2015 at the option of the Issuer upon direction of the Borrower out of amounts prepaid under the Loan Agreement and deposited in the Redemption Fund, in whole or in part at any time, and if in part by maturities designated by the Borrower (and if less than all of a single maturity is being redeemed, by lot within a maturity or in such manner as may be reasonably determined by the Bond Trustee), at a redemption price of 100% (expressed as percentages of the principal amount of the Series 2007A Bonds to be redeemed), plus accrued interest, if any,  thereon to the date of redemption.

 

January 1, 2015 through December 31, 2015

 

106

%

January 1, 2016 through December 31, 2016

 

104

 

January 1, 2017 and thereafter

 

102

 

 

No Extraordinary Redemption or Optional Redemption of less than all of the Series 2007A Bonds Outstanding at the time of such redemption shall be made pursuant to the foregoing provisions of this Section 5.1 unless the aggregate principal amount of Series 2007A Bonds to be redeemed is equal to or greater than $100,000.

 

Series 2007A Bonds may be called for Extraordinary Redemption or Optional Redemption by the Bond Trustee pursuant to this Section 5.1 upon receipt by the Bond Trustee at least 60 days prior to the redemption date of a Written Request of the Borrower requesting such redemption. Such Written Request shall specify the principal amount of the Series 2007A Bonds to be called for redemption, the redemption date, the applicable redemption price or prices, the provision or provisions above specified pursuant to which such Series 2007A Bonds are to be called for redemption and if the Series 2007A Bonds are to be redeemed in part, the

 

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maturities of such Series 2007A Bonds, and the amounts within each such maturity to be redeemed. If for any reason the Bond Trustee has not received a Written Request as to the maturities of the Series 2007A Bonds or the amounts within any maturity to be redeemed, it shall apply the funds available for redemption to redeem the Series 2007A Bonds in inverse order of maturity.

 

Following the occurrence of the Determination of Taxability, the Series 2007A Bonds are subject to mandatory redemption, in whole ,as soon as practicable but in any event no later than ninety (90) days after the occurrence of a Determination of Taxability. The Series 2007A Bonds are subject to mandatory redemption as prepayment upon a Determination of Taxability from a prepayment by the Company of all Loan Payments. The redemption price of the Series 2007A Bonds upon a Determination of Taxability will be equal to one hundred eight percent (108%) of the principal amount of the Bonds to be redeemed and prepaid plus interest accrued, if any, to the mandatory redemption date following the Determination of Taxability. In addition, upon occurrence of a Determination of Taxability, the interest rate on the Bonds shall be adjusted as of the Date of Taxability to the Taxable Rate. The Taxable Rate is equal to a fluctuating interest rate adjusted on the first day of each calendar quarter to a rate equal to the sum of the London Interbank Offered Rates (LIBOR) with a term of three months plus 350 basis points.

 

The Bonds are subject to mandatory redemption in part by lot (or such other random means selected by the Bond Trustee) at a redemption price equal to the principal amount thereof, together with accrued interest to the date of redemption, from proceeds of the Series 2007A Bonds available therefore after the Completion Date.

 

In addition to Extraordinary Optional Redemption, Optional Redemption, mandatory redemption upon Determination of Taxability and mandatory redemption upon completion, the Series 2007A Bonds are subject to mandatory sinking fund redemption pursuant to and in the manner specified in Section 5.2 (herein referred to as “Mandatory Sinking Fund Redemption”).

 

In lieu of redeeming Series 2007A Bonds pursuant to this Section 5.1 or Section 5.2, the Bond Trustee may, at the Written Request of the Borrower, use such funds otherwise available hereunder for redemption of Series 2007A Bonds to purchase for cancellation Series 2007A Bonds in the open market at a price not exceeding the redemption price then applicable hereunder. It is understood that in the case of any such redemption or purchase and cancellation of Series 2007A Bonds, the Issuer shall receive credit against its required Bond Sinking Fund deposits with respect to the Series 2007A Bonds of such maturity, which in the case of Series 2007A Bonds subject to Mandatory Sinking Fund Redemption shall be applied to the mandatory deposits with respect to Mandatory Sinking Fund Redemption which the Borrower elects or, if no election is made, in the inverse order thereof.

 

The portion of any Series 2007A Bonds of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and in selecting portions of such Series 2007A Bonds for redemption, the Bond Trustee shall treat each such Series 2007A Bond as representing that number of Series 2007A Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Series 2007A Bond by $5,000.

 

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Section 5.2                          Bond Sinking Fund Deposits - Mandatory Deposits . With respect to the payment of Series 2007A Bonds, whether at maturity or by Mandatory Sinking Fund Redemption, the Issuer shall have on deposit in the Bond Sinking Fund moneys in the amounts and at the times, respectively, as follows:

 

January 1
of the Year

 

Principal
Amount

 

2016 

 

$

5,840,000.00

 

2017 

 

6,320,000.00

 

2018*

 

6,840,000.00

 

*Final Maturity

 

provided, that such amounts shall be reduced (a) by the amount of Series 2007A Bonds of the applicable maturity acquired and delivered in accordance with Section 4.4 hereof in satisfaction of such Bond Sinking Fund requirements and (b) in connection with a partial redemption of Series 2007A Bonds if the Borrower elects to reduce Mandatory Sinking Fund Redemptions for the Series 2007A Bonds of the applicable maturity in the manner provided in the penultimate paragraph of Section 5.1.

 

Moneys on deposit in the Bond Sinking Fund on January 1 of any year shall be applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds next maturing in the amount set forth above. Payment of the Series 2007A Bonds through the Bond Sinking Fund shall be without premium. If less than all Series 2007A Bonds of a particular maturity are subject to Mandatory Sinking Fund Redemption on a particular date, the Series 2007A Bonds to be redeemed shall be selected by lot in such manner as may be designated by the Bond Trustee. The Series 2007A Bonds shall be paid by the Bond Trustee pursuant to the provisions of this paragraph without any notice from or direction by the Issuer or the Borrower.

 

Section 5.3                          Notice of Redemption . Notice of the call for any redemption of the Series 2007A Bonds shall state the following:  (i) the name of the Series 2007A Bonds, (ii) the CUSIP number and bond certificate number of the Series 2007A Bonds to be redeemed, (iii) the original dated date of the Series 2007A Bonds, (iv) the interest rate and maturity date of the Series 2007A Bonds to be redeemed, (v) the date of the redemption notice, (vi) the redemption date, (vii) the redemption price and (viii) the address and telephone number of the principal office of the Bond Trustee. Such notice shall further state that on the redemption date for such Series 2007A Bonds there shall become due and payable upon each Series 2007A Bond to be redeemed the redemption price thereof, or the redemption price of the specified portion of the principal amount thereof in the case of a Series 2007A Bond to be redeemed in part only, with interest accrued and unpaid to such date, and that from and after such date, interest thereon shall cease to accrue and be payable. The redemption notice shall be given by mailing a copy of such notice of redemption by first class mail, postage prepaid, to the Issuer, and the registered owners of the Series 2007A Bonds to be redeemed at the address shown on the Bond Register not less than 30 or more than 60 days prior to the redemption date; provided, however, that failure to give such notice by mailing or a defect in the notice or the mailing as to any Series 2007A Bond will not affect the validity of any proceedings for redemption as to any other Series 2007A Bond with

 

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respect to which notice was properly given. Said notice shall also be given by the Bond Trustee by certified mail, return receipt requested, at least thirty days prior to the date fixed for redemption, to each securities depository registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to the national information services which disseminate redemption notices. Except for a mandatory sinking fund redemption pursuant to Section 5.2 hereof, prior to the date that the redemption notice is first mailed as aforesaid, funds shall be placed with the Bond Trustee to pay the principal and redemption premium, if any, of such Series 2007A Bonds and the accrued interest thereon to the redemption date. In the case of an optional redemption, at the option of the Borrower, funds need not be deposited prior to the mailing of the notice of redemption, provided that the notice of redemption states that if funds are not on deposit with the Bond Trustee on or prior to the redemption date, the redemption shall be cancelled and the Series 2007A Bonds so called for redemption shall remain Outstanding and continue to bear interest. Upon the happening of the above conditions, the Series 2007A Bonds, or portions thereof, thus called for redemption shall not bear interest after the applicable redemption date, shall no longer be protected by this Bond Indenture and shall not be deemed to be outstanding under the provisions of this Bond Indenture. The Bond Trustee shall redeem or purchase, in the manner provided in this Article V, such an aggregate principal amount of Series 2007A Bonds at the principal amount thereof plus accrued interest to the redemption date as will exhaust as nearly as practicable such funds. At the Written Request of the Borrower, such funds may be invested in Government Obligations until needed for redemption.

 

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ARTICLE VI

 

GENERAL COVENANTS

 

Section 6.1                          Payment of Principal and Interest . Subject to the limited source of payment hereinafter referred to, the Issuer covenants that it will promptly pay the principal of premium, if any, and interest on every Series 2007A Bond issued under this Bond Indenture at the place, on the dates and in the manner provided herein and in said Series 2007A Bonds according to the true intent and meaning thereof. The principal of premium, if any, and interest on the Series 2007A Bonds are payable solely from payments or prepayments by the Borrower under the  Loan Agreement, which Loan Agreement and payments thereon are hereby specifically assigned and pledged to the payment of the Series 2007A Bonds in the manner and to the extent herein specified, and nothing in the Series 2007A Bonds or in this Bond Indenture shall be considered as assigning or pledging any funds or assets of the Issuer except the moneys and the Loan Agreement (other than Unassigned Rights) pledged under this Bond Indenture.

 

Section 6.2                          Performance of Covenants; Legal Authorization . The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Bond Indenture, in any and every Series 2007A Bond executed, authenticated and delivered hereunder and in all proceedings of its members pertaining thereto. The Issuer represents that it is duly  authorized under the Constitution and laws of the State to issue the Series 2007A Bonds authorized hereby and to execute this Bond Indenture and to assign the Loan Agreement and payments thereon in the manner and to the extent herein set forth, that all action on its part for the issuance of the Series 2007A Bonds and the execution and delivery of this Bond Indenture has been duly and effectively taken, and that the Series 2007A Bonds in the hands of the owners thereof are and will be valid and enforceable obligations of the Issuer according to the import thereof.

 

Section 6.3                          Ownership; Instruments of Further Assurance . The Issuer represents that the assignment of the Loan Agreement to the Bond Trustee hereby made are valid and lawful. The Issuer covenants that it will defend its interest in the Loan Agreement and the assignment thereof to the Bond Trustee, for the benefit of the holders and owners of the Series 2007A Bonds, against the claims and demands of all persons whomsoever. The Issuer covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the Bond Trustee may reasonably require for the better assuring, transferring, mortgaging, conveying, pledging, assigning and confirming unto the Bond Trustee, the Loan Agreement and all payments thereon and thereunder (except for Unassigned Rights) pledged hereby to the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds.

 

Section 6.4                          Recording and Filing . The Issuer covenants that, solely from additional amounts payable as provided in Section 7.11 of the Loan Agreement, it will, if requested to do so in writing, cause this Bond Indenture and all supplements hereto and the Loan Agreement and all supplements thereto, and all related financing statements, to be kept, recorded and filed in such manner and in such places as may be so requested in order to preserve and protect fully the security of the holders of the Series 2007A Bonds and the rights of the Bond Trustee hereunder.

 

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The Bond Trustee, at the expense of the Borrower, agrees to file all continuation statements with respect to such related financing statements as required from time to time by law.

 

Section 6.5                          Books and Records . The Issuer covenants that so long as any Series 2007A Bonds are outstanding and unpaid, to the extent of its financial dealings or transactions in relation to the Property of the Borrower and the amounts derived from the Loan Agreement, it will keep, or cause to be kept, proper books of record and account including such records as are required by the Tax Exemption Agreement. Such books shall at all times be open for any lawful purpose to the inspection of the Bond Trustee and such accountants or other agencies as the Bond Trustee may from time to time designate.

 

Section 6.6                          Bond Register . The Bond Trustee shall keep on file at its office the Bond Register. At reasonable times and under reasonable regulations established by the Bond Trustee, said Bond Register may be inspected and copied by the Borrower or the Issuer.

 

Section 6.7                          Rights Under the Loan Agreement. The Issuer agrees that the Bond Trustee in its own name or in the name of the Issuer may enforce all rights of the Issuer and all obligations of the Borrower under and pursuant to the Loan Agreement for and on behalf of the Bondholders (other than Unassigned Rights), whether or not the Issuer is in default hereunder.

 

Section 6.8                          Designation of Additional Paying Agents . The Issuer shall (upon the written direction of the Borrower) cause the necessary arrangements to be made through the Bond Trustee and to be thereafter continued for the designation of additional Paying Agents, if any, and for the making available of funds hereunder for the payment of such of the Series 2007A Bonds as shall be presented when due at the principal corporate trust office of the Bond Trustee, or its successor in trust hereunder, or at the principal office of said additional Paying Agents.

 

Section 6.9                          Arbitrage; Compliance with Tax Exemption Agreement . The Issuer covenants and agrees that it will not take any action, or fail to take any action which may be requested of it, with respect to the investment of the proceeds of the Series 2007A Bonds or with respect to the payments derived from the Loan Agreement or any other moneys regardless of source or where held which may result in constituting the Series 2007A Bonds “arbitrage bonds” within the meaning of such term as used in Section 148 of the Code. The Issuer further covenants and agrees that it will comply with and take all actions required by the Tax Exemption Agreement.

 

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ARTICLE VII

 

EVENTS OF DEFAULT; REMEDIES

 

Section 7.1                          Extension of Payment; Penalty . In case the time for the payment of principal of or the interest on any Series 2007A Bonds shall be extended, whether or not such extension be by or with the consent of the Issuer, such principal or such interest so extended shall not be entitled in case of default hereunder to the benefit or security of this Bond Indenture except subject to the prior payment in full of the principal of all Series 2007A Bonds then outstanding and of all interest thereon, the time for the payment of which shall not have been extended.

 

Section 7.2                          Events of Default . Each of the following events is hereby declared an “event of default,” that is to say, if:

 

(a)                                   payment of any installment of interest payable on any of the Series 2007A Bonds shall not be made when the same shall become due and payable; or

 

(b)                                  payment of the principal of, or the premium, if any, on the Series 2007A Bonds shall not be made when the same shall become due and payable, either at maturity, by proceedings for redemption, or upon acceleration; or

 

(c)                                   any event of default as defined in Section 6.1 of the Loan Agreement shall occur and such event of default shall be continuing for a period of 15 days from and after the date the Issuer is entitled under the Loan Agreement to request that the Bond Trustee declare the Series 2007A Obligation to be immediately due and payable or such event of default shall be continuing for a period of 15 days from and after the date on which the Bond Trustee is entitled under the Bond Indenture to declare the Series 2007A Bonds immediately due and payable, or the Bond Trustee shall declare the Series 2007A Bonds due and payable; or

 

(d)                                  the Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Series 2007A Bonds, in this Bond Indenture, or in any indenture supplemental hereto to be performed on the part of the Issuer, and such default shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Issuer and the Borrower by the Bond Trustee; provided, that the Bond Trustee may give such notice in its discretion and shall give such notice at the written request of the owners of not less than ten percent (10%) in aggregate principal amount of the Series 2007A Bonds then outstanding hereunder; provided further that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Issuer to remedy such default within such 30-day period shall not constitute a default hereunder if the Issuer shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or

 

(e)                                   the Issuer or the Borrower shall default in the performance of any covenant, condition, agreement or provision of the Tax Exemption Agreement, and such default

 

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shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the party in default and the Borrower by the other party; provided that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Issuer or the Borrower to remedy such default within such 30-day period shall not constitute a default hereunder if any of the foregoing shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch.

 

If on the date payment of principal of or interest on the Series 2007A Bonds is due sufficient moneys are not available to make such payment, the Bond Trustee shall give telephonic notice, confirmed in writing, of such insufficiency to the Issuer and the Borrower.

 

Section 7.3                          Acceleration . The Bond Trustee may, upon the happening of any event of default specified in paragraphs (c) through (e) of Section 7.2 and the continuance of the same for the period, if any, specified in said paragraphs, without any action on the part of the Bondholders, and the Bond Trustee shall, upon the happening of an event of default specified in paragraph (a) or (b) of Section 7.2 or upon the happening and continuance of any other event of default (other than those specified in paragraph (a) or (b) of Section 7.2) and the written request of the owners of not less than twenty-five percent in aggregate principal amount of the Series 2007A Bonds then outstanding hereunder (exclusive of Series 2007A Bonds then owned by the Issuer or the Borrower) and upon being indemnified to its satisfaction, by notice in writing delivered to the Issuer and the Borrower, declare the entire principal amount of the Series 2007A Bonds then outstanding hereunder and the interest accrued thereon, immediately due and payable, and the entire principal and interest shall thereupon become and be  immediately due and payable, subject, however, to the provisions of Section 7.11 hereof with respect to waivers of events of default.

 

Section 7.4                          Remedies; Rights of Bondholders . Upon the occurrence of any event of default, the Bond Trustee may pursue any available remedy including a suit at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds outstanding hereunder.

 

If an event of default shall have occurred, and if it shall have been requested so to do by the holders of not less than twenty-five percent in aggregate principal amount of Series 2007A Bonds then outstanding and if it shall have been indemnified as provided in Section 8.1 hereof, the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VII as the Bond Trustee shall deem most expedient in the interests of the holders of Series 2007A Bonds; provided, however, that the Bond Trustee shall have the right to decline to comply with any such request if the Bond Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Bond Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of Series 2007A Bonds not parties to such request.

 

No remedy by the terms of this Bond Indenture conferred upon or reserved to the Bond Trustee (or to the holders of Series 2007A Bonds) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other

 

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remedy given to the Bond Trustee or to the holders of Series 2007A Bonds hereunder now or hereafter existing at law or in equity or by statute.

 

No delay or omission to exercise any right or power accruing upon any default or event of default shall impair any such right or power or shall be construed to be a waiver of any such default or event of default, or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient.

 

No waiver of any default or event of default hereunder, whether by the Bond Trustee or by the holders of Series 2007A Bonds, shall extend to or shall affect any subsequent default or event of default or shall impair any rights or remedies consequent thereon.

 

In the event that the Bondholders direct the Bond Trustee to take any action under the Bond Indenture or act on behalf of the Bond Trustee or seek to enforce any right of the Bond Trustee, the Bondholders, and each Bondholder shall be subject to the express terms and conditions of the Intercreditor Agreement to the same extent and with the same effect as if the Bond Trustee took such action without direction from the Bondholders or took such action directly itself, as the case may be.

 

Section 7.5                          Direction of Proceedings by Bondholders . The owners of a majority in aggregate principal amount of Series 2007A Bonds then outstanding shall have the right at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method  and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Bond Indenture, including the enforcement of the rights of the Issuer under the Loan Agreement or the appointment of a receiver or any other proceedings hereunder; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of this Bond Indenture.

 

Section 7.6                          Appointment of Receivers . Upon the occurrence of an event of default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the holders of Series 2007A Bonds under this Bond Indenture, the Bond Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the rights and properties pledged hereunder and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer.

 

Section 7.7                          Application of Moneys . All moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the cost and expenses (including the fees and expenses of counsel, which may be its in-house legal counsel) of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Bond Trustee, and all moneys in the funds maintained by the Bond Trustee under Articles III and IV, be applied as follows:

 

(a)                                   Unless the principal of all the Series 2007A Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:

 

First:  To the payment to the Persons entitled thereto of all installments of interest then due on the Series 2007A Bonds, in the order of the maturity of the installments of

 

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such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto without any discrimination or privilege;

 

Second:  To the payment to the Persons entitled thereto of the unpaid principal of any of the Series 2007A Bonds which shall have become due (other than Series 2007A Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full Series 2007A Bonds due on any particular date, then to the payment ratably, according to the amount of principal due on such date, to the Persons entitled thereto without any discrimination or privilege;

 

Third:  To the payment to the Persons entitled thereto of unpaid principal and interest due and owing on any Series 2007A Bonds, the payment of principal and interest of which has been extended in the manner described in Section 7.1; and

 

Fourth:  To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement.

 

(b)                                  If the principal of all the Series 2007A Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied:

 

First:  To the payment of the principal and interest then due and unpaid upon the Series 2007A Bonds, without preference or priority of principal or interest over the other, or of any installment of interest over any other installment of interest, or of any Series 2007A Bond over any other Series 2007A Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege;

 

Second:  To the payment of the principal and interest then due and unpaid upon Series 2007A Bonds with respect to which the payment of principal and interest has been extended as described in Section 7.1; and

 

Third: To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement.

 

(c)                                   If the principal of all the Series 2007A Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Series 2007A Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.

 

Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall

 

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be an Interest Payment Date unless it shall  deem another date more suitable, or, with respect to payments of Defaulted Interest, shall be such date as is required by the last paragraph of Section 2.2 hereof) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date by mailing a copy of such notice by first class mail, postage prepaid, to the registered owners of the Series 2007A Bonds, at least 10 days prior to the Special Record Date. The Bond Trustee shall not be required to make payment to the holder of any Series 2007A Bond until such Series 2007A Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid.

 

Whenever all Series 2007A Bonds and interest thereon have been paid under the provisions of this Section 7.7 and all expenses and charges of the Bond Trustee have been paid, any balance remaining shall be paid to the Persons entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the Borrower.

 

Section 7.8                          Remedies Vested in Bond Trustee . All rights of action including the right to file proof of claims under this Bond Indenture or under any of the Series 2007A Bonds may be enforced by the Bond Trustee without the possession of any of the Series 2007A Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Bond Trustee shall be brought in its name as Bond Trustee without the necessity of joining as plaintiffs or defendants any holders of the Series 2007A Bonds, and any recovery of judgment shall be for the equal benefit of the holders of the outstanding Series 2007A Bonds.

 

Section 7.9                          Rights and Remedies of Bondholders . No holder of any Series 2007A Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless (i) a default shall have become an event of default, (ii) the holders of twenty-five percent in aggregate principal amount of Series 2007A Bonds then outstanding shall have made written request to the Bond Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and unless also they have offered to the Bond Trustee indemnity as provided in Section 8.1, and (iii) unless the Bond Trustee shall thereafter fail or refuse to exercise the power hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every case at the option of the Bond Trustee to be conditions precedent to the  execution of the powers and trusts of this Bond Indenture and to any action or cause of action for the enforcement of this Bond Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more holders of the Series 2007A Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Bond Indenture by any action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the holders of all Series 2007A Bonds outstanding. Nothing in this Bond Indenture contained shall, however, affect or impair the right of any holder to enforce the payment of the principal of and interest on any Series 2007A Bond at and after the maturity thereof, or the obligation of the Issuer to pay the

 

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principal of and interest on each of the Series 2007A Bonds issued hereunder to the respective holders thereof at the time and place, from the source and in the manner in said Series 2007A Bonds expressed.

 

Section 7.10                   Termination of Proceedings . In case the Bond Trustee shall have proceeded to enforce any right under this Bond Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Bond Trustee, then and in every case the Issuer and the Bond Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the property pledged and assigned hereunder, and all rights, remedies and powers of the Bond Trustee shall continue as if no such proceedings had been taken.

 

Section 7.11                   Waiver of Events of Default . The Bond Trustee may in its discretion waive any event of default hereunder and its consequences and rescind any declaration of maturity of principal upon written request of the holders of (1) at least 51% in aggregate principal amount of all the Series 2007A Bonds outstanding in respect of which default in the payment of principal and/or interest exists, or (2) at least 51% in aggregate principal amount of all the Series 2007A Bonds outstanding. The foregoing notwithstanding, in no event shall there be waived (a) any event of default in the payment when due (other than with respect to principal becoming due as a result of acceleration of the Series 2007A Bonds) of the principal of any outstanding Series 2007A Bonds whether by Mandatory Sinking Fund Redemption or at the dates of maturity specified therein or (b) any default in the payment when due of the interest on any such Series 2007A Bonds, unless prior to such waiver or rescission all arrears of interest, with interest thereon (to the extent permitted by law) at the rate borne by the Series 2007A Bonds in respect of which such default shall have occurred on overdue installments of interest or all  arrears of payments of principal when due, as the case may be, and all expenses of the Bond Trustee and any Paying Agent in connection with such default shall have been paid or provided for. In case of any such waiver or rescission or in case any proceeding taken by the Bond Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Issuer, the Bond Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon.

 

Section 7.12                   Borrower’s Rights of Possession and Use of Its Property . So long as the Borrower is in full compliance with the terms and provisions of the Loan Agreement, the Borrower shall be suffered and permitted to possess, use and enjoy its Property and appurtenances thereto free of claims of the Issuer and the Bond Trustee.

 

Section 7.13                   Waiver of Redemption; Effect of Sale of Trust Estate . The Issuer, to the extent permitted by law, shall not claim any rights under any stay, valuation, exemption or extension law, and hereby waives any right of redemption which it may have in respect of any sale or other disposition of the Borrower’s Property pursuant to the rights and remedies granted under this Article VII. Upon the institution of any foreclosure proceedings or upon such sale or other disposition of the Borrower’s Property, or any acceleration of the principal of all Series

 

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2007A Bonds then outstanding hereunder, if not previously due and payable shall without more become immediately due and payable.

 

Section 7.14                   Notice of Default. Upon the occurrence of an Event of Default hereunder, the Bond Trustee will promptly give written notice thereof to the Issuer and the Borrower setting forth the nature of such Event of Default.

 

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ARTICLE VIII

 

THE BOND TRUSTEE

 

Section 8.1                          Acceptance of the Trusts . The Issuer initially appoints the Bond Trustee as Paying Agent and Registrar. The Bond Trustee accepts and agrees to execute the trusts imposed upon it by this Bond Indenture and to act as the Bond Trustee  under the Tax Exemption Agreement, but only upon the terms and conditions set forth herein, to all of which the Issuer agrees and the respective owners of the Series 2007A Bonds agree by their acceptance of delivery of any of the Series 2007A Bonds. The Bond Trustee, prior to the occurrence of an event of default hereunder and after the curing of all events of default hereunder which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Bond Indenture and to perform such trusts as an ordinarily prudent trustee under a corporate indenture and no other implied covenants or obligations should be read into this Bond Indenture against the Bond Trustee. If an event of default has occurred and is continuing, the Bond Trustee shall exercise such of the rights and powers vested in it by this Bond Indenture and shall use the same degree of care as a prudent person would exercise in the circumstances in the conduct of such person’s own affairs. The Bond Trustee agrees to perform such trusts only upon and subject to the following expressed terms and conditions:

 

(a)                                   The Bond Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents or receivers and shall not be responsible for the misconduct or negligence of any such attorneys, agents or receivers appointed in the exercise of care, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay and be reimbursed for such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith. The Bond Trustee may act upon the opinion or advice of an attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care. The Bond Trustee shall not be responsible for any loss or damage resulting from any action or nonaction based on its good faith reliance upon such opinion or advice.

 

(b)                                  The Bond Trustee shall not be responsible for any recital herein, or in the Series 2007A Bonds (except with respect to the certificate of the Bond Trustee endorsed on the Series 2007A Bonds), or for the investment of moneys as herein permitted (except that no investment shall be made except in compliance with Section 4.7 hereof and the Tax Exemption Agreement), or for the recording or re-recording, filing or re-filing of this Bond Indenture, or any supplement or amendment thereto, or the filing of financing statements(other than continuation statements), or for the validity of the execution by the Issuer of this Bond Indenture, or of any supplemental indentures or instruments of further assurance, or for the sufficiency of the security for the Series 2007A Bonds issued hereunder or intended to be secured hereby, or for the value or title of the property herein conveyed or otherwise as to the maintenance of the security hereof. The Bond Trustee may (but shall be under no duty to) require of the Issuer and the Borrower full information and advice as to the performance of the covenants, conditions and agreements in the Loan Agreement. Except as otherwise provided in Section 7.4 hereof, the Bond Trustee shall have no obligation to perform any of the duties of the Issuer under the Loan Agreement.

 

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(c)                                   The Bond Trustee shall not be accountable for the investment, use or application by the Issuer or the Borrower of any of the Series 2007A Bonds or the proceeds thereof or for the use or application of any money paid over by the Bond Trustee in accordance with the provisions of this Bond Indenture or for the use and application of money received by any Paying Agent. The Bond Trustee may become the owner of Series 2007A Bonds secured hereby with the same rights it would have if not Bond Trustee.

 

(d)                                  The Bond Trustee shall be protected in acting upon any notice, order, requisition, request, consent, certificate, order, opinion (including an opinion of Independent Counsel), affidavit, letter, telegram or other paper or document in good faith deemed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Bond Trustee pursuant to this Bond Indenture upon the request or Issuer or consent of any person who at the time of making such request or giving such Issuer or consent is the owner of any Series 2007A Bond, shall be conclusive and binding upon all future owners of the same Series 2007A Bond and upon Series 2007A Bonds issued in exchange therefor or in place thereof.

 

(e)                                   As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Bond Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by its Chair or County Auditor as sufficient evidence of the facts therein contained and prior to the occurrence of a default of which the Bond Trustee has been notified as provided in subsection (g) of this Section, or of which by said subsection it is deemed to have notice, may accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Bond Trustee may accept a certificate of the Chair or County Auditor of the Issuer to the effect that a resolution in the form therein set forth has been adopted by the Issuer as conclusive evidence that such resolution has been duly adopted, and is in full force and effect.

 

(f)                                     The permissive right of the Bond Trustee to do things enumerated in this Bond Indenture shall not be construed as a duty and the Bond Trustee shall not be answerable for other than its gross negligence or willful default.

 

(g)                                  The Bond Trustee shall not be required to take notice or be deemed to have notice of any default hereunder, other than an event of default under clause (a) or (b) of Section 7.2 hereof unless the Bond Trustee shall be specifically notified in writing of such default by the Issuer or by the holders of at least twenty-five percent in aggregate principal amount of all Series 2007A Bonds then outstanding, and all notices or other instruments required by this Bond Indenture to be delivered to the Bond Trustee must, in order to be effective, be delivered at the principal corporate trust office of the Bond Trustee, and in the absence of such notice so delivered the Bond Trustee may conclusively assume there is no default except as aforesaid.

 

(h)                                  The Bond Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts during any period in which it may be in possession of or managing

 

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the Property of the Borrower and shall have no obligation to expend its own funds for any purpose whatsoever.

 

(i)                                      At any and all reasonable times, the Bond Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all books, papers and records of the Issuer pertaining to the Series 2007A Bonds, and to take such memoranda from and in regard thereto as may be desired.

 

(j)                                      The Bond Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.

 

(k)                                   Notwithstanding anything contained elsewhere in this Bond Indenture, the Bond Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Series 2007A Bonds, the withdrawal of any cash, the release of any Property, or any action whatsoever within the purview of this Bond Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Bond Trustee deemed reasonably necessary for the purpose of establishing the right of the Issuer to the authentication of any Series 2007A Bonds, the withdrawal of any cash, the release of any property or the taking of any other action by the Bond Trustee.

 

(l)                                      Before taking any action under Articles VII or VIII of this Bond Indenture other than an acceleration when required pursuant to Section 7.3 hereof, the Bond Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its gross negligence or willful default in connection with any action so taken.

 

(m)                                All moneys received by the Bond Trustee or any Paying Agent shall, until used or applied or invested as provided in this Bond Indenture or in the Tax Exemption Agreement, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law or by this Bond Indenture or by the Tax Exemption Agreement. Neither the Bond Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon.

 

Section 8.2                          Fees, Charges and Expenses of Bond Trustee and any Additional Paying Agent . The Bond Trustee shall be entitled to payment and/or reimbursement for reasonable fees and for its services rendered hereunder and all advances, counsel fees and other expenses reasonably and necessarily made or incurred by the Bond Trustee in connection with such services. The Bond Trustee shall be entitled to payment and/or reimbursement for the reasonable fees and charges of the Bond Trustee as Paying Agent and Registrar for the Series 2007A Bonds as hereinabove provided. Any additional Paying Agent shall be entitled to payment and/or reimbursement for its reasonable fees and charges as additional Paying Agent for the Series 2007A Bonds. Upon an event of default hereunder, but only upon an event of default hereunder, the Bond Trustee and any additional Paying Agent shall have a right of payment prior to payment on account of interest or principal of, or premium, if any, on any Series 2007A Bond for the foregoing advances, fees, costs and expenses incurred; provided, however, that in no

 

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event shall the Bond Trustee or any such additional Paying Agent have any such prior right of payment or claim therefor against moneys or obligations deposited with or paid to the Bond Trustee for the  redemption or payment of Series 2007A Bonds which are deemed to have been paid in accordance with Article XI hereof.

 

Section 8.3                          Notice to Issuer and the Bondholders if Default Occurs . If a default occurs of which the Bond Trustee is by subsection (g) of Section 8.1 hereof required to take notice or if notice of default is given as in said subsection (g) provided, then the Bond Trustee shall give written notice thereof by first class mail, postage prepaid, to the Issuer and the registered owners of all Series 2007A Bonds then outstanding.

 

Section 8.4                          Good Faith Reliance . The Bond Trustee and any additional Paying Agent shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, telex or facsimile transmission, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board, body or person or to have been prepared and furnished pursuant to any of the provisions of this Bond Indenture or the Loan Agreement, or upon the written opinion of any attorney, engineer, accountant or other expert believed by the Bond Trustee and any additional Paying Agent, as the case may be, to be qualified in relation to the subject matter, and the Bond Trustee and any additional Paying Agent shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. Neither the Bond Trustee nor any Paying Agent shall be bound to recognize any person as an owner of Series 2007A Bonds or to take any action at such person’s request unless satisfactory evidence that such person is the registered owner of such Series 2007A Bond shall be furnished to such entity.

 

Section 8.5                          Dealings in Series 2007A Bonds . The Bond Trustee and any additional Paying Agent, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Series 2007A Bonds issued hereunder, and may join in any action which any owner may be entitled to take with like effect as if it did not act in any capacity hereunder. The Bond Trustee and any additional Paying Agent, in its individual capacity, either as principal or Agent, may also engage in or be interested in any financial or other transaction with the Borrower, and may act as depository, trustee or Agent for any committee or body of owners of Series 2007A Bonds secured hereby or other obligations of the Issuer or the Borrower as freely as if it did not act in any capacity hereunder.

 

Section 8.6                          Several Capacities . Anything in this Bond Indenture to the contrary notwithstanding, the same entity  may serve hereunder as the Bond Trustee, the Paying Agent and the Registrar, and in any other combination of such capacities, to the extent permitted by law.

 

Section 8.7                          Intervention by Bond Trustee . In any judicial proceeding to which the Issuer is a party and which in the opinion of the Bond Trustee and its counsel has a substantial bearing on the interests of owners of the Series 2007A Bonds, the Bond Trustee may intervene on behalf of Bondholders and, subject to the provisions of Section 8.1(1), shall do so if requested in writing by the owners of at least twenty-five percent in aggregate principal amount of all

 

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Series 2007A Bonds then outstanding. The rights and obligations of the Bond Trustee under this Section are subject to the approval of a court of competent jurisdiction.

 

Section 8.8                          Successor Bond Trustee by Merger or Consolidation . Any corporation or association into which the Bond Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible under Section 8.9 hereof, shall be and become successor Bond Trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

 

Section 8.9                          Bond Trustee Required; Eligibility . There shall at all times be a Bond Trustee hereunder which shall be a bank or trust company in good standing under the law of the State and organized under the laws of the United States of America or any state, authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities, and having a reported combined capital and surplus of not less than $75,000,000. If at any time the Bond Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided in Section 8.10 hereof. No resignation or removal of the Bond Trustee and no appointment of a successor Bond Trustee shall become effective until the successor Bond Trustee has accepted its appointment under Section 8.13 hereof.

 

Section 8.10                   Resignation by the Bond Trustee . Subject to Section 8.9, the Bond Trustee and any successor Bond Trustee may at any time resign from the trusts created by this  Bond Indenture and the Tax Exemption Agreement by executing any instrument in writing resigning such trusts and specifying the date when such resignation shall take effect, and filing the same with the Issuer and the Borrower, not less then 45 days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such resignation by first class mail, postage prepaid, not less than 20 days prior to such resignation date, to each registered owner of Series 2007A Bonds then outstanding, as shown by the Bond Register.

 

Section 8.11                   Removal of the Bond Trustee . Subject to Section 8.9, the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding at the time, may remove the Bond Trustee for “cause” by notice to the Issuer, the Bond Trustee and the Borrower. The Bond Trustee shall continue to act as Bond Trustee hereunder and have the right to proceed to cure any gross negligence, willful misconduct or failure or unwillingness to perform its duties (any of which shall be deemed to constitute “cause”), for a period of two weeks. If such cure is not effected within such time, the Bond Trustee’s functions hereunder will be terminated immediately upon the appointment of a successor bond trustee by the Borrower pursuant to Section 8.12 hereof. Subject to Section 8.9, the Bond Trustee may be removed by filing with the Bond Trustee so removed, and with the Issuer and the Borrower, an instrument or instruments in writing by the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of execution of such instrument, appointing a successor, or an

 

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instrument or instruments in writing by the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of execution of such instrument, consenting to the appointment by the Issuer of a successor and accompanied by an instrument of appointment by the Issuer of such successor.

 

Section 8.12                   Appointment of Successor Bond Trustee by the Bondholders; Temporary Bond Trustee . Subject to Section 8.9 in case the Bond Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed, by the owners of a majority in aggregate principal amount of Series 2007A Bonds then outstanding, by an instrument or concurrent instruments in writing signed by such owners, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the Borrower by an instrument executed and signed by a duly authorized officer, may appoint a temporary Bond Trustee to fill such vacancy until a successor Bond Trustee shall be appointed by the Bondholders in the manner above provided; provided further, that if no permanent successor Bond Trustee shall have been appointed by the Bondholders within the six calendar months next succeeding the month during which the Issuer appoints such a temporary Bond Trustee, such temporary Bond Trustee shall without any further action on the part of the Issuer or the Bondholders become the permanent successor Bond Trustee. The foregoing notwithstanding, any such temporary Bond Trustee so appointed by the Issuer shall immediately and without further act be superseded by any successor Bond Trustee so appointed by such Bondholders within the six calendar months next succeeding the month during which such temporary Bond Trustee is appointed.

 

Section 8.13                   Judicial Appointment of Successor Trustee . In case at any time the Bond Trustee shall resign and no appointment of a successor Bond Trustee shall be made pursuant to the foregoing provisions of this Article VIII prior to the date specified in the notice of resignation as the date when such resignation is to take effect, the resigning Bond Trustee may forthwith apply to a court of competent jurisdiction for the appointment of a successor Bond Trustee. If no appointment of a successor Bond Trustee shall be made pursuant to the foregoing provisions of this Article VIII within 30 days after a vacancy shall have occurred in the office of Bond Trustee, any owner of Series 2007A Bonds may apply to any court of competent jurisdiction to appoint a successor Bond Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Bond Trustee.

 

Section 8.14                   Concerning Any Successor Bond Trustees . Every successor Bond Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the Issuer, or of its successor, execute and deliver an instrument transferring to such successor Bond Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Bond Trustee shall deliver all securities and moneys held by it as Bond Trustee hereunder to its successors. Should any instrument in writing from the Issuer be required by any successor Bond Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby

 

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vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. The resignation of any Bond Trustee and the instrument or instruments removing any Bond Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article shall be filed and/or recorded by the successor Bond Trustee in each recording office, if any, where this Bond Indenture shall have been filed and/or recorded.

 

Section 8.15                   Bond Trustee Protected in Relying Upon Resolution, Etc . The resolutions, opinions, certificates and other instruments provided for in this Bond Indenture may be accepted by the Bond Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and Issuer to the Bond Trustee for the release of property and the withdrawal of cash hereunder.

 

Section 8.16                   Successor Bond Trustee as Trustee of Funds, Paying Agent and Bond Registrar . In the event of a change in the office of Bond Trustee, the predecessor Bond Trustee which has resigned or been removed shall cease to be trustee of the Expense Fund, Interest Fund, Bond Sinking Fund, Project Fund, Redemption Fund and any other funds provided hereunder and Registrar and Paying Agent for principal of, premium, if any, and interest on the Series 2007A Bonds, and the successor Bond Trustee shall become such Bond Trustee, Registrar and Paying Agent unless a separate Paying Agent or Agents are appointed by the Issuer in connection with the appointment of any successor Bond Trustee.

 

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ARTICLE IX

 

SUPPLEMENTAL BOND INDENTURES

 

Section 9.1                          Supplemental Bond Indentures Not Requiring Consent of Bondholders . Subject to the limitations set forth in Section 9.2 hereof with respect to this Section 9.1, the Issuer and the Bond Trustee may, but without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to this Bond Indenture, as shall not be inconsistent with the terms and provisions hereof, for any one or more of the following purposes:

 

(a)                                   to cure any ambiguity or formal defect or omission in this Bond Indenture;

 

(b)                                  to grant to or confer upon the Bond Trustee for the benefit of the Bondholders any additional rights, remedies, powers or Issuer that may lawfully be granted to or conferred upon the Bondholders and the Bond Trustee, or either of them;

 

(c)                                   to assign and pledge under or subject to this Bond Indenture additional revenues, properties or collateral;

 

(d)                                  to evidence the appointment of a separate bond trustee or the succession of a new bond trustee hereunder;

 

(e)                                   to permit the qualification of this Bond Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect or to permit the qualification of the Series 2007A Bonds for sale under the securities laws of any state of the United States;

 

(f)                                     to permit continued compliance with the Tax Exemption Agreement;

 

(g)                                  to provide for the refunding or advance refunding of any Series 2007A Bonds, including the right to establish and administer an escrow fund and to take related action in connection therewith; and

 

(h)                                  to make any other change that, in the judgment of the Bond Trustee, does not materially adversely affect the rights of any Bondholders.

 

If at any time the Issuer or the Bond Trustee proposes to enter into an indenture or indentures supplemental to this Bond Indenture pursuant to subparagraph (i) above, the Bond Trustee shall cause notice of the proposed execution of such supplemental indenture to be given to each rating agency, if any, then maintaining a rating on the Series 2007A Bonds in the manner provided in Section 13.4 hereof at least 30 days prior to the execution of such supplemental indenture, which notice shall include a copy of the proposed supplemental indenture and shall deliver to each such rating agency each such supplemental indenture promptly after it becomes effective.

 

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Section 9.2                          Supplemental Bond Indentures Requiring Consent of Bondholders . In addition to supplemental indentures  covered by Section 9.1 hereof and subject to the terms and provisions contained in this Section, and not otherwise, the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of the execution of such supplemental indenture, shall have the right, from time to time, anything contained in this Bond Indenture to the contrary notwithstanding, to consent to and approve the execution by the Issuer and the Bond Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the Issuer for the purpose of modifying altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Bond Indenture or in any supplemental indenture; provided, however, that nothing in this Section or in Section 9.1 hereof contained shall permit, or be construed as permitting, a supplemental indenture effecting or providing for: (a) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying interest on, or reduction of any premium payable on the redemption of any Series 2007A Bonds, without the consent of the owners of such Bonds; (b) a reduction in the amount or extension of the time of any payment required to be made to or from the Interest Fund or the Bond Sinking Fund; (c) the creation of any lien prior to or on a parity with the lien of this Bond Indenture, without the consent of the owners of all the Series 2007A Bonds at the time outstanding; (d) a reduction in the aforesaid aggregate principal amount of Series 2007A Bonds the owners of which are required to consent to any such supplemental indenture, without the consent of the owners of all the Series 2007A Bonds at the time outstanding which would be affected by the action to be taken; or (e) a modification of the rights, duties or immunities of the Bond Trustee, without the written consent of the Bond Trustee.

 

If at any time the Issuer shall request the Bond Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed to each holder of Series 2007A Bonds as shown on the Bond Register and to each rating agency then maintaining a rating on the Series 2007A Bonds. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal corporate trust office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the holders of the requisite principal amount of Series 2007A Bonds which are outstanding hereunder at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no holder of any Series 2007A Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided, this Bond Indenture shall be and be deemed to be modified and amended in accordance therewith and the Bond Trustee shall deliver a copy of such supplemental indenture to each rating agency then maintaining a rating on the Series 2007A Bonds.

 

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Anything herein to the contrary notwithstanding, so long as the Borrower is not in default under the Loan Agreement, a supplemental indenture under this Article IX which adversely affects the rights of the Borrower under the Loan Agreement shall not become effective unless and until such corporation shall have consented in writing to the execution and delivery of such supplemental indenture. In this regard, the Bond Trustee shall cause notice of the proposed execution and delivery of any such supplemental indenture to which the Borrower has not already consented, together with a copy of the proposed supplemental indenture and a written consent form to be signed by the Borrower, to be mailed by certified or registered mail to the Borrower at least 30 days prior to the proposed date of execution and delivery of any such supplemental indenture.

 

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ARTICLE X

 

AMENDMENTS TO THE LOAN AGREEMENT

 

Section 10.1                   Amendments, Etc. to Loan Agreement Not Requiring Consent . The Issuer, the Borrower and the Bond Trustee may, but without the consent of or notice to the owners of the Series 2007A Bonds, consent to any amendment, change or modification of the Loan Agreement (i) as may be required by the  provisions of this Bond Indenture or such Loan Agreement, (ii) for the purpose of curing any ambiguity or formal defect or omission, (iii) in connection with any other change therein which, in the judgment of the Bond Trustee, does not materially adversely affect the rights of the Bond Trustee, the owners of the Series 2007A Bonds or (iv) as may be required for the purpose of complying with the provisions of the Tax Exemption Agreement; provided, however, that nothing in this Section 10.1 shall permit, or be construed as permitting, any amendment, change or modification of the Loan Agreement that may result in anything described in clauses (a) through (e) of Section 9.2(a) hereof, without the consent of each Bondholder affected. If at any time the Borrower shall request the Issuer and the Bond Trustee to consent to any amendment, change or modification of the Loan Agreement pursuant to clause (iii) above, the Bond Trustee shall cause notice of the proposed execution of such amendment, change or modification to the Loan Agreement to be given to each rating agency, if any, then maintaining a rating on the Series 2007A Bonds at least 30 days prior to the execution of such amendment, change or modification to the Loan Agreement, which notice shall include a copy of the proposed amendment, change or modification to the Loan Agreement.

 

Section 10.2                   Amendments, Etc. to Loan Agreement Requiring Consent of the Bondholders . Except for the amendments, changes or modifications as provided in Section 10.1 hereof, neither the Issuer nor the Bond Trustee shall consent to any other amendment, change or modification of the Loan Agreement without the written approval or consent, given and procured as in this Section provided, of the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of execution of any such amendment, change or modification. If at any time the Issuer and the Borrower shall request the consent of the Bond Trustee to any such proposed amendment, change or modification of the Loan Agreement, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given to each holder of the Series 2007A Bonds as shown on the Bond Register in the same manner as provided by Section 9.2 hereof with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the principal office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to give such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to and approved as provided in this Section. If the holders of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds outstanding hereunder at the time of the execution of any such amendment, change or modification shall have consented to and  approved the execution thereof as herein provided, no holder of any Series 2007A Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to

 

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enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.

 

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ARTICLE XI

 

SATISFACTION OF THIS BOND INDENTURE

 

Section 11.1                   Defeasance . If the Issuer shall pay or provide for the payment of the entire indebtedness on all Series 2007A Bonds (including, for the purposes of this Section 11.1, Series 2007A Bonds held by the Borrower outstanding in any one or more of the following ways:

 

(a)                                   by paying or causing to be paid the principal of and interest on all Series 2007A Bonds outstanding, as and when the same become due and payable;

 

(b)                                  by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Series 2007A Bonds outstanding (including the payment of interest payable on such Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act;

 

(c)                                   by delivering to the Bond Trustee, for cancellation by it, all Series 2007A Bonds outstanding; or

 

(d)                                  by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall determine will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding at or before their respective maturity dates (which determination shall be made in reliance upon an accountant’s verification report reasonably accepted to the Bond Trustee);

 

and if the Issuer shall pay or cause to be paid or make arrangements satisfactory to the Bond Trustee for the payment of all other sums payable hereunder by the Issuer, and if any such Series 2007A Bonds are to be optionally redeemed prior to the maturity thereof, irrevocable notice of such redemption shall have been given in accordance with the requirements of this Bond Indenture or irrevocable instructions shall have been given to the Bond Trustee of such notice, this Bond Indenture and the estate and rights granted hereunder shall cease, determine, and be discharged, and thereupon the Bond Trustee shall, upon Written Request of the Issuer, and upon receipt by the Bond Trustee of an Officer’s Certificate of the Borrower and an opinion of Independent Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Bond Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Bond Indenture and the lien hereof.

 

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The satisfaction and discharge of this Bond Indenture shall be without prejudice to the rights of the Bond Trustee to charge and be reimbursed by the Issuer and the Borrower for any expenditures which it may thereafter incur in connection herewith.

 

Any moneys, funds, securities, or other property remaining on deposit in the Expense Fund, Interest Fund, Bond Sinking Fund, Project Fund, Redemption Fund or in any other fund or investment under this Bond Indenture (other than the Escrow Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of this Bond Indenture, forthwith be transferred, paid over and distributed to the Issuer and the Borrower, as their respective interests may appear.

 

The Issuer or the Borrower may at any time surrender to the Bond Trustee for cancellation by it any Series 2007A Bonds previously authenticated and delivered, which the Issuer or the Borrower may have acquired in any manner whatsoever, and such Series 2007A Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.

 

Section 11.2                   Liability of Issuer Not Discharged . Upon the deposit with the Bond Trustee, in trust, at or before maturity, of money or Escrow Obligations in the necessary amount to pay or redeem all outstanding Series 2007A Bonds (whether upon or prior to their maturity or the redemption date of such Series 2007A Bonds) and compliance with the other payment requirements of Section 11.1, provided that if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of  such redemption shall have been given as in Article V herein provided, or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, and subject to the provisions of Section 11.4, this Bond Indenture may be discharged in accordance with the provisions hereof but the liability of the Issuer upon the Series 2007A Bonds shall continue, but the owners thereof shall thereafter be entitled to payment only out of the moneys or the Escrow Obligations deposited with the Bond Trustee as aforesaid.

 

Section 11.3                   Provision for Payment of Portion of the Series 2007A Bonds . If the Issuer shall pay or provide for the payment of a portion of the Series 2007A Bonds (including, for the purposes of this Section 11.3, any Series 2007A Bonds held by the Borrower) in one or more of the following ways:

 

(a)                                   by paying or causing to be paid the principal of and interest on such portion of the Series 2007A Bonds, as and when the same shall become due and payable;

 

(b)                                  by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) a portion of the Series 2007A Bonds outstanding (including the payment of interest payable on such portion of the Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act;

 

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(c)                                   by delivering to the Bond Trustee, for cancellation by it, such portion of the Series 2007A Bonds; or

 

(d)                                  by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall determine (which determination shall be made in reliance on an accountant’s verification report of an accountant reasonably acceptable to the Bond Trustee) will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates;

 

and if the Issuer shall also pay or cause to be paid or made arrangements satisfactory to the Bond Trustee for the payment of all other sums payable hereunder by the Issuer with respect to such Series 2007A Bonds, and, if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article V of this Bond Indenture provided or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, such Series 2007A Bonds shall cease to be entitled to any lien, benefit or security under this Bond Indenture. The liability of the Issuer in respect of such Series 2007A Bonds shall continue, but the owners thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or the Escrow Obligations deposited with the Bond Trustee as aforesaid.

 

Section 11.4                   When Advance Refunding is Not Permitted and Special Conditions for Refundings . The other provisions of this Bond Indenture notwithstanding, none of the Series 2007A Bonds outstanding hereunder may be refunded as aforesaid nor may this Bond Indenture be discharged if under any circumstances would result in the loss of any exclusion from federal income taxation to which the Series 2007A Bonds would otherwise be entitled. As a condition precedent to the advance refunding of any Series 2007A Bonds outstanding hereunder, the Bond Trustee shall receive an opinion of Bond Counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof are acceptable to the Bond Trustee and which opinion may be based upon a ruling or rulings of the Internal Revenue Service and the verification report referred to in Sections 11.1 and 11.3 hereof) to the effect that such advance refunding will not result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.

 

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ARTICLE XII

 

MANNER OF EVIDENCING OWNERSHIP OF SERIES 2007A BONDS

 

Section 12.1                   Proof of Ownership . Any request, direction, consent or other instrument provided by this Bond Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Series 2007A Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Bond Indenture and shall be conclusive in favor of the Bond Trustee and the Issuer, with regard to any action taken by them, or either of them, under such request or other instrument, namely:

 

(a)                                   the fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the person signing such writing acknowledged before him the execution thereof, or by the affidavit of a witness of such execution; and

 

(b)                                  the ownership of Series 2007A Bonds and the amounts and registration numbers of such Bonds and the date of holding the same shall be proved by the Bond Register.

 

Any action taken or suffered by the Bond Trustee pursuant to any provision of this Bond Indenture, upon the request or with the assent of any Person who at the time is the owner of any Series 2007A Bond or Series 2007A Bonds, shall be conclusive and binding upon all future owners of the same Series 2007A Bond or Series 2007A Bonds.

 

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ARTICLE XIII

MISCELLANEOUS

 

Section 13.1      Limitation of Rights .   With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Bond Indenture or the Series 2007A Bonds is intended or shall be construed to give to any person other than the parties hereto and the owners of the Series 2007A Bonds any legal or equitable right, remedy or claim under or in respect to this Bond Indenture or any covenants, conditions and provisions herein contained; this Bond Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the owners of the Series 2007A Bonds as herein provided.

 

Section 13.2      Unclaimed Moneys .   Any moneys deposited with the Bond Trustee in accordance with the terms and covenants of this Bond Indenture, in order to redeem or pay any Series 2007A Bond in accordance with the provisions of this Bond Indenture which remain unclaimed by the owners of the Series 2007A Bond for four years after the redemption or maturity date, as the case may be, shall, if the Borrower is not at the time, to the knowledge of the Bond Trustee, in default with respect to any of the terms and conditions of this Bond Indenture or the Series 2007A Bonds, be repaid by the Bond Trustee to the Borrower upon its written request therefor; and thereafter the owners of the Series 2007A Bond shall be entitled to look only to the Borrower for payment thereof.  Such moneys may be invested in accordance with Section 4.7 hereof if the Borrower makes arrangements satisfactory to the Bond Trustee to indemnify the Bond Trustee  for any costs which it may incur due to the unavailability of moneys due to such investment.  Investment income on any such unclaimed moneys received by the Bond Trustee shall be deposited as provided in Section 4.7 hereof until the final maturity or redemption date of the Series 2007A Bonds.  Any such income generated after such date shall be deemed to be unclaimed moneys of the type referred to in the first sentence of this Section and shall be disposed of in accordance with such sentence. The Issuer hereby covenants and agrees to indemnify and save the Bond Trustee harmless from any and all loss, costs, liability and expense suffered or incurred by the Bond Trustee by reason of having returned any such moneys to the Issuer as herein provided.

 

Section 13.3      Severability .   If any provision of this Bond Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.

 

The invalidity of any one or more phrases, sentences, clauses or Sections in this Bond Indenture contained shall not affect the remaining portions of this Bond Indenture, or any part thereof.

 

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Section 13.4      Notices .   It shall be sufficient service of any notice, request, complaint, demand or other paper if the same shall be duly mailed by registered or certified mail, sent by reputable registered overnight mail or delivery service, or send by personal delivery or confirmed facsimile delivery, and addressed as follows:

 

To the Issuer:

 

Brown County , South Dakota
25 Market Street, Suite 2

Aberdeen, South Dakota 57401

Attention: County Auditor

 

To the Borrower:

 

Heartland Grain Fuels, L.P.

10201 Wayzata Boulevard, Suite 250

Minneapolis, Minnesota 55305

Attention: General Partner

 

To the Bond Trustee:

 

Well Fargo, National Association

MAC N9311-115

625 Marquette Avenue, 11 th Floor

Minneapolis, Minnesota 55479

Attention:  Corporate Trust

 

Section 13.5      Bond Trustee as Paying Agent and Registrar .   The Bond Trustee is hereby designated and agrees to act as principal Paying Agent and Registrar for and in respect to the Series 2007A Bonds.

 

Section 13.6      Counterparts .   This Bond Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

 

Section 13.7      Applicable Law .   This Bond Indenture shall be governed exclusively by the applicable laws of the State of South Dakota.

 

Section 13.8      Immunity of Officers, Employees and Members of Issuer .   No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Series 2007A Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this Bond Indenture contained against any past, present or future elected official, officer, director, member, employee or agent of the Issuer, or of any successor political subdivision, as such, either directly or through the Issuer or any successor political subdivision, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such elected official, officers, directors, members, employees or agents as such is hereby expressly waived and released as a condition of

 

75


 

and consideration for the execution of this Bond Indenture and the issuance of such Series 2007A Bonds.

 

Section 13.9      Parties Interested Hereunder .  Nothing in this Bond Indenture expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Issuer, the Bond Trustee and the registered owners of the Series 2007A Bonds, any right, remedy or claim under or by reason of this or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Bond Indenture, contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Bond Trustee and the registered owners of the Series 2007A Bonds.

 

Section 13.10    Continuing Disclosure .   Pursuant to Section 5.16 of the Loan Agreement, the Borrower has agreed to undertake all responsibility for compliance with continuing disclosure requirements pursuant to a Continuing Disclosure Agreement, dated as of September 1, 2007 (the “Continuing Disclosure Agreement”) between the Borrower and the Bond Trustee to be executed the date of issuance and delivery of the Series 2007A Bonds, and the Issuer shall have no liability to the Bondholders or any other person with respect to such disclosure matters.  Notwithstanding any other provision of this Bond Indenture, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an event of default, hereunder; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower to comply with its obligations under Section 5.16 of the Loan Agreement.

 

Section 13.11    The Intercreditor Agreement .  In connection with the execution and delivery of the Bond Indenture, the Bond Trustee has entered into the Intercreditor Agreement which sets forth the relative rights and priorities of the Bondholders and the Senior Lenders. The performance of the Bond Trustee of its duties hereunder and all actions taken by the Bond Trustee, as trustee hereunder, are subject to the express terms of the Intercreditor Agreement. Notwithstanding anything in this Bond Indenture to the contrary, any right of payment from or on behalf of the Borrower, liens or security interests granted to the Bond Trustee (other than the liens and security interests granted pursuant to the Granting Clauses of the Bond Indenture), the exercise of certain rights on remedies hereunder and the ability of the Bond Trustee to perform or enforce certain provisions of this Bond Indenture are subject to the provisions of (but only to the extent provided in) the Intercreditor Agreement. In the event that the express terms of the Intercreditor Agreement shall prohibit or restrict the Bond Trustee from taking any action or enforcing any right hereunder, the express terms of the Intercreditor Agreement shall govern and in the event of any conflict between the express terms of the Intercreditor Agreement and the Bond Indenture, the express terms of the Intercreditor Agreement shall govern and control; provided, however, the terms of the Intercreditor Agreement shall not constitute and amendment to, or waiver or deletion of, performance of any provisions, or waive or delete or amend any default or an Event of Default under the Bond Indenture.

 

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IN WITNESS WHEREOF , the Brown County, South Dakota, has caused these presents to be signed in its name and on its behalf by its Chair, and the same to be attested by its County Auditor, and to evidence its acceptance of the trusts hereby created, Wells Fargo Bank, National Association has caused these presents to be signed in its name and on its behalf by one of its authorized officers, [its official seal to be hereunto affixed], and the same to be attested by one of its authorized officers, all as of the day and year first above written.

 

 

BROWN COUNTY, SOUTH DAKOTA

 

 

 

 

By

/s/ Mike Wiese

 

 

Its:

Chair

 

 

 

 

 

 

 

Attest:

/s/ Maxine Taylor

 

 

Its:

County Auditor

 

 

[Execution by Bond Trustee on following page.]

 


 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION

 

AS BOND TRUSTEE

 

 

 

 

 

By

/s/ Steven R. Gubrud

 

 

 

 

 

 

Its:

Vice President

 

 

 

 

 

 

 

 

By

 

 

 

 

 

 

 

Its:

 

 

 


 

EXHIBIT A

(FORM OF SERIES 2007A BOND)

 

UNITED STATES OF AMERICA

 

STATE OF SOUTH DAKOTA

 

BROWN COUNTY, SOUTH DAKOTA

 

SUBORDINATE SOLID WASTE FACILITIES REVENUE BOND

 

(HEARTLAND GRAIN FUELS, L.P. ETHANOL PLANT PROJECT), SERIES 2007A

 

R-_______

 

INTEREST RATE:

 

MATURITY DATE:

 

DATED DATE:

 

CUSIP:

 

REGISTERED OWNER:

 

PRINCIPAL SUM:

 

AS PROVIDED IN THE BOND INDENTURE REFERRED TO HEREIN, UNTIL THE TERMINATION OF THE SYSTEM OF BOOK-ENTRY-ONLY TRANSFERS THROUGH THE DEPOSITORY TRUST COMPANY, NEW YORK, NEW YORK (TOGETHER WITH ANY SUCCESSOR SECURITIES DEPOSITORY APPOINTED PURSUANT TO THE BOND INDENTURE, “DTC”), AND NOTWITHSTANDING ANY OTHER PROVISIONS OF THE BOND INDENTURE TO THE CONTRARY, (A) THIS BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO A NOMINEE OF DTC, OR BY A NOMINEE OF DTC TO DTC OR A NOMINEE OF DTC, OR BY DTC OR A NOMINEE OF DTC TO ANY SUCCESSOR SECURITIES DEPOSITORY OR ANY NOMINEE THEREOF AND (B) A PORTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE PAID OR REDEEMED WITHOUT SURRENDER HEREOF TO THE PAYING AGENT.  DTC OR A NOMINEE, TRANSFEREE OR ASSIGNEE OF DTC OF THIS BOND MAY NOT RELY UPON THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID.  THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID SHALL FOR ALL PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER PROVIDED IN THE BOND INDENTURE.

 

A-1


 

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (A) TO THE BOND REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE OR (B) TO THE BOND TRUSTEE FOR PAYMENT OF PRINCIPAL OR REDEMPTION PRICE, AND ANY BOND ISSUED IN REPLACEMENT HEREOF OR SUBSTITUTION HEREFOR IS REGISTERED IN THE NAME OF DTC OR ITS NOMINEE OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO DTC OR ITS NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE ONLY THE REGISTERED OWNER HEREOF, CEDE & CO., AS NOMINEE OF DTC, HAS AN INTEREST HEREIN.

 

BROWN COUNTY, SOUTH DAKOTA (the “Issuer”), a public body corporate and politic and a political subdivision duly and validly created and existing under the laws and constitution of the state of South Dakota and has all powers granted under the provisions, restrictions and limitations of South Dakota Codified Laws Chapter 9-54, as supplemented and amended (the “Act”), for value received, hereby promises to pay in lawful money of the United States of America to the registered owner shown above, or registered assigns, on the maturity date specified above, unless this Bond shall be redeemable and shall have previously been called for redemption and payment of the redemption price made or provided for, but solely from amounts available under the Bond Indenture (hereinafter referred to), and certain amounts payable under the Loan Agreement (hereinafter referred to), which payments are pledged and assigned for the benefit and payment hereof pursuant to the Bond Indenture and not otherwise, upon surrender hereof, the principal sum set forth above, and to pay interest on such principal amount (based on a 360-day year composed of twelve 30-day months) in like manner, but solely from said amounts available under the Bond Indenture, and certain amounts payable under the Loan Agreement, from the dated date hereof at the rate  per annum specified above, payable on each January 1 and July l, beginning January 1, 2008, until payment of such principal amount, or provision therefor, shall have been made upon redemption or at maturity. 

 

The principal of this Bond is payable upon surrender of this Bond at the principal corporate trust office in Minneapolis, Minnesota of Wells Fargo Bank, National Association, as bond trustee (the “Bond Trustee”).  Except as otherwise provided in the Bond Indenture with respect to Defaulted Interest (as defined therein), interest payments hereon shall be made to the registered owner (the “Holder”) hereof appearing on the registration books of the Issuer (the “Bond Register”) maintained by the Bond Trustee, as bond registrar, as of the close of business of the Bond Trustee on the 15th day of the month (whether or not a business day) next preceding the interest payment date (the “Record Date”) and shall be paid (i) by check or draft of the Bond Trustee mailed on the applicable interest payment date to the Holder at the Holder’s address as it appears on the Bond Register or at such other address furnished in writing by such registered owner to the Bond Trustee no later than the Record Date or (ii) as to any Holder of $1,000,000 or more in aggregate principal amount of the Series 2007A Bonds who so elects, by wire transfer of funds to such wire transfer address within the continental United States as the Holder shall have furnished in writing to the Bond Trustee no later than the Record Date, which wire instructions shall remain in effect until the Bond Trustee is notified to the contrary.

 

Defaulted Interest with respect to any Series 2007A Bond shall cease to be payable to the Owner of such Series 2007A Bond on the relevant Record Date and, except as hereinafter

 

A-2


 

provided, shall be payable to the Owner in whose name such Series 2007A Bond is registered at the close of business of the Bond Trustee on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner.  The Borrower shall notify the Bond Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Series 2007A Bond and the date of the proposed payment (which date shall be such, as will enable the  Bond Trustee to comply with the next sentence hereof) and, at the same time, the Borrower or the Obligated Group shall deposit with the Bond Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Bond Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the owners of the Series 2007A Bonds entitled to such Defaulted Interest as provided in this Section.  Following receipt of such funds, the Bond Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which date will be fifteen (15) days prior to the date of the proposed payment.  The Bond Trustee shall promptly notify the Borrower of such Special Record Date and, in the name and at the expense of the Borrower, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, not less than 10 days prior to such Special Record Date to each Owner of a Series 2007A Bond entitled to such notice at the address of such Owner as it appears on the Bond Register. Such Defaulted Interest shall be paid to the Owners of the Series 2007A Bonds in whose names the Series 2007A Bonds on which such Defaulted Interest is to be paid are registered on such Special Record Date.

 

Upon a Determination of Taxability, the interest rate on the Bonds will be converted to the Taxable Rate as of the date of the Determination of Taxability, regardless of the date as of which the Bonds were taxable. The Taxable Rate is a fluctuating per annum interest rate adjusted on the first day of each calendar quarter in a year (January 1, April 1, July, and October 1) and equal to the sum of (i) the rate of interest published as the London Interbank Offered Rates with a term of three months as of each adjustment date, plus (ii) 350 basis points. If the adjustment date is not a Business Day, the rate will be adjusted on the next Business Day. The Bond Trustee may be precluded by the terms of the Intercreditor Agreement and the Accounts Agreement from paying interest in the Bonds at the Taxable Rate.

 

This Bond is one of an authorized series of Bonds issued under the Bond Indenture in the aggregate principal amount of $______________ (the “Series 2007A Bonds”) for the purpose of lending funds to Heartland Grain Fuels, L.P., a limited partnership, organized and existing under the laws of the State of Delaware (the “Borrower”) which funds will be used, together with certain moneys of the Borrower, to (i) pay the cost of the acquisition, construction and equipping of improvements and expansion of the Facility consisting of certain Solid Waste Disposal Facilities (as herein defined which constitute a project within the meaning of the Act) (the “Project”), which is owned by the Issuer and operated by the Borrower, (ii) fund a debt service reserve, (iii) pay interest on the Series 2007A Bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds.

 

The loan by the Issuer to the Borrower of the proceeds of the Series 2007A Bonds will be made under and secured pursuant to a Loan Agreement, dated as of October 1, 2007 (the “Loan Agreement”) between the Borrower and the Issuer.

 

A-3


 

The Series 2007A Bonds are all issued under and equally and ratably secured by and entitled to the security of a Bond Trust Indenture dated as of October 1, 2007 (the “Bond Indenture”) duly executed and delivered by the Issuer to the Bond Trustee, pursuant to which Bond Indenture all of the right, title and interest of the Issuer in and to the Loan Agreement (excluding Unassigned Rights, as defined in the Bond Indenture) are assigned by the Issuer to the Bond Trustee as security for the Series 2007A Bonds. The payment of principal and interest, and redemption premium, if any, on Series 2007A Bonds will be secured by the Bond Collateral Documents as defined in the Bond Indenture. The ability of the Borrower to make payments under the Loan Agreement and the enforcement thereof and of the Bond Collateral Documents, and the use of the proceeds of any such enforcement, are subject and subordinate to the Senior Credit Facilities between the Borrower and the Senior Lenders pursuant to the Accounts Agreement and the Intercreditor Agreement, all as defined in the Bond Indenture. Reference is made to the Bond Indenture, the Loan Agreement, the Bond Collateral Documents, the Senior Credit Facilities, the Accounts Agreement, the Intercreditor Agreement and to all amendments to any such agreements for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Bond Trustee and the rights of the owners of the Series 2007A Bonds and the Senior Lenders, and to all the provisions of which the owner, by the acceptance of this Bond, assents.

 

This Bond and such other Bonds of the series of which it forms a part do not constitute a debt or liability of the State of South Dakota (the “State”) or of any political subdivision thereof or a pledge of the faith and credit of the State or any political subdivision thereof.  The issuance of the Series 2007A Bonds under the provisions of the Act does not, directly, indirectly or  contingently, obligate the State or any political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment, and such Bonds and the interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof within the meaning of the Constitution or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof.  Neither the State nor any political subdivision thereof shall in any event be liable for the payment of the principal of or interest on the Series 2007A Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer.  No breach by the Issuer of any such pledge, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any political subdivision thereof.  No covenant or agreement in the Series 2007A Bonds or in the Bond Indenture and no obligation imposed by the Bond Indenture upon the Issuer and no breach thereof shall constitute or give rise to or impose upon the Issuer a general liability or a charge upon its general credit or property other than the trust estate (as described in the Bond Indenture). 

 

This Bond and such other Bonds of the series of which it forms a part, and the interest payable hereon and thereon, are limited obligations of the Issuer and are payable solely from amount available under the Bond Indenture and from payments or prepayments to be made under the Loan Agreement, which are pledged and assigned for the payment of the Series 2007A Bonds in accordance with the Bond Indenture, and from moneys and investments on deposit in various funds under the Bond Indenture.

 

This Bond is registered on the Bond Register and may be transferred by the registered owner hereof at the written request of such registered owner in person or by his duly authorized

 

A-4


 

attorney, but only in the manner, subject to the limitations and upon the payment of the charges provided in the Bond Indenture and upon surrender and cancellation of this Bond.  Upon such transfer, a new fully registered bond or bonds of the same maturity and of authorized denominations for the same aggregate principal amount shall be issued to the transferee in exchange therefor.  The Issuer and the Bond Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal and interest due hereon and for all other purposes, and neither the Issuer nor the Bond Trustee shall be affected by any notice to the contrary.  The Issuer and the Bond Trustee shall not be required to register the transfer or exchange of any Series 2007A Bond after notice calling such Bond or portion thereof for redemption has been given as provided in the Bond Indenture, or during the period of 15 days next preceding the giving of such notice of redemption with respect to any Series 2007A Bonds of the same maturity.

 

The Series 2007A Bonds are issuable only as registered bonds, in denominations of $5,000 and integral multiples thereof.

 

With respect to the payment of Series 2007A Bonds, whether at maturity or by Mandatory Sinking Fund Redemption (as defined in the Bond Indenture), the Issuer shall have on deposit in the Bond Sinking Fund (as defined in the Bond Indenture), moneys in the amounts and at the times, respectively, as follows:

 

January 1
of the Year

 

Principal
Amount

 

January 1
of the Year

 

Principal
Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moneys on deposit in the Bond Sinking Fund on January 1 of each year shall be applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds in the amount set forth above.  Payment of the Series 2007A Bonds through the Bond Sinking Fund shall be without premium.  If less than all Series 2007A Bonds of a particular maturity are subject to Mandatory Sinking Fund Redemption on a particular date, the Series 2007A Bonds to be redeemed shall be selected by lot in such manner as may be designated by the Bond Trustee.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, the Series 2007A Bonds are redeemable out of proceeds received from insurance and condemnation and from sale under threat of condemnation under certain conditions described in the Bond Indenture (“Extraordinary Redemption”), in whole or in part, and if in part, by maturities (less than all of a single maturity to be selected by lot in such manner as may be determined by the Bond Trustee) designated by the Borrower, at a redemption price equal to the principal amount thereof plus accrued and unpaid interest thereon to the date fixed for redemption and without premium, as provided in the Bond Indenture.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, outstanding Series 2007A Bonds are also subject to redemption prior to maturity on or after

 

A-5


 

January 1, _____ at the option of the Issuer upon direction of the Borrower (“Optional Redemption”) out of amounts prepaid under the Loan Agreement and deposited in the Redemption Fund (as defined in the Bond Indenture), in whole or in part at any time, and if in part by maturities (less than all of a single maturity is being redeemed by, lot within a maturity or in such manner as may be reasonably determined by the Bond Trustee) at the redemption prices (expressed as percentages of the principal amount of the Series 2007A Bonds to be redeemed) as set forth below plus accrued interest thereon to the date fixed for redemption:

 

Redemption Dates
(Dates inclusive)

 

Redemption
Price

 

 

 

 

 

January 1, 20__ through December 31, 20__

 

____

%

January 1, 20__ through December 31, 20__

 

____

%

January 1, 20__ and thereafter

 

____

%

 

No Extraordinary Redemption or Optional Redemption of less than all of the Series 2007A Bonds at the time outstanding shall be made unless the aggregate principal amount of Series 2007A Bonds to be redeemed is equal to or greater than $100,000.  In the case of any Extraordinary Redemption or Optional Redemption or any purchase and cancellation of Series 2007A Bonds, the Issuer shall receive credit against its required Bond Sinking Fund deposits with respect to such Series 2007A Bonds.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, outstanding Series 2007A Bonds are also subject to mandatory redemption prior to maturity (herein referred to as a “Determination of Taxability Redemption”) upon a Determination of Taxability, in whole but not in part, on the earliest redemption date for which notice can be given as required in Section 5.3 hereof as the redemption price equal to the principal amount of the Series 2007A Bonds to be redeemed plus accrued interest thereon to the date of redemption, without penalty.

 

Subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, the Bonds are subject to mandatory redemption in part by lot (or such other random means selected by the Bond Trustee) at a redemption price equal to the principal amount thereof, together with accrued interest to the date of redemption, from proceeds of the Series 2007A Bonds available therefor after the Completion Date.

 

In the event any of the Series 2007A Bonds are called for redemption as aforesaid, notice thereof identifying the Series 2007A Bonds to be redeemed will be given by mailing a copy of the redemption notice by mail not less than 30 or more than 60 days prior to the date fixed for redemption to the registered  owner of each Series 2007A Bond to be redeemed at the address shown on the Bond Register; provided, however, that failure to give such notice by mailing, or any defect in such notice or mailing, as to any Series 2007A Bond, shall not affect the validity of any proceedings for redemption of any other Series 2007A Bond with respect to which notice was properly given.  All Series 2007A Bonds so called for redemption will cease to bear interest

 

A-6


 

on the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time, and shall no longer be protected by the Bond Indenture and shall not be deemed to be outstanding under the provisions of the Bond Indenture.

 

The Series 2007A Bonds are subject to advance defeasance of the Bond Indenture by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations (as defined in the Bond Indenture) in such amount as the Bond Trustee shall determine (such determination may be based upon an accountant’s verification report) will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding under the Bond Indenture at or before their respective maturity dates.  The Series 2007A Bonds are also subject to advance defeasance of the Bond Indenture by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Series 2007A Bonds outstanding (including the payment of interest payable on such Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations (as defined in the Bond Indenture) in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding under the Bond Indenture at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act.  Upon such payment or provision therefor, together with all other payments required under the Bond Indenture, the Bond Indenture may be discharged in accordance with the provisions thereof, but the Issuer shall remain the obligor on all Series 2007A Bonds, although the owners thereof and the owner hereof shall be entitled to payment solely out of such moneys or Escrow Obligations deposited with the Bond Trustee.

 

The Issuer may also pay or provide for the payment of any portion of the Series 2007A Bonds by: (a) depositing with the Bond Trustee, in trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall determine (such determination may be based upon an accountant’s verification report) will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates; or (b) depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) a portion of the Series 2007A Bonds outstanding (including the payment of interest payable on such portion of the Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act. Upon such deposit, such portion of the Series 2007A Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture.  The Issuer shall remain the obligor on such portion of the Series 2007A Bonds but the owners thereof shall be entitled to payment (to the exclusion of all other Bondholders) solely out of such moneys or Escrow Obligations deposited with the Bond Trustee.

 

A-7


 

The foregoing notwithstanding, none of the Series 2007A Bonds may be so refunded nor may the Bond Indenture be discharged if under any circumstances such refunding would result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.  As a condition precedent to the advance refunding of any Series 2007A Bonds, the Bond Indenture requires that the Bond Trustee receive an opinion of nationally recognized municipal bond counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof are acceptable to the Bond Trustee and which opinion may be based upon a ruling or rulings of the Internal Revenue Service and an accountant’s verification report) to the effect that such refunding will not result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.

 

The owner of this Bond shall have no right to enforce the provisions of the Bond Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Bond Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Bond Indenture.  In certain events, on the conditions, in the manner and with the effect set forth in the Bond Indenture, the principal of the Series 2007A Bonds issued under the Bond Indenture and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon.  Modifications or alterations of the Bond Indenture or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Bond Indenture.

 

It is hereby certified that all conditions, acts and things required to exist, happen and be performed under the Act and under the Bond Indenture precedent to and in the issuance of this Bond, exist, have happened and have been performed, and that the issuance, authentication and delivery of this Bond have been duly authorized by resolution of the Issuer duly adopted.

 

No recourse shall be had for the payment of the principal of, premium, if any, or interest on any of the Series 2007A Bonds or for any claim based thereon or upon any obligation, covenant or agreement in the Bond Indenture contained, against any past, present or future officer, director, member, employee or agent of the Issuer, or any incorporator, officer, director, member, trustee, employee or agent of any successor to the Issuer or body politic, as such, either directly or through the Issuer or any successor to the Issuer or body politic, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporators, officers, directors, trustees, members, employees or agents, as such, is hereby expressly waived and released as a condition of and consideration for the execution of the Bond Indenture and the issuance of any of the Series 2007A Bonds.

 

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Indenture until the certificate of authentication hereon shall have been duly executed by the Bond Trustee.

 

A-8


 

IN WITNESS WHEREOF , as provided by the Act, Brown County, South Dakota has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chair [and its seal to be hereunto affixed or reproduced] and attested with the manual or facsimile signature of its County Auditor, all as of the dated date specified above.

 

 

BROWN COUNTY, SOUTH DAKOTA

 

 

 

 

By

 

 

Its:

Chair

 

 

 

 

 

 

 

Attest:

 

 

Its:

County Auditor

(Seal)

 

 

Countersignature of Resident Attorney

 

 

 

 

Countersigned:

 

 

 

 

By

 

 

 

 

A Resident Attorney

 

 

 

A-9


 

CERTIFICATE OF AUTHENTICATION

 

This Bond is one of the Series 2007A Bonds described in the within-mentioned Bond Indenture.

 

Authentication Date:

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,

 

Bond Trustee

 

 

 

 

 

By

 

 

 

 

Authorized Signatory

 

A-10


 

ASSIGNMENT

 

FOR VALUE RECEIVED , the undersigned sells, assigns and transfers unto

 

 

 

 

 

 

 

 

(Name and Address of Assignee)

 

 

the within Bond and does hereby irrevocably constitute and appoint _______________________, Attorney, to transfer the said Bond on the Bond Register thereof with full power of substitution in the premises.

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTICE: The assignor’s signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatsoever.

 

 

Signature guaranteed:

 

 

 

NOTICE:  Signature must be guaranteed by an institution who is a participant in the Securities Transfer Agent Medallion Program (“STAMP”) or similar program

 

 

NOTICE:

 

The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever.

 

A-11


 

EXHIBIT B

PROJECT DESCRIPTION

 

The Project consists of Solid Waste Disposal Facilities at the Aberdeen Facility, including the following:

 

Centrifuge .  The centrifuge portion of the Project consists of (i) the stillage pump, (ii) the whole stillage tank, (iii) centrifuges, (iv) a centrifuge conveyor, used solely to transport stillage cake from the centrifuges to the dryer, (v) then stillage storage tanks, used to temporarily hold then stillage removed from the centrifuges prior to being pumped to the evaporator, and (vi) related pipes, valves, switches, agitators, and controls.

 

Evaporator .  The evaporator portion of the Project consists of (i) a portion of the cost of the gas-fired boiler, representing that portion of the boiler used to produce steam for the processing of by-products, (ii) heat exchangers, which allow heat to be transferred from the steam to the thin stillage and from the evaporated vapor to the cooling water, (iii) evaporator recirculation pumps, used to recirculate the syrup until proper specifications are reached, (iv) a surge tank, used to temporarily hold the syrup before it is pumped to the dryer, (v) a syrup feed pump, used solely to pump the syrup from the evaporator to the dryer, and (vi) related pipes, valves, switches, agitators, small pumps and controls.

 

Dryer .  The dryer portion of the Project consists of (i) a dryer feed conveyor, used to convey the stillage cake to the dryer, (ii) a mixer in which the cake and syrup are mixed, (iii) the dryer drum and its drive system, (iv) a gas-fired burner and combustion furnace used exclusively to supply heat to the dryer, (v) a dryer discharge conveyor system, used to convey the DDGS out of the dryer, (vi) a recycle screw conveyor, which is used to convey a portion of the DDGS back into the dryer to enhance drying efficiencies, (vii) a 4-cyclone air/production separation system, (viii) a large induced draft fan, which pulls a draft on the dryer drum and discharges water vapor up the discharge stack in the form of steam, (ix) a stainless steel dryer discharge stack, which routes all steam away from the dryer, and (x) related pipes, valves, switches and controls.

 

Methanator .  The methanator portion of the Project consists of:  (i) the digester; (ii) the biogas scrubber and the biogas flare that burns off the cleaned gas; (iii) the decarbonator; (iv) the recycle tank; (v) tanks which store the “food” sources for the bacteria in the digester; and (vi) related pipes, valves, switches, and controls.

 

Storage .  The Project includes related storage to be used exclusively for the storage of DDGS.  In addition, the storage portion of the Project includes (i) a conveyor system used to move the DDGS from the dryer exit conveyor to the storage building, (ii) conveyors, elevator leg, weigh system, and related equipment used to handle weigh, and load bulk DDGS onto trucks or rail cars, and (iii) related pipes, valves, switches, and controls.

 

B-1


 

EXHIBIT C

INTEREST PAYMENT SCHEDULE

 

The following amounts shall be withdrawn from the Project Fund on or before the Interest Payment date set forth below in the amount set forth below and transferred to the Interest Fund to pay interest on such Interest Payment Date:

 

Interest Payment
Date

 

Amount

 

January 1, 2008

 

$

357,041.67

 

 

 

 

 

 

July 1, 2008

 

779,395.83

 

 

 

 

 

Total

 

$

1,136,437.50

 

 

C-1

EXHIBIT 10.4

 

 

LOAN AGREEMENT

Between

Heartland Grain Fuels, L.P.

And

Brown County, South Dakota

 

Dated as of October, 2007

 

Relating to $19,000,000 in aggregate principal amount of Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A.

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

DEFINITIONS

1

 

 

 

ARTICLE II

REPRESENTATIONS

2

 

 

 

Section 2.1

Representations by Issuer

2

Section 2.2

Representations and Warranties by the Borrower

3

 

 

 

ARTICLE III

PAYMENT OF SERIES 2007A BONDS; APPLICATION OF PROCEEDS; COMPLETION OF PROJECT

4

 

 

 

Section 3.1

Loan and Application of the Proceeds of Series 2007A Bonds

4

Section 3.2

Payment of Series 2007A Bonds

5

Section 3.3

Right of Bond Trustee to Enforce this Loan Agreement

5

Section 3.4

Investment of Funds; Arbitrage; Tax Exemption Agreement

5

Section 3.5

Completion of Project

5

Section 3.6

Plans and Specifications

6

Section 3.7

Records

6

Section 3.8

Operation of Project

6

 

 

 

ARTICLE IV

PAYMENTS, FUND DEPOSITS, PREPAYMENTS AND OTHER PAYMENTS

6

 

 

 

Section 4.1

Payment of Principal, Premium and Interest

6

Section 4.2

Loan Repayments

7

Section 4.3

Credits on Loan Repayments

7

Section 4.4

Mandatory Prepayment Upon a Determination of Taxability

8

Section 4.5

Optional Prepayment

8

Section 4.6

Notice of Prepayment

8

Section 4.7

Extraordinary Optional Prepayment from Net Proceeds of Insurance or Condemnation

8

Section 4.8

Mandatory Prepayment on the Completion Date

9

Section 4.9

Effect of Partial Prepayment

9

Section 4.10

Additional Payments

9

Section 4.11

Borrower’s Obligations Unconditional

9

 

 

 

ARTICLE V

COVENANTS OF THE BORROWER

10

 

 

 

Section 5.1

Affirmative Covenants

10

Section 5.2

Negative Covenants

18

Section 5.3

Reporting Requirements

23

Section 5.4

Maintenance of Existence and Status

28

Section 5.5

Consent to Assignment of Loan Agreement to the Bond Trustee

28

Section 5.6

Transfer of Project Assets

28

Section 5.7

Indemnity

28

Section 5.8

Notice Regarding Bankruptcy Petitions, Event of Default or Potential Default

30

 

i


 

 

 

Page

 

 

 

Section 5.9

Continuing Disclosure

30

Section 5.10

Huron Expansion

30

Section 5.11

Maintenance Capital Expense Account; Working Capital Reserve Account

30

 

 

 

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES THEREFOR

31

 

 

 

Section 6.1

Events of Default

31

Section 6.2

Application of Proceeds of Remedies

32

Section 6.3

Remedies Cumulative

33

Section 6.4

Delay or Omission Not a Waiver

33

Section 6.5

Waiver of Extension, Valuation and Appraisement Laws

33

Section 6.6

Remedies Subject to Provisions of Law

34

 

 

 

ARTICLE VII

SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT

34

 

 

 

Section 7.1

Supplements and Amendments to this Loan Agreement

34

 

 

 

ARTICLE VIII

DEFEASANCE

34

 

 

 

Section 8.1

Defeasance

34

 

 

 

ARTICLE IX

MISCELLANEOUS PROVISIONS

35

 

 

 

Section 9.1

Payment of Expenses of Issuance of Series 2007A Bonds

35

Section 9.2

Loan Agreement for Benefit of Parties Hereto

35

Section 9.3

Severability

35

Section 9.4

Notices

35

Section 9.5

Successors and Assigns

36

Section 9.6

Counterparts

36

Section 9.7

Governing Law

36

Section 9.8

Immunity of Officers, Employees and Members of the Issuer and the Borrower

36

Section 9.9

Intercreditor Agreement

36

 

ii


 

This is a LOAN AGREEMENT dated as of October 1, 2007 (herein referred to sometimes as this “Loan Agreement”) between Heartland Grain Fuels, L.P., a limited partnership organized and existing under the laws of the State of Delaware (the “Borrower”) and the Brown County, South Dakota (the “Issuer”), a public body corporate and politic and political subdivision created and existing under and by the constitution and the laws of the State of South Dakota.

 

PRELIMINARY STATEMENT

 

Reference is hereby made to the Bond Trust Indenture (the “Bond Indenture”) dated as of October 1, 2007 between the Issuer and Wells Fargo Bank, National Association, as bond trustee (the “Bond Trustee”), relating to the hereinafter described Series 2007A Bonds, as the same may be supplemented and amended from time to time for definitions of various terms used herein.

 

The Borrower desires to obtain a portion of the moneys which will be used, together with certain other funds, to (i) pay the cost of acquisition, construction and equipping of improvements and additions to the Facility (the “Project”), including reimbursement to the Borrower of certain moneys previously spent with respect to the Project, (ii) fund a debt service reserve, (iii) to find capitalized interest, and (iv) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds, all as permitted under the Act.

 

Pursuant to the Act, the Issuer is obtaining funds to provide for a loan to the Borrower through the issuance and sale of its Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds, (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A, in the original aggregate principal amount of $19,000,000 (the “Series 2007A Bonds”), which will be issued under and secured by the Bond Indenture. Pursuant to the Bond Indenture, the Issuer will pledge and assign certain of its rights under this Loan Agreement as part of the security for the Series 2007A Bonds. The Series 2007A Bonds will be payable out of loan repayments made pursuant to this Loan Agreement.

 

In order to provide security for the repayment of the Series 2007A Bonds and the amounts payable under this Loan Agreement, the Borrower is concurrently with the delivery hereof delivering to the Bond Trustee, the Bond Collateral Documents.

 

In consideration of the premises, the respective representations and agreements contained herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, and interest payable on the Series 2007A Bonds, the payment of all amounts due hereunder and the performance of all the covenants of the Borrower contained herein, the Borrower and the Issuer hereby covenant and agree as follows:

 

ARTICLE I
DEFINITIONS

 

The terms used in this Loan Agreement, unless otherwise defined herein or unless the context requires otherwise, shall have the same meanings as set forth in the Bond Indenture. All accounting terms not otherwise defined in the Bond Indenture or herein shall have the meanings

 


 

assigned to them in accordance with generally accepted accounting principles in effect from time to time.

 

All references in this instrument to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or other subdivision unless the context indicates otherwise.

 

ARTICLE II
REPRESENTATIONS

 

Section 2.1      Representations by Issuer . The Issuer represents and warrants that:

 

(a)         the Issuer (i) is a public body corporate and politic and political subdivision validly created and existing under the constitution and the laws of the State of South Dakota, is authorized to enter into the transactions contemplated by the Bond Indenture, this Loan Agreement, and the Tax Exemption Agreement and to carry out its obligations hereunder and thereunder, (ii) has been duly authorized to execute and deliver this Loan Agreement, the Bond Indenture and the Tax Exemption Agreement, and (iii) agrees that it will do or cause to be done, to the extent within its control, all things necessary to preserve and keep in full force and effect its existence;

 

(b)         (i) the issuance and sale of the Series 2007A Bonds, (ii) the lending of the proceeds of the Series 2007A Bonds to the Borrower to provide a portion of the moneys required to (A) pay the costs of the Project, (B) fund a debt service reserve, (C) pay interest on the Series 2007A Bonds during construction of the Project and (D) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds, all as permitted under the Act, (iii) the execution and delivery of this Loan Agreement, the Bond Indenture and the Tax Exemption Agreement, and (iv) the performance of all covenants and agreements of the Issuer contained in this Loan Agreement, the Bond Indenture and the Tax Exemption Agreement and of all other acts and things required under the Constitution and laws of the State to make this Loan Agreement a valid and binding obligation enforceable against the Issuer in accordance with its terms, are authorized by the Act and have been duly authorized by proceedings of the Issuer adopted at meetings thereof duly called and held; and

 

(c)         in order to provide funds to lend to the Borrower for the purposes described above, the Issuer has authorized its Series 2007A Bonds in the aggregate principal amount of $19,000,000 to be issued upon the terms set forth in the Bond Indenture, under the provisions of which the Issuer’s interest in this Loan Agreement (other than Unassigned Rights) and the payments of principal, interest and other revenues hereunder are pledged and assigned to the Bond Trustee as security for the payment of the principal of, and interest on, the Series 2007A Bonds.

 

2


 

Section 2.2      Representations and Warranties by the Borrower . The Borrower makes the following representations and warranties as the basis for its covenants herein:

 

(a)         The Borrower is a limited liability company duly created and existing under the laws of the State of Delaware, is in good standing and duly authorized to conduct its business in the State, is duly authorized and has full power under the laws of the State and all other applicable provisions of law and its organizational documents to create, issue, enter into, execute and deliver the, the Bond Purchase Agreement, the Tax Exemption Agreement, this Loan Agreement, the Bond Collateral Documents to which it is a party and all action on its part necessary for the valid execution and delivery of, this Loan Agreement, the Tax Exemption Agreement, the Bond Purchase Agreement and the Bond Collateral Documents to which it is a party have been duly and effectively taken.

 

(b)         The execution and delivery of this Loan Agreement, the Tax Exemption Agreement, the Bond Purchase Agreement, the Bond Collateral Documents to which it is a party, the consummation of the transactions contemplated herein and therein, and the fulfillment of the terms and conditions hereof and thereof do not and will not conflict with or result in a breach of any of the terms or conditions of any partnership restriction or of any agreement or instrument to which the Borrower or any Affiliate is now a party, and do not and will not constitute a default under any of the foregoing, or result in the creation or imposition of any Lien of any nature upon any of the Property of the Borrower, including Property which the Borrower subsequently acquires, except for Permitted Liens; the Borrower has a good and marketable title to its Property, and will have good and marketable title to the Expansions, including the Project, in each case free and clear of all Liens whatsoever except Permitted Liens; the easements, rights-of-way, Liens, encumbrances, covenants, conditions, restrictions, exceptions, minor defects, irregularities of title and encroachments on adjoining real estate, if any, now existing with respect to the real property do not and will not materially adversely affect the value of the Facilities, materially impair the same, or materially impair or materially interfere with the operation and usefulness thereof for the purpose for which it was acquired or are held by the Borrower; the Facilities are located upon the real property described in the Subordinate Mortgage; to the best of the Borrower’s knowledge, the Facilities do not and will not violate any applicable zoning land use, environmental or similar law or restriction; and the recitals of fact and statements contained in this Loan Agreement with respect to the Borrower are true.

 

(c)         The Borrower has all necessary licenses and permits to occupy and operate the Facilities other than the Expansions, including the Project.

 

(d)         Except as specifically described in the Official Statement, no litigation, proceedings or investigations are pending or, to the knowledge of the Borrower, threatened against the Borrower, except (i) litigation, proceedings or investigations involving claims for which the probable ultimate recoveries and the estimated costs and expenses of defense, in the opinion of counsel to the Borrower, will be entirely within the applicable insurance policy limits (subject to applicable deductibles) or self insurance reserves and (ii) litigation in which, in the opinion of counsel to the Borrower, an adverse determination would not have a material adverse effect on the operations or condition, financial or otherwise, of the Borrower. In addition, no litigation, proceedings or investigations are pending or, to the knowledge of the Borrower, threatened against the Borrower seeking to restrain, enjoin or in any way limit the approval and

 

3


 

delivery of the Official Statement, the issuance, delivery or validity of the Series 2007A Bonds, or the execution, delivery or validity of the Bond Indenture, this Loan Agreement, the Tax Exemption Agreement, the Bond Purchase Agreement, the Series 2007A Bonds, the Bond Collateral Documents, or which would in any manner challenge or adversely affect the existence or powers of the Borrower to enter into and carry out the transactions described in or contemplated by or the execution, delivery, validity or performance by the Borrower of the terms and provisions of the Series 2007A Bonds, the Tax Exemption Agreement, the Bond Purchase Agreement, this Loan Agreement or the Bond Collateral Documents.

 

(e)         The Borrower is a limited partnership organized and existing under the laws of the State of Delaware.

 

(f)          The financial information with respect to the Borrower and any Affiliate included in the Preliminary Official Statement, dated August 20, 2007, as supplemented by an addendum dated October 1, 2007, and the Official Statement dated October 9, 2007 (the “Official Statement”), both relating to the Series 2007A Bonds is correct, and there has been no material adverse change in the condition, financial or otherwise, of the Borrower from that set forth in the Official Statement, except as expressly disclosed in the Official Statement.

 

(g)         The Borrower has not heretofore engaged in, and the consummation of the transactions herein provided for and compliance by the Borrower with the provisions of this Loan Agreement, the Bond Indenture, the Series 2007A Bonds, the Tax Exemption Agreement and the Bond Collateral Documents will not involve, any prohibited transaction within the meaning of Section 4975 of the Code.

 

(h)         The information set forth in this Loan Agreement, the Tax Exemption Agreement and any other written statement (including the Official Statement) furnished by the Borrower to the Issuer does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading. The Borrower has no knowledge of any fact not disclosed to the Issuer in writing or in the Official Statement which materially adversely affects or, so far as the Borrower can now foresee, will materially adversely affect the financial condition of the Borrower, its ability to own and operate its Property or its ability to make the payments under this Loan Agreement when and as the same become due and payable.

 

(i)          The representations, warranties and covenants contained in the Tax Exemption Agreement are true and correct as of such date.

 

ARTICLE III
PAYMENT OF SERIES 2007A BONDS;
APPLICATION OF PROCEEDS; COMPLETION OF PROJECT

 

Section 3.1      Loan and Application of the Proceeds of Series 2007A Bonds . The Issuer hereby lends all of the proceeds of the Series 2007A Bonds in connection with the original issuance and sale of the Series 2007A Bonds to the Borrower upon the terms and conditions set forth herein. The Borrower agrees that the proceeds of the Series 2007A Bonds being lent to the Borrower shall be deposited with the Bond Trustee and applied as provided in the Bond

 

4


 

Indenture. The Borrower shall have no right to use such proceeds other than pursuant to the terms of the Bond Indenture and may not use such proceeds as general funds.

 

Section 3.2      Payment of Series 2007A Bonds . The Borrower agrees that the principal of, premium, if any, and the interest on the Series 2007A Bonds shall be made payable in accordance with the provisions of the Bond Indenture and this Loan Agreement. The Borrower further agrees that this Loan Agreement and payments to be made hereunder and thereunder (excluding Unassigned Rights) shall be assigned and pledged to the Bond Trustee to secure the payment of the Series 2007A Bonds. In addition, the Borrower agrees that all amounts due under the Loan Agreement shall be secured by, and payable from the proceeds of enforcement of the Bond Collateral Documents. The foregoing notwithstanding, the Borrower agrees that the moneys and securities, if any, on deposit in the Rebate Fund are not part of the trust estate and are not available to make payments of principal and interest on the Series 2007A Bonds.

 

Section 3.3      Right of Bond Trustee to Enforce this Loan Agreement. The Borrower agrees that this Loan Agreement and all of the rights, interests, powers, privileges and benefits accruing to or vested in the Issuer under this Loan Agreement may be protected and enforced in conformity with the Bond Indenture and may be thereby assigned by the Issuer to the Bond Trustee (except Unassigned Rights) as security for the Series 2007A Bonds and may be exercised, protected and enforced for or on behalf of the Bondholders in conformity with the provisions of this Loan Agreement and the Bond Indenture.

 

Section 3.4      Investment of Funds; Arbitrage; Tax Exemption Agreement . The Borrower covenants and agrees that moneys on deposit in any funds under the Bond Indenture shall at all times be invested by the Bond Trustee pursuant to the Borrower’s direction and that the Borrower will take all actions necessary, including without limitation providing the Bond Trustee with all necessary directions, to assure that such moneys are continuously invested in accordance with the provisions of the Bond Indenture and the Tax Exemption Agreement. The Borrower further covenants and agrees that it will not take any action or fail to take any action, including without limitation any action with respect to the investment of the proceeds of any Series 2007A Bonds (regardless of the source or whether or not held under the Bond Indenture), with respect to any other moneys or securities deposited with the Bond Trustee pursuant to the Bond Indenture or with the Accounts Bank pursuant to the Accounts Agreement in the Bond Proceeds Sub-account, with respect to the payments derived from the Loan Agreement, or with respect to any actions or payments required under the Tax Exemption Agreement which may result in the Series 2007A Bonds constituting “arbitrage bonds” within the meaning of such term as used in Section 148 of the Code. The Borrower covenants that neither it nor any related person, as defined in Sections 144(a)(3) and 147(a) of the Code, shall, pursuant to an arrangement, formal or informal, purchase obligations of the Issuer in an amount related to the amount of the Series 2007A Bonds delivered in connection with the transaction contemplated hereby.

 

Section 3.5      Completion of Project . The Borrower agrees to complete the acquisition, construction and equipping of the Project substantially in accordance with the plans and specifications on file with the Borrower, and to undertake and complete the Project with due diligence. In the event moneys in the Project Fund or the Bond Proceeds Sub-account available for payment of the Costs of the Project are not sufficient to pay Costs of the Project in full, the

 

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Borrower shall cause the Project to be completed and shall pay from other funds of the Borrower that portion of the Costs of the Project in excess of the moneys available therefor in the Project Fund and the Bond Proceeds Sub-account. The Issuer does not make any warranty, either express or implied, that the moneys which will be deposited into the Project Fund will be sufficient to pay all the Costs of the Project.

 

Section 3.6      Plans and Specifications . The plans and specifications for the Project are on file with the Borrower. The Borrower may revise the plans and specifications at any time and from time to time prior to the completion of the Project provided that no such change shall render inaccurate any of the representations of the Borrower contained in this Loan Agreement or in the Tax Exemption Agreement. No revision to the plans and specifications shall be made which would cause the Costs of the Project to exceed the amounts available in the Project Fund and the Bond Proceeds Sub-account, or otherwise available to the Borrower, to pay such Costs. No revisions to the plans and specifications for the Project will be made which would affect the nature or purpose of the Project or any component thereof, unless the Borrower shall have obtained an opinion of Bond Counsel that such revision will not impair the exclusion from federal income taxation of the interest on the Series 2007A Bonds.

 

Section 3.7      Records . The Borrower will maintain such records in connection with the acquisition, construction and equipping of the Project as are required to permit ready identification of the Project and the items of Project Costs.

 

Section 3.8      Operation of Project . So long as the Borrower owns the Project and the Series 2007A Bonds are outstanding, the Project will be operated as a project as contemplated by the Act and as Solid Waste Disposal Facilities as contemplated by Section 142(a)(6) of the Code. To the extent that such definitions are amended after the date of this Loan Agreement, the Borrower will use its reasonable best efforts to operate the Project in accordance with such amendments or changes if, or to the extent, required to maintain the validity or tax exempt status of the Series 2007A Bonds; provided, however, that the Borrower’s failure to operate the Project in such manner will not, in and of itself, constitute a default under this Agreement.

 

ARTICLE IV
PAYMENTS, FUND DEPOSITS,
PREPAYMENTS AND OTHER PAYMENTS

 

Section 4.1      Payment of Principal, Premium and Interest . The Borrower will duly and punctually pay all loan repayments and other amounts payable under this Loan Agreement at the dates and the places and in the manner provided in this Loan Agreement according to the true intent and meaning hereof. Notwithstanding any schedule of payments set forth herein, the Borrower agrees to make payments hereunder, and to be liable therefor, at the times and in the amounts (including principal and interest) equal to the amounts which are equal to the principal of, premium, if any, and interest due on the Series 2007A Bonds and the Borrower agrees to make payments equal to the amount due on the Series 2007A Bonds from time to time outstanding, whether as regularly scheduled interest or principal payments, at maturity, upon acceleration or otherwise; provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under Section 4.3 hereof.

 

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Section 4.2      Loan Repayments . The Borrower covenants and agrees to make the following loan repayments directly to the Bond Trustee for deposit into the appropriate Fund established by the Bond Indenture on the following dates:

 

(a)         Interest : On or before December 31, 2007 (or on the next preceding Business Day if such day is not a Business Day), an amount which, after taking into account the amount available for deposit in the Interest Fund representing capitalized interest to be transferred from the Project Fund to the Interest Fund as described in Section 403 of the Indenture, will be sufficient to pay the interest to become due on the Series 2007A Bonds on January 1, 2008, and on or before each Quarterly Payment Date thereafter (or on the next preceding Business Day if such Quarterly Payment Date is not a Business Day), after taking into account said available amount of capitalized interest, an amount which is not less than one-half (1/2) of the amount of interest to become due on the next succeeding Interest Payment Date of the Series 2007A Bonds; provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under Section 4.3 hereof.

 

(b)         Principal : On or before each Quarterly Payment Date (or on the next preceding Business Day if such Quarterly Payment Date is not a Business Day) commencing March 31, 2015, an amount which is not less than one-fourth (1/4) of the amount of principal to become due on the next succeeding January 1 principal payment date of the Series 2007A Bonds (whether upon maturity or as a result of a Mandatory Sinking Fund Redemption); provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under Section 4.3 hereof.

 

(c)         Commencing as of the first day of the month following any month in which (i) the balance in the Debt Service Reserve Fund is less than the Debt Service Reserve Requirement, (ii) a transfer is made from the Debt Service Reserve Fund to the Interest Fund and/or the Bond Sinking Fund to cure a deficiency therein, or (iii) a draw is made on a surety bond, insurance policy or letter of credit on deposit in the Debt Service Reserve Fund to cure a deficiency in the Interest Fund and/or the Bond Sinking Fund, the amount necessary to restore, in one monthly deposit, if such deficiency is a result of a valuation loss pursuant to Section 405 of the Bond Indenture, and otherwise in twelve equal monthly deposits, the Debt Service Reserve Requirement (or if a draw has been made on a surety bond, insurance policy or letter of credit on deposit in the Debt Service Reserve Fund, to reinstate the maximum limits of such surety bond, insurance policy or letter of credit within the time and in the manner required by the document providing for such surety bond, insurance policy or letter of credit).

 

Section 4.3      Credits on Loan Repayments . Notwithstanding any provision contained in this Loan Agreement or in the Bond Indenture to the contrary:

 

(a)         any moneys deposited with the Bond Trustee by the Borrower or on behalf of the Borrower by any Affiliate, for the payment of principal of, premium, if any, or interest on, the Series 2007A Bonds or for payment of other amounts due under this Loan Agreement, shall be credited against the obligation of the Borrower to make such payment under this Loan Agreement as the same becomes due; and

 

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(b)         the principal amount of Series 2007A Bonds of any maturity delivered by the Borrower to the Bond Trustee, or purchased by the Bond Trustee upon direction of the Borrower and cancelled, shall be credited against the obligation of the Borrower to make a loan repayment (including installment payments corresponding to mandatory sinking fund payments on such Series 2007A Bonds) related to such maturity of Series 2007A Bonds so delivered or purchased to the extent directed by the Borrower; provided, however, that deposit or purchase of a Series 2007A Bond of one maturity may not be credited against a loan repayment which would be used, in the normal course, to retire a Series 2007A Bond of another maturity.

 

Section 4.4      Mandatory Prepayment Upon a Determination of Taxability . If a final action or decree constituting a Determination of Taxability occurs and the Bond Trustee receives notice thereof, the Bond Trustee shall request, and the Borrower shall pay all amounts due under this Loan Agreement, including without limitation all principal of and accrued interest on the Series 2007A Bonds to the date fixed by the Bond Trustee for redemption of all Series 2007A Bonds pursuant to a mandatory redemption for a Determination of Taxability pursuant to the Bond Indenture. The Bond Trustee shall give notice of redemption for the first redemption date for which notice can be given upon notice of the Determination of Taxability.

 

Section 4.5      Optional Prepayment . The Borrower shall be permitted at its option to prepay the amounts due under this Loan Agreement for the payment of principal of and redemption premium, if any, and interest on, the Series 2007A Bonds to the extent and in the manner permitted or required by the Bond Indenture for the optional prepayment of the Series 2007A Bonds. Such prepayments shall be made by paying to the Bond Trustee an amount sufficient to redeem (when redeemable) all or a part of the Series 2007A Bonds at the redemption prices specified therefor in the Bond Indenture. No other such prepayment shall be permitted except that other amounts required hereunder as additional payments may be prepaid.

 

Section 4.6      Notice of Prepayment . The Borrower shall give the Bond Trustee not less than 60 days prior written notice of any optional prepayment, which notice shall designate the date of prepayment and the amount thereof and direct the redemption of Series 2007A Bonds of the maturities and in the amounts to be prepaid. Such notice may be withdrawn by the Borrower at any time prior to delivery of the Written Request of the Borrower to the Bond Trustee described in Section 5.1 of the Bond Indenture.

 

Section 4.7      Extraordinary Optional Prepayment from Net Proceeds of Insurance or Condemnation . The Borrower shall have the right to prepay the loan repayments due hereunder from the Net Proceeds of insurance, condemnation or sale consummated under threat of condemnation by giving the Bond Trustee direction to apply such Net Proceeds. In such event the Bond Trustee shall apply such Net Proceeds promptly to prepay the loan repayments due hereunder and the Series 2007A Bonds, without premium, plus accrued and unpaid interest thereon to the date of prepayment. Prepayments under this Section shall be credited against the mandatory installment payments to be made hereunder corresponding to the related payments to be applied to the payment of the Series 2007A Bonds. Notwithstanding partial prepayment made pursuant to this Section, the Borrower is obligated to make the mandatory principal payments hereunder pursuant to Section 4.2(b) hereof to the extent any portion of the Series 2007A Bonds remains Outstanding.

 

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Section 4.8         Mandatory Prepayment on the Completion Date . The Bond Trustee shall give notice to the Borrower of all amounts on deposit in the Project Fund and the Bond Proceeds Sub-account on the date of Substantial Completion not required for the payment of remaining Costs of the Project and the Borrower agrees to the mandatory use of such funds by the Bond Trustee to prepay in part the principal amount due under this Loan Agreement to redeem Series 2007A Bonds as required under the Bond Indenture upon payment of amounts, if any, in the Bond Proceeds Sub-account to the Bond Trustee..

 

Section 4.9         Effect of Partial Prepayment . Upon any partial prepayment hereunder relating to the debt service on the Series 2007A Bonds, each installment of interest which shall thereafter be payable hereunder shall be reduced, taking into account the interest rate or rates on the Series 2007A Bonds remaining outstanding after the redemption of Series 2007A Bonds from the proceeds of such partial prepayment and after the purchase and delivery and cancellation of Series 2007A Bonds described in Section 4.3(c) hereof, so that the interest remaining payable on hereunder shall be sufficient to pay the interest on such outstanding Series 2007A Bonds when due.

 

Section 4.10       Additional Payments . The Borrower agrees to pay directly all costs incurred by or on behalf of the Issuer, the Bond Trustee or the Borrower in connection with or incident to the issuance and sale of the Series 2007A Bonds which exceed the amount on deposit in the Expense Fund described in Section 3.2 of the Bond Indenture.

 

The Borrower also agrees to pay the following items to the following persons as additional payments under this Loan Agreement:

 

(1)         to the Bond Trustee when due, an amount equal to all fees and expenses of the Bond Trustee for services rendered under the Bond Indenture and all fees, expenses and charges of any Paying Agents, registrars, counsel, accountants, consultants or other persons incurred in the performance of services under the Bond Indenture on request of the Bond Trustee for which the Bond Trustee and such other persons are entitled to payment or reimbursement;

 

(2)         to the Issuer, upon demand, an amount equal to all expenses incurred by the Issuer in relation to the Series 2007A Bonds which are not otherwise required to be paid by the Borrower under the terms of this Loan Agreement; and

 

(3)         to the Issuer or the Bond Trustee, as the case may be, the amount of all advances of funds made by either of them under the provisions of this Loan Agreement or an amount equal to all advances of funds made by either of them under the Bond Indenture, with interest thereon at the Bond Trustee’s announced prime rate per annum from the date of each such advance.

 

Section 4.11       Borrower’s Obligations Unconditional . The Issuer and the Borrower agree that the Borrower shall bear all risk of damage to or destruction in whole or in part of the Facility, its other Property or any part thereof, including without limitation any loss, complete or partial, or interruption in the use, occupancy or operation of the Facilities or its other Property, or any manner or thing which for any reason interferes with, prevents or renders burdensome, the

 

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use or occupancy of the Facilities or its other Property or the compliance by the Borrower with any of the terms of this Loan Agreement. In furtherance of the foregoing, but without limiting any of the other provisions of this Loan Agreement, the Borrower agrees that its obligations to pay the principal of and interest hereunder and on the Series 2007A Bonds and to pay the other sums herein provided for and to perform and observe its other agreements contained herein shall be absolute and unconditional and that the Borrower shall not be entitled to any abatement or diminution thereof or to any termination of this Loan Agreement or the Series 2007A Bonds for any reason whatsoever.

 

ARTICLE V
COVENANTS OF THE BORROWER

 

Section 5.1             Affirmative Covenants . The Borrower agrees that at all times the Borrower will perform the following obligations set forth in this Section 5.1; provided, however, the failure to perform any obligation under the Section 5.1 during the time the Senior Credit Facilities are outstanding and in effect shall not constitute a default or Event of Default hereunder so long as the Senior Lenders have waived compliance with, or amended the terms of, the corresponding, if any, obligation under the Senior Credit Facilities.

 

(a)            Compliance with Laws . The Borrower shall comply in all material respects with all Laws (other than Environmental Laws) applicable to it or to its business or property.

 

(b)            Environmental Matters .

 

(i)             The Borrower shall (A) comply in all material respects with all Environmental Laws, (B) keep the Facilities free of any Lien imposed pursuant to any Environmental Law, (C) pay or cause to be paid when due and payable by the Borrower any and all costs required in connection with any Environmental Laws, including the cost of identifying the nature and extent of the presence of any Materials of Environmental Concern in, on or about the Facilities or on any real property owned or leased by the Borrower or on the Mortgaged Property, and the cost of delineation, management, remediation, removal, treatment and disposal of any such Materials of Environmental Concern, and (D) use its best efforts to ensure that no Environmental Affiliate takes any action or violates any Environmental Law that could reasonably be expected to result in an Environmental Claim.

 

(ii)            The Borrower shall not use or allow the Facilities to generate, manufacture, refine, produce, treat, store, handle, dispose of, transfer, process or transport Materials of Environmental Concern other than in compliance in all material respects with Environmental Laws.

 

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(c)            Operations and Maintenance . The Borrower shall own, construct, operate and maintain (or cause to be operated and maintained) the Aberdeen Expansion, and shall own, operate and maintain (or cause to be operated and maintained) the Existing Facilities in all material respects in accordance with (i) the terms and provisions of the Transaction Documents, (ii) all applicable Governmental Approvals and Laws and (iii) Prudent Ethanol Operating Practice.

 

(d)            Construction and Completion of the Aberdeen Expansion; Maintenance of Properties .

 

(i)             The Borrower shall apply the proceeds of the Series 2007A Bonds as required by or specified in the Bond Indenture, Loan Agreement, Tax Exemption Agreement and any Written Request for disbursement of such proceeds and shall apply the proceeds of the Senior Credit Facilities to the purposes specified in the Senior Credit Facilities and in each Funding Notice and shall duly construct and complete, or cause the construction and completion of, the Aberdeen Expansion, and shall cause the Final Completion Date with respect thereto to occur, substantially in accordance with (A) the scope of work and other specifications set forth in the Design-Build Agreement (including any Change Orders permitted under the Senior Credit Facilities), (B) the Construction Budget, and (C) exercise of that degree of skill, diligence, prudence, foresight and care reasonably to be expected of skilled and experienced contractors in the ethanol industry in the United States of America, in order to accomplish the desired result consistent with reliability, safety, performance and expedition taking into account the provisions of the Facilities Documents and any relevant manufacturer’s or licensor’s recommendations or guidelines.

 

(ii)            The Borrower shall keep, or cause to be kept, in good working order and condition, ordinary wear and tear excepted, all of its properties and equipment related to the Facilities that are necessary or useful in the proper conduct of its business.

 

(iii)           Except as required in connection with the construction of the Aberdeen Expansion or the Huron Expansion, the Borrower shall not permit the Facilities or any material portion thereof to be removed, demolished or materially altered, unless such material portion that has been removed, demolished or materially altered has been replaced or repaired as permitted under this Loan Agreement.

 

(iv)           The Borrower shall continue to engage in business of the same type as now conducted by it and do or cause to be done all things necessary to preserve and keep in full force and effect (A) its

 

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limited partnership existence and good standing in the State of Delaware and (B) its material patents, trademarks, trade names, copyrights, franchises and similar rights.

 

(v)            For the Aberdeen Expansion, the Borrower shall cause all applicable air emissions tests to be completed to the satisfaction of the Independent Engineer within the time periods specified for such tests in the air permit.

 

(e)            Payment of Obligations . The Borrower shall pay and discharge as the same shall become due and payable all of its obligations and liabilities, including (i) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same (A) are subject to a Contest or (B) are immaterial Taxes in an aggregate amount not in excess of twenty-five thousand Dollars ($25,000) at any one time outstanding (taking into account any interest and penalties that could accrue or be applicable to such past-due Taxes), and provided that such Taxes are no more than forty-five (45) days past due, (ii) all of its obligations and liabilities under its Contractual Obligations, except as are subject to a Contest and (iii) all lawful claims that, if unpaid, would by law become a Lien upon its properties (other than Permitted Liens), unless the same are subject to a Contest.

 

(f)             Governmental Approvals . The Borrower shall maintain in full force and effect, in the name of the Borrower, all Necessary Aberdeen Expansion Approvals and obtain all Deferred Approvals prior to the time it is required to be obtained, but in any event no later than the date required to be obtained under applicable Law (other than any such failure to maintain or obtain that could not reasonably be expected to have a Material Adverse Effect on the Borrower).

 

(g)            Use of Proceeds and Cash Flow .

 

(i)             All proceeds of the Senior Credit Facilities shall be applied in accordance with the terms and conditions of the Senior Credit Facilities and the Funding Notice, if any, pursuant to which any amounts were funded.

 

(ii)            All proceeds of any equity contribution shall be applied to pay the costs of the Aberdeen Expansion.

 

(iii)           All proceeds of the Series 2007A Bonds shall be applied in accordance with the Bond Indenture, this Loan Agreement and the Tax Exemption Agreement.

 

(iv)           All Cash Flow, Insurance Proceeds and Condemnation Proceeds (as defined in the Senior Credit Agreement) shall be applied in accordance with the Accounts Agreement and, upon the termination of the Accounts Agreement, all insurance and condemnation proceeds shall be applied as set forth in the Loan Agreement and the Bond Indenture.

 

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(h)            Insurance . So long as the Senior Credit Facilities are outstanding and in effect and at the Borrower’s expense, the Borrower shall at all times obtain and maintain, or cause to be obtained and maintained, the types and amounts of insurance listed and described on Schedule 7.01(h) of the Senior Credit Agreement, in accordance with the terms and provisions set forth therein, and shall obtain and maintain such other insurance as may be required pursuant to the terms of any Transaction Document. The Borrower shall cause each such insurance to be in place no less than ten (10) days prior to the date required, and each required insurance policy shall be renewed or replaced no less than thirty (30) days prior to the expiration thereof. From and after the date that the Senior Credit Facilities are no longer in effect, the Borrower shall continue to maintain the insurance required thereby as if the Senior Credit Facilities were still in effect; provided, however, the Borrower may change such insurance requirements as permitted by this Section. Not more frequently than annually, the Borrower may retain a nationally recognized insurance consultant familiar with the operation of ethanol plants and not objected to by the Bond Trustee to prepare a written report specifying the insurance, the policy limits and the deductibles or retained liability provision which such consultant believes that the Borrower shall maintain. The Borrower may then obtain and maintain such insurance as recommended by such consultant, provided that (i) the Borrower certify in writing to the Bond Trustee that it believes the recommended insurance, policy limits and deductibles cover all risks in amounts that a reasonably prudent operator of an ethanol plant generally, and the Facilities specifically, would obtain and maintain, (ii) the Borrower delivers the written report of the insurance consultant to the Bond Trustee, together with a reliance letter by the consultant to the Bond Trustee, and (iii) the Borrower retains such a consultant at least once in every three years to prepare an updated report and the Borrower follows the recommendations in such updated reports.

 

(i)             Books and Records; Inspections . The Borrower shall keep proper books of record and account in which complete, true and accurate entries in conformity with GAAP and all requirements of Law shall be made of all financial transactions and matters involving the assets and business of the Borrower, and shall maintain such books of record and account in material conformity with applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower. The Borrower shall keep books and records separate from the books and records of any other Person (including any Affiliates of the Borrower) that accurately reflect all of its business affairs, transactions and the documents and other instruments that underlie or authorize all of its limited liability company actions. The Borrower shall permit officers and designated representatives, agents or consultants of the Bond Trustee to visit and inspect any of the properties of the Borrower (including the Facilities), to examine its limited partnership, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its members, managers, directors, officers and independent public accountants, all at the expense of the Borrower (provided that so long as no default or Event of Default has occurred and is continuing, such visits or inspections shall be at the expense of the Borrower only once per fiscal quarter) and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided that if a default or Event of Default has occurred and is continuing, the Bond Trustee (or any of their respective officers or designated representatives, agents or consultants) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

 

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(j)             Operating Budgets .

 

(i)             The Borrower shall, with respect to each of the Existing Facilities, not later than the Closing Date, and, with respect to the Aberdeen Expansion, not later than thirty (30) days before the Final Completion Date, adopt an operating plan and a budget setting forth in reasonable detail the projected requirements for Operation and Maintenance Expenses and Maintenance Capital Expenses for such plant for the period from such date to the conclusion of the then-current Fiscal Year and provide a copy of such operating plan and budget at such time to the Bond Trustee. No less than forty-five (45) days in advance of the beginning of each Fiscal Year thereafter, the Borrower shall similarly adopt an operating plan and a budget for the Facilities setting forth in reasonable detail the projected requirements for Operation and Maintenance Expenses and Maintenance Capital Expenses for the ensuing Fiscal Year and provide a copy of such operating plan and budget at such time to the Bond Trustee. (Each such operating plan and budget is herein called an “Operating Budget”.)  So long as the Senior Credit Facilities are outstanding and in effect, the Operating Budget shall be prepared in accordance with the requirements of the Senior Credit Agreement, with a copy delivered to the Bond Trustee, and no separate Operating Budget need be prepared hereunder. If the Borrower shall not have adopted an annual Operating Budget before the beginning of any Fiscal Year, the Operating Budget for the preceding Fiscal Year shall, until the adoption of an annual Operating Budget by the Borrower be deemed to be in force and effective as the annual Operating Budget for such upcoming Fiscal Year.

 

(ii)            Each Operating Budget delivered to the Bond Trustee shall be accompanied by a memorandum detailing all material assumptions used in the preparation of such operating budget, shall contain a line item for each operating budget category, shall specify for each month and for each such operating budget category the amount budgeted for such category for such month, and shall clearly distinguish Operation and Maintenance Expenses and Maintenance Capital Expenses.

 

(k)            Performance Tests .

 

(i)             All performance tests will be made in compliance with the requirements of the Senior Credit Agreement and the Borrower will deliver to the Bond Trustee copies of all notices, performance test reports and Independent Engineer reviews delivered to the Senior Lenders at the same time such notices, reports or reviews are delivered to the Senior Lenders.

 

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(l)             Facilities Documents .

 

(i)             The Borrower shall maintain in full force and effect, preserve, protect and defend its material rights under, and take all actions necessary to prevent termination or cancellation (except by expiration in accordance with its terms) of, the SNDAs, and each Facilities Document. The Borrower shall exercise all material rights, discretion and remedies under each SNDA and each Facilities Document, if any, in accordance with its terms and in a manner consistent with (and subject to) the Borrower’s obligations under the Financing Documents.

 

(ii)            Promptly upon execution of any Facilities Document by the Borrower, the Borrower shall deliver to the Bond Trustee certified copies of such Facilities Document and, if reasonably requested by the Bond Trustee, any Ancillary Documents related thereto.

 

(iii)           If any of the SNDAs and the Facilities Documents provides that such document will expire prior to the Final Maturity Date, then, on or prior to the date that is forty-five (45) days (or such shorter period as shall be satisfactory to the Bond Trustee) prior to the expiration date of such document, the Borrower shall enter into an agreement replacing such document.

 

(m)           Preservation of Title; Acquisition of Additional Property .

 

(i)             The Borrower shall preserve and maintain (A) good, marketable and insurable fee interest in the Sites (except for the Leased Premises) and valid easement interest to its easement interest in the Sites, (B) good and valid leasehold interest in the Leased Premises and (C) good, legal and valid title to all of its other respective material properties and assets, in each case free and clear of all Liens other than Permitted Liens. If the Borrower at any time acquires any real property or leasehold or other interest in real property (including, to the extent reasonably requested by the Bond Trustee, with respect to any material easement or right-of-way not covered by the Subordinate Mortgages), the Borrower shall, promptly upon such acquisition, execute, deliver and record a supplement to the applicable Subordinate Mortgage, reasonably satisfactory in form and substance to the Bond Trustee, subjecting such real property or leasehold or other interest to the Lien and security interest created by such Subordinate Mortgage. If required by the Senior Lenders with respect to the Senior Credit Facilities or if reasonably requested by the Bond Trustee, the Borrower shall obtain an appropriate endorsement or supplement to any Title Insurance Policy insuring the Lien of the Bond Collateral

 

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Documents in such additional property, subject only to Permitted Liens.

 

(ii)            If required by the Senior Lenders with respect to the Senior Credit Facilities or if reasonably requested by the Bond Trustee prior to the acquisition or lease of any such additional real property interests (other than easements that do not involve soil disturbance), the Borrower shall deliver to the Bond Trustee an Environmental Site Assessment Report(s) with respect to such real property, in each case along with a corresponding reliance letter from the consultant issuing such report(s) (to the extent such report(s) does not permit reliance thereon by the Bond Trustee). Each such Environmental Site Assessment Report(s) shall not identify any material liability associated with the condition of such real property.

 

(n)            Maintenance of Liens; Creation of Liens on Newly Acquired Property .

 

(i)             The Borrower shall take or cause to be taken all action necessary or desirable to maintain and preserve the Lien of the Bond Collateral Documents and the priority thereof.

 

(ii)            The Borrower shall take all actions required to cause each Additional Facilities Document to be or become subject to the Lien of the Bond Collateral Documents (whether by amendment to any agreement or otherwise) and shall deliver or cause to be delivered to the Bond Trustee all Ancillary Documents related thereto.

 

(o)            Certificate of Formation . The Borrower shall observe all of the separateness and other provisions and procedures of its Bond Collateral Documents.

 

(p)            Required LP Provisions . The Borrower shall comply at all times with the required limited partnership provisions set forth on Schedule 5.24(a) of the Senior Credit Agreement.

 

(q)            Further Assurances . Upon written request of the Bond Trustee, the Borrower shall promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including UCC financing statements and UCC continuation statements):

 

(i)             that are necessary or advisable for compliance with Section 5.1(n)(i);

 

(ii)            for the purposes of ensuring the validity and legality of this Loan Agreement or any other Financing Document and the rights of the Bond Trustee hereunder or thereunder; and

 

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(iii)           for the purposes of facilitating the proper exercise of rights and powers granted to the Bond Trustee under this Loan Agreement or any other Bond Document.

 

(r)             Priority Ranking . The payment obligations of the Borrower with respect to this Loan Agreement constitute direct general obligations of the Borrower, subject to the Intercreditor Agreement and Accounts Agreement.

 

(s)            Quarterly Calculations .

 

(i)             Not more than three (3) Business Days prior to each Quarterly Payment Date, the Borrower shall calculate the Historical Debt Service Coverage Ratio and the Prospective Debt Service Coverage Ratio, and shall provide written evidence to the Bond Trustee of such calculations certified by a Financial Officer of the Borrower.

 

(t)             Financial Model .

 

(i)             No less than forty-five (45) days prior to the end of each Fiscal Year (commencing with the Fiscal Year ended September 30, 2008), the Borrower shall deliver to the Bond Trustee a proposed updated Financial Model, as required and described in the Senior Credit Agreement.

 

(ii)            If in any Fiscal Year (A) the actual Cash Flow for the completed Fiscal Quarters in such Fiscal Year (or, in the case of the Fiscal Year in which the Closing Date occurs, the period from the Closing Date to the end of the most recent completed Fiscal Quarter) (such period, the “Specified Period”) is ninety percent (90%) or less of the projections for such period set forth in the then-current Financial Model, or (B) Operation and Maintenance Expenses and Maintenance Capital Expenses for the Specified Period are, in the aggregate, ten percent (10%) or more above the projections for such period set forth in the then-current Financial Model, the Borrower shall, no less than thirty (30) days prior to the end of the immediately following Fiscal Quarter, deliver to the Bond Trustee a proposed updated Financial Model, as required and described in the Senior Credit Agreement; provided that if (x) the Historical Debt Service Coverage Ratio calculated as of the most recent Quarterly Payment Date exceeds 4.0x and (y) the Borrower delivers to the Bond Trustee a certificate certifying that the Prospective Debt Service Coverage Ratio calculated as of such most recent Quarterly Payment Date exceeds 4.0x notwithstanding the deviation from the Financial Model described in item (A) or (B) above, as applicable, the Borrower shall not be required to deliver an updated Financial Model pursuant to this Section.

 

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Section 5.2             Negative Covenants . The Borrower agrees that the Borrower will perform the obligations set forth in this Section 5.2; provided, however, the failure to perform any obligation under this Section 5.2 during the time the Senior Credit Facilities are outstanding and in effect shall not constitute a default or Event of Default hereunder so long as the Senior Lenders have waived compliance with, or amended the terms of, the corresponding, if any, obligation under the Senior Credit Facilities.

 

(a)            Restrictions on Indebtedness of the Borrower . The Borrower will not create, incur, assume or suffer to exist any Indebtedness except:

 

(i)             the Obligations and the Refinancing (as defined in the Intercreditor Agreement), if any; provided the aggregate principal amount thereof shall not exceed $150,000,000;

 

(ii)            Indebtedness under the Bond Documents;

 

(iii)           Indebtedness under the Permitted Commodity Hedging Arrangements;

 

(iv)           accounts payable to trade creditors incurred in the ordinary course of business and not more than forty-five (45) days past due; and

 

(v)            obligations as lessee under operating leases or leases for the rental of any real or personal property which are required by GAAP to be capitalized where all such leases (other than railcar leases) under this Section 5.2(v) do not, in the aggregate, require the Borrower to make scheduled payments to the lessors in any Fiscal Year in excess of two hundred thousand Dollars ($200,000) in the aggregate;

 

(vi)           indebtedness for borrowed money up to $14,000,000 which may be secured by liens and/or security interests in any property of the Borrower, except for the funds and accounts established under the Bond Indenture, and consented to by the Senior Lenders if the Senior Credit Facilities are outstanding and in effect; provided, however, the amount of indebtedness incurred under this Section 5.2 (a) (vi) and Section 5.2. (a) (i) shall not exceed in the aggregate $150,000,000.

 

(b)            Liens . The Borrower shall not create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets (including its Equity Interests), whether now owned or hereafter acquired, except:

 

(i)             Liens in favor, or for the benefit, of the Senior Lenders securing the Senior Credit Facilities and liens securing the Obligations and the Refinancing permitted pursuant to Section 5.2(a)(i) hereof;

 

(ii)            Liens created the Bond Collateral Documents;

 

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(iii)           Liens for taxes, assessments and other governmental charges that are not yet due or the payment of which is the subject of a Contest;

 

(iv)           Liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is the subject of a Contest;

 

(v)            any Liens reflected on the Title Insurance Policy or any Title Continuation;

 

(vi)           Liens arising by reason of judgments that are subject to a Contest; and

 

(vii)          Liens in respect of personal property under which the liability of the Borrower does not exceed two hundred thousand dollars ($200,000) in the aggregate;

 

(viii)         Liens securing up to $14,000,000 of indebtedness for borrowed money permitted pursuant to Section 5.2 (a) (vi) hereof.

 

(c)            Permitted Investments . Except for the investment of amounts on deposit with the Bond Trustee under the Bond Indenture which are governed by the Bond Indenture, the Borrower shall not make any investments, loans or advances (whether by purchase of stocks, bonds, notes or other securities, loans, extensions of credit, advances or otherwise) except for investments in Cash Equivalents.

 

(d)            Change in Business . The Borrower shall not (i) enter into or engage in any business other than the ownership, operation, maintenance, development, start-up, testing, use and financing of the Aberdeen Expansion and the Huron Expansion, the ownership, operation, maintenance, use and financing of the Existing Facilities and all activities reasonably related thereto or (ii) change in any material respect the scope of the Facilities from that which is contemplated as of the date hereof.

 

(e)            Equity Issuances . The Borrower shall not issue any Equity Interests unless such Equity Interests are immediately pledged to the Bond Trustee (for the benefit of the Bondholders) on a perfected basis pursuant to the Subordinate Equity Pledge Agreement or, if necessary, a supplement thereto or a pledge and security agreement in substantially the form of the Subordinate Equity Pledge Agreement on a second lien priority to the liens securing the Senior Credit Facilities.

 

(f)             Asset Dispositions . The Borrower shall not sell, lease, assign, transfer or otherwise dispose of assets, including the Facilities, of the Borrower (other than Products), whether now owned or hereafter acquired, except:

 

(i)             disposal of assets that are promptly replaced in accordance with the then current Operating Budgets;

 

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(ii)            to the extent that such assets are uneconomical, obsolete or no longer useful or no longer usable in connection with the operation or maintenance of the Facilities; and

 

(iii)           disposal of assets with a fair market value, or at a disposal price, of less than one million dollars ($1,000,000) in the aggregate during any Fiscal Year; provided, that such disposal does not, and would not reasonably be expected to, adversely affect the construction, operation or maintenance of the Facilities.

 

(g)            Consolidation, Merger . The Borrower will not (i) directly or indirectly liquidate, wind up, terminate, reorganize or dissolve itself (or suffer any liquidation, winding up, termination, reorganization or dissolution) or otherwise wind up; or (ii) acquire (in one transaction or a series of related transactions) all or any substantial part of the assets, property or business of, or any assets that constitute a division or operating unit of, the business of any Person or otherwise merge or consolidate with or into any other Person.

 

(h)            Transactions with Affiliates . The Borrower shall not enter into or cause, suffer or permit to exist any arrangement or contract with any of its Affiliates or any other Person that owns, directly or indirectly, any Equity Interest in the Borrower unless such arrangement or contract (i) is fair and reasonable to the Borrower and (ii) is an arrangement or contract that is on an arm’s-length basis and contains terms no less favorable than those that would be entered into by a prudent Person in the position of the Borrower with a Person that is not one of its Affiliates.

 

(i)             Accounts .

 

(i)             So long as the Senior Credit Facilities are outstanding, the Borrower shall not maintain, establish or use any deposit account, securities account (as each is defined in the UCC) or other banking account other than in compliance with the Senior Credit Agreement.

 

(ii)            Upon the termination of the Senior Credit Facilities, the Borrower shall give the Bond Trustee written notice of each deposit account, securities account (as each term is defined in the UCC) or other banking account it maintains, establishes or uses and shall deliver to the Bond Trustee a control agreement (meeting the requirements of the UCC) to perfect the security interest of the Bond Trustee therein.

 

(j)             Subsidiaries . The Borrower shall not create or acquire any Subsidiary or enter into any partnership or joint venture.

 

(k)            ERISA . The Borrower will not engage in any prohibited transactions under Section 406 of ERISA or under Section 4975 of the Code with respect to any Plan or any other employee benefit plan subject to ERISA that could reasonably result in a material liability to the Borrower. The Borrower will not incur any obligation or liability in respect of any Plan,

 

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Multiemployer Plan or employee welfare benefit plan providing post-retirement welfare benefits (other than a plan providing continue coverage under Part 6 of Title I of ERISA or similar state law).

 

(l)             Taxes . The Borrower shall not make any election to be treated as an association taxable as a corporation for federal, state or local tax purposes.

 

(m)           Facilities Documents . The Borrower shall not enter into, or consent to, any amendment, notification, supplement, waiver, consent or assignments of any of its rights in respect of the SNDAS and the Facilities Documents except in compliance with the terms of the Senior Credit Agreement. The Borrower will not enter into or approve any Change Orders or Additional Aberdeen Facilities except in compliance with the terms of the Senior Credit Agreement.

 

(n)            Suspension or Abandonment . The Borrower shall not (i) permit or suffer to exist an Event of Abandonment or (ii) order or consent to any suspension of work under any Facilities Document unless such action is approved by the Senior Lenders.

 

(o)            Use of Proceeds; Margin Regulations . The Borrower shall not use any proceeds of the Series 2007A Bonds other than in accordance with the provisions of this Loan Agreement, the Bond Indenture or the Tax Exemption Agreement. The Borrower shall not use any part of the proceeds of the Series 2007A Bonds to purchase or carry any Margin Stock (as defined in Regulation U) or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. The Borrower shall not use the proceeds of the Series 2007A Bonds in a manner that could violate or be inconsistent with the provisions of Regulations T, U or X.

 

(p)            Environmental Matters . The Borrower shall not permit (i) any underground storage tanks to be located on any property owned or leased by the Borrower, (ii) any asbestos to be contained in or form part of any building, building component, structure or office space owned or leased by the Borrower, (iii) any polychlorinated biphenyls (PCBs) to be used or stored at any property owned or leased by the Borrower or (iv) any other Materials of Environmental Concern to be used, stored or otherwise be present at any property owned or leased by the Borrower, other than Materials of Environmental Concern necessary for the operation of the Facilities and used in accordance with all Laws and Prudent Ethanol Operating Practice.

 

(q)            Restricted Payments . Except as otherwise permitted under Section 2.06(e) of the Senior Credit Agreement, the Borrower shall not make any Restricted Payments unless each of the conditions set forth below has been satisfied:

 

(i)             the Conversion Date shall have occurred;

 

(ii)            such Restricted Payment is made on, or within thirty (30) days following, a Quarterly Payment Date (provided, so long as the Senior Credit Facilities are outstanding and in effect, that such Restricted Payment is made only from funds on deposit in or standing to the credit of the Revenue Account or the Prepayment

 

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Holding Account (as both are defined in the Accounts Agreement), as the case may be, on such Quarterly Payment Date);

 

(iii)           no default or Event of Default under the Senior Credit Agreement or this Loan Agreement has occurred and is continuing or would occur as a result of such Restricted Payment;

 

(iv)           each of the Debt Service Reserve Account and the Working Capital Reserve Account under the Accounts Agreement and after the Senior Credit Facilities are no longer outstanding the working capital reserve account and the capital expense account required by this Loan Agreement is fully funded to any applicable required level;

 

(v)            each of the Historical Debt Service Coverage Ratio and the Prospective Debt Service Coverage Ratio, calculated as of such Quarterly Payment Date with respect to Debt Service on the Senior Credit Agreement so long as they are outstanding and thereafter Debt Service on the Loan Agreement, are greater than or equal to 1.5:1.0; and

 

(vi)           the Bond Trustee has received a certificate, duly executed by an Authorized Officer of the Borrower, confirming that each of the conditions set forth in clauses (i) through (v) of this Section 5.2(q) have been satisfied on and as of the date such Restricted Payment is requested to be made, and setting forth a detailed calculation of each of the Historical Debt Service Coverage Ratio and Prospective Debt Service Coverage Ratio with respect to Debt Service on the Senior Credit Agreement so long as they are outstanding and thereafter Debt Service on the Loan Agreement,;

 

Provided that notwithstanding the foregoing, Restricted Payments shall be permitted to the extent set forth in priority twelfth of Section 6.01(b) of the Accounts Agreement.

 

(r)             Construction Budget . The Borrower shall construct the Aberdeen Expansion in compliance with the construction budget requirements of the Senior Credit Agreement with only such change orders and reallocations of line items as permitted therein or otherwise consented to by the Senior Lenders.

 

(s)            Commodity Hedging Arrangements . The Borrower shall not enter into any Commodity Hedging Arrangements that:

 

(i)             are not in accordance with the Commodity Risk Management Plans; or

 

(ii)            are for speculative purposes.

 

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(t)             Accounting Changes . The Borrower shall not make any change in (i) its accounting policies or reporting practices or (ii) its Fiscal Year without the prior written consent of the Senior Lenders so long as the Senior Credit Facilities are outstanding and in effect and without prior written notice to the Bond Trustee.

 

(u)            Huron Expansion Contracts . The Borrower will not enter into or be a party to any agreement or contract relating to the Huron Expansion except as permitted by the Senior Credit Agreement.

 

Section 5.3             Reporting Requirements . The Borrower will furnish to the Bond Trustee the following:

 

(a)            Quarterly Financial Statements . As soon as available and in any event within forty-five (45) days after the end of the first three Fiscal Quarters of each Fiscal Year, balance sheets and statements of income and cash flows of the Borrower for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, prepared in accordance with GAAP.

 

(b)            Annual Financial Statements . As soon as available and in any event within ninety (90) days after the end of each Fiscal Year, a copy of the annual audit report for such Fiscal Year for the Borrower including therein balance sheets as of the end of such Fiscal Year and statements of income and cash flows of the Borrower for such Fiscal Year, and accompanied by an unqualified opinion of the auditors selected by the Borrower stating that such financial statements present fairly in all material respects the financial position of the Borrower for the periods indicated in conformity with GAAP applied on a basis consistent with prior periods, which report and opinion shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit.

 

(c)            Certificate of Financial Officer . Concurrently with the delivery of the financial statements referred to in Section 5.3(a) and (b), a certificate executed by a Financial Officer of the Borrower stating that:

 

(i)             such financial statements fairly present in all material respects the financial condition and results of operations of such Person on the dates and for the periods indicated in accordance with GAAP subject, in the case of interim financial statements, to the absence of notes and normally recurring year-end adjustments;

 

(ii)            such Financial Officer has reviewed the terms of the Bond Collateral Documents and has made, or caused to be made under his or her supervision, a review in reasonable detail of the business and financial condition of such Person during the accounting period covered by such financial statements; and

 

(iii)           as a result of such review such Financial Officer has concluded that no Default or Event of Default under either the Senior Credit Agreement or the Bond Documents has occurred during the period covered by such financial statements through and including the

 

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date of such certificate or, if any such Default or Event of Default has occurred, specifying the nature and extent thereof and, if continuing, the action that the Borrower has taken and proposes to take in respect thereof.

 

(d)            Auditor’s Letters . Promptly upon receipt, copies of any detailed audit reports, management letters or recommendations submitted to the Borrower (or the audit or finance committee of the Borrower) by the auditors selected by the Borrower in connection with the accounts or books of the Borrower, or any audit of the Borrower.

 

(e)            Notice of Default or Event of Default . As soon as possible and in any event within five (5) days after the Borrower obtains or should have obtained knowledge of any default or Event of Default under this Loan Agreement, a statement of an Authorized Officer of the Borrower setting forth details of such default or Event of Default and the action that the Borrower has taken and proposes to take with respect thereto.

 

(f)             Notice of Other Events . Within five (5) days after the Borrower obtains knowledge thereof, a statement of an Authorized Officer of the Borrower setting forth details of:

 

(i)             any litigation or governmental proceeding pending or threatened in writing against the Borrower, the Aberdeen Expansion or the Parent Company;

 

(ii)            any litigation or governmental proceeding pending or threatened in writing against any Facilities Party that has or could reasonably be expected to have a Material Adverse Effect;

 

(iii)           any other event, act or condition that has or could reasonably be expected to have a Material Adverse Effect;

 

(iv)           notification of any event of force majeure or similar event under a Facilities Document; or

 

(v)            notification of any other change in circumstances that could reasonably be expected to result in an increase of more than five hundred thousand Dollars ($500,000) in the cost of the Aberdeen Expansion.

 

(g)            Facilities Document or Additional Facilities Document Notice . Promptly after delivery or receipt thereof, copies of all material notices or documents given or received by the Borrower, pursuant to any of the SNDAs, the Facilities Documents and any Additional Facilities Document including:

 

(i)             any Change Orders or any written notices or communications related thereto;

 

(ii)            any written notice alleging any breach or default thereunder; and

 

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(iii)           any written notice regarding, or request for consent to, any assignment, termination, modification, waiver or variation thereof.

 

(h)            Design-Build Agreement Notice . Within two (2) days following receipt thereof, the Borrower shall deliver to the Bond Trustee any monthly or other periodic report provided to the Borrower under any Design-Build Agreement.

 

(i)             ERISA Event . As soon as possible and in any event within five (5) days after the Borrower knows, or has reason to know, that any of the events described below has occurred, a duly executed certificate of an Authorized Officer of the Borrower setting forth the details of each such event and the action that the Borrower proposes to take with respect thereto, together with a copy of any notice or filing from the PBGC, Internal Revenue Service or Department of Labor or that may be required by the PBGC or other U.S. Governmental Authority with respect to each such event:

 

(i)             any Termination Event with respect to any Plan or a Multiemployer Plan has occurred or will occur that could reasonably be expected to result in any liability to the Borrower;

 

(ii)            any condition exists with respect to a Plan that presents a material risk of termination of a Plan (other than a standard termination under Section 4041(b) of ERISA) or imposition of an excise tax or other material liability on the Borrower;

 

(iii)           an application has been filed for a waiver of the minimum funding standard under Section 412 of the Code or Section 302 of ERISA under any Plan;

 

(iv)           with respect to any Plan or any other employee benefit plan subject to ERISA, the Borrower or any Plan fiduciary has engaged in a “prohibited transaction,” as defined in Section 4975 of the Code or as described in Section 406 of ERISA, that is not exempt under Section 4975 of the Code and Section 408 of ERISA that could reasonably be expected to result in a material liability to the Borrower;

 

(v)            there exists any Unfunded Benefit Liabilities under any Plan;

 

(vi)           any condition exists with respect to a Multiemployer Plan that presents a risk of a partial or complete withdrawal (as described in Section 4203 or 4205 of ERISA) from a Multiemployer Plan that could reasonably be expected to result in any liability to the Borrower;

 

(vii)          a “default” (as defined in Section 4219(c)(5) of ERISA) occurs with respect to payments to a Multiemployer Plan and such default could reasonably be expected to result in any liability to the Borrower;

 

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(viii)         a Multiemployer Plan is in “reorganization” (as defined in Section 418 of the Code or Section 4241 of ERISA) or is “insolvent” (as defined in Section 4245 of ERISA);

 

(ix)            the Borrower and/or any ERISA Affiliate has incurred any potential withdrawal liability (as defined in accordance with Title IV of ERISA); or

 

(x)             there is an action brought against the Borrower or any ERISA Affiliate under Section 502 of ERISA with respect to its failure to comply with Section 515 of ERISA with respect to any Plan or any other employee benefit plan subject to ERISA.

 

(j)             Notice of PBGC Demand Letter . As soon as possible and in any event within five (5) days after the receipt by the Borrower of a demand letter from the PBGC notifying the Borrower of its final decision finding liability and the date by which such liability must be paid, a copy of such letter, together with a duly executed certificate an Authorized Officer of the Borrower setting forth the action the Borrower proposes to take with respect thereto.

 

(k)            Notice of Environmental Event . Promptly and in any event within five (5) days after the existence of any of the following conditions, a duly executed certificate of an Authorized Officer of the Borrower specifying in detail the nature of such condition and, if applicable, the Borrower’s proposed response thereto:

 

(i)             receipt by the Borrower of any written communication from a Governmental Authority or any written communication from any other Person (other than a privileged communication from legal counsel to the Borrower) or other source of written information, including reports prepared by the Borrower, that alleges or indicates that the Borrower or an Environmental Affiliate is not in compliance in all material respects with applicable Environmental Laws or Environmental Approvals and such alleged noncompliance could reasonably be expected to form the basis of an Environmental Claim against the Borrower;

 

(ii)            the Borrower obtains knowledge that there exists any Environmental Claim pending or threatened in writing against the Borrower or an Environmental Affiliate;

 

(iii)           the Borrower obtains knowledge of any release, threatened release, emission, discharge or disposal of any Material of Environmental Concern or obtains knowledge of any material non-compliance with any Environmental Law that, in either case, could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any Environmental Affiliate; or

 

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(iv)           any Removal, Remedial or Response action taken, or required to be taken, by the Borrower or any other person in response to any Material of Environmental Concern in, at, on or under, a part of or about the Borrower’s properties or any other property or any notice, claim or other information that the Borrower might be subject to an Environmental Claim.

 

(l)             Materials of Environmental Concern . The Borrower will maintain and make available for inspection by the Bond Trustee, on reasonable notice during regular business hours, accurate and complete records of all non-privileged correspondence, investigations, studies, sampling and testing conducted, and any and all remedial actions taken, by the Borrower or, to the best of the Borrower’s knowledge and to the extent obtained by the Borrower, by any Governmental Authority or other Person in respect of Materials of Environmental Concern that could reasonably be expected to form the basis of an Environmental Claim on or affecting the Facilities.

 

(m)           Deferred Approvals . Promptly after receipt thereof, copies of each Deferred Approval obtained by the Borrower, together with applicable documents, if any, relating thereto, certified as true, complete and correct by an Authorized Officer of the Borrower.

 

(n)            Operating Statements . Within forty-five (45) days after the end of each Fiscal Quarter and concurrently with the delivery of the annual financial statements referred to in Section 5.3(b), the Borrower shall furnish to the Bond Trustee an Operating Statement regarding the operation and performance of the Facilities for each monthly, quarterly and, in the case of the last quarterly Operating Statement for each year, annual period substantially in the form of required by the Senior Credit Agreement. Such Operating Statements shall contain (i) line items corresponding to each Operating Budget Category of the then current Operating Budget showing in reasonable detail by Operating Budget Category all actual expenses related to the operation and maintenance of the Facilities compared to the budgeted expenses for each such Operating Budget Category for such period, (ii) information showing the amount of ethanol and other Products produced by the Facilities during such period and (iii) information showing (A) the amount of ethanol sold by the Borrower from the Facilities to pursuant to the Ethanol Marketing Agreement, (B) the amount of Distillers Grains sold by the Borrower from the Facilities pursuant to the Co-Product Marketing Agreement, and (C) the amount, if any, of other sales of ethanol and/or Distillers Grains sold by the Borrower from the Facilities, together with an explanation of any such sale and identification of the purchaser, and (D) the amount, if any, of other Products sold by the Borrower from the Facilities, together with an explanation of any such sale and identification of the purchaser. The Operating Statements shall be certified as complete and correct by an Authorized Officer of the Borrower, who also shall certify that, the expenses reflected therein for the year to date and for each month or quarter therein did not exceed the provision for such period contained in the Operating Budget then in effect by more than ten percent (10%) or, if any of such certifications cannot be given, stating in reasonable detail the necessary qualifications to such certifications.

 

(o)            Other Information . The Borrower shall furnish the Bond Trustee with such other information reasonably requested by the Bond Trustee.

 

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Section 5.4      Maintenance of Existence and Status . The Borrower agrees that it will at all times maintain its existence as a Delaware limited partnership and that it will neither take any action nor suffer any action to be taken by others which will alter, change or destroy its status as a Delaware limited partnership.

 

The Borrower further agrees that it will not act or fail to act in any other manner which would adversely affect the exclusion from federal income tax of the interest earned by the owners of the Series 2007A Bonds.

 

The Borrower also covenants to cause any order, writ or warrant of attachment, garnishment, execution, replevin or similar process filed against any part of the funds or accounts held by the Bond Trustee under the Bond Indenture to be discharged, vacated, bonded or stayed within 90 days after such filing (which 90-day period shall be extended for so long as the Borrower is contesting such process in good faith), but, notwithstanding the foregoing, in any event not later than five days prior to any proposed execution or enforcement with respect to such filing or any transfer of moneys or investments pursuant to such filing.

 

Section 5.5      Consent to Assignment of Loan Agreement to the Bond Trustee . The Borrower agrees that this Loan Agreement (excluding Unassigned Rights) and payments to be made hereunder shall be assigned and pledged to secure the payment of the Series 2007A Bonds and all of the rights, interests, powers, privileges and benefits accruing to or vested in the Issuer thereunder may be protected and enforced in conformity with the Bond Indenture and may be assigned by the Issuer to the Bond Trustee as additional security for the Series 2007A Bonds, other than Unassigned Rights.

 

Section 5.6      Transfer of Project Assets . The provisions of the Bond Indenture notwithstanding, the Borrower covenants and agrees it will not sell, lease or otherwise dispose of (including without limitation any involuntary disposition) in excess of 2% in the aggregate of the Project financed or refinanced with the proceeds of the Series 2007A Bonds unless (a) prior to such sale, lease or other disposition there is delivered to the Bond Trustee an Officer’s Certificate of the Borrower stating that, in the judgment of the signer, such Property has become inadequate, obsolete or worn out and that any amounts received by the Borrower upon such disposition shall be applied by the Borrower to acquire additional Property constituting a “project” under the Act; or (b) prior to such sale, lease or disposition, the Borrower delivers to the Bond Trustee a written opinion of nationally recognized municipal bond counsel to the effect that any such disposition will not adversely affect the validity of the Series 2007A Bonds or any exemption of the interest on the Series 2007A Bonds from federal income taxation to which such Series 2007A Bonds would otherwise be entitled. The Borrower hereby agrees to apply the proceeds of any disposition by it of Property of the type described in subsection (a) above as provided in such subsection and agrees that any Property acquired with such proceeds shall be deemed to be Property financed or refinanced with the proceeds of the Series 2007A Bonds for the purposes of applying the provisions of this Loan Agreement and the Tax Exemption Agreement.

 

Section 5.7      Indemnity . The Borrower will, and hereby does, pay, protect, indemnify and save the Issuer and the Bond Trustee and its officers, directors, employees and agents harmless from and against any and all liabilities, losses, damages, costs and expenses (including attorneys’ fees and expenses of the Issuer and the Bond Trustee), causes of action, suits, claims,

 

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demands and judgments of whatsoever kind and nature (including those arising or resulting from any injury to or death of any person or damage to property or from any present or future statute, law, ordinance, rule or regulation related to the protection of the environment or hazardous substances) arising from or in any manner directly or indirectly growing out of or connected with the following:

 

(1)            the use, non-use, condition or occupancy of any of the Borrower’s Property, any repairs, construction, alterations, renovation, relocation, remodeling and equipping thereof or thereto or the condition of any of the Borrower’s Property including adjoining sidewalks, streets or alleys and any equipment or facilities at any time located on its Property or used in connection therewith which are not the result of the negligence of the Issuer or the Bond Trustee;

 

(2)            violation of any agreement, warranty, covenant or condition of this Loan Agreement, except by the Issuer or the Bond Trustee;

 

(3)            violation of any contract, agreement or restriction by the Borrower relating to its Property;

 

(4)            violation of any law, ordinance, regulation or court order affecting any of the Borrower’s Property or the ownership, occupancy or use thereof;

 

(5)            any statement or information concerning the Borrower, any of its or their officers and members or its or their Property, contained in any official statement furnished to the purchasers of the Series 2007A Bonds, that is untrue or incorrect in any material respect, and any omission from such official statement of any statement or information which should be contained therein for the purpose for which the same is to be used or which is necessary to make the statements therein concerning the Borrower, any of its or their officers and members and its or their Property not misleading in any material respect, provided that such official statement has been approved by the Borrower and that the indemnified person did not have knowledge of the omission or misstatement and did not use such official statement with reckless disregard of or gross negligence in regard to the accuracy or completeness of such official statement; and

 

(6)            Any liability, loss, cost or expense suffered by the Bond Trustee arising out of or relating to the duties as trustee for the Series 2007A Bonds, except to the extent resulting from the gross negligence or willful misconduct of the Bond Trustee.

 

Such indemnity shall extend to each person, if any, who “controls” the Issuer or the Bond Trustee, as the case may be, as that term is defined in Section 15 of the Securities Act of 1933, as amended.

 

In the event of the settlement of any litigation commenced or threatened, such indemnity shall be limited to the aggregate amount paid under a settlement effected with the written consent of the Borrower.

 

The Issuer and the Bond Trustee shall promptly notify the Borrower and the Borrower in writing of any claim or action brought against the Issuer, the Bond Trustee or its officers,

 

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directors, employees or agents or any controlling person, as the case may be, in respect of which indemnity may be sought against the Borrower, setting forth the particulars of such claim or action, and the Borrower will assume the defense thereof, including the employment of counsel satisfactory to the Issuer, the Bond Trustee, or its officers, directors, employees or agents, or such controlling person, as the case may be, and the payment of all expenses. The Issuer, the Bond Trustee or its officers, directors, employees or agents, or any such controlling person, as the case may be, may employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall not be payable by the Borrower unless such employment has been specially authorized in writing by the Borrower, which authorization shall not be unreasonably withheld. The foregoing notwithstanding, if the Issuer or the Bond Trustee or its officers, directors, employees or agent, is advised by Independent Counsel that there may be legal defenses available to it which are different from or in addition to those available to the Borrower, the Borrower shall not be entitled to assume the defense of the proceeding on behalf of the indemnified party, but the Borrower shall be responsible for the reasonable fees, costs and expenses of conducting such defense.

 

All amounts payable to or with respect to the Issuer under this Section 5.10 shall be deemed to be fees and expenses of the Issuer for the purposes of the provisions hereof and of the Bond Indenture dealing with the assignment of the Issuer’s rights hereunder.

 

Section 5.8      Notice Regarding Bankruptcy Petitions, Event of Default or Potential Default . The Borrower agrees to notify the Bond Trustee in writing prior to any filing by it of a petition in bankruptcy and to notify the Bond Trustee immediately by telephone and in writing as soon as reasonably practicable when it obtains knowledge that a petition in bankruptcy has been filed against the Borrower or of an event of default or potential default under this Loan Agreement or of any other development, financial or otherwise, which might materially adversely affect the ability of the Borrower to perform its obligations has occurred.

 

Section 5.9      Continuing Disclosure . The Borrower hereby covenants and agrees that it will comply with and carry out all of the provisions of its Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”) to be executed and delivered on the date of issuance and delivery of the Series 2007A Bonds. Notwithstanding any other provision of this Loan Agreement, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an event of default hereunder; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking specific performance by court order, to cause the Borrower to comply with its obligations under this Section.

 

Section 5.10    Huron Expansion . The Borrower agrees that, unless it has deposited an amount sufficient to pay interest due on the Bonds from June l, 2008 through March 31, 2009, with the Bond Trustee on or before June 1, 2008 for deposit to the Project Fund to be used to pay interest on the Bonds during such period, the Borrower will not proceed with the Huron Expansion, will not borrow any amounts for the payment of expenses for the Huron Expansion pursuant to the Senior Credit Facilities and will cause the Conversion Date (as defined in the Senior Credit Agreement) to occur no later than June l, 2008.

 

Section 5.11    Maintenance Capital Expense Account; Working Capital Reserve Account . The Borrower agrees to maintain a Maintenance Capital Expense reserve account in a

 

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banking institution selected by the Borrower in such amounts that on the last Business Day of each month the amount or deposit therein equals the amount of Maintenance Capital Expense reasonably expected to become due and payable during the next succeeding calendar month. Amounts in such account may be used for Maintenance Capital Expenses and debt service payable under the Loan Agreement. In addition, the Borrower agrees to maintain a working capital reserve account in a banking institution selected by the Borrower so that the amount on deposit therein, less the amount available to the Borrower pursuant to any working capital credit facility, equals at least $8,000,000; provided, however, such amounts may be used by the Borrower provided that for at least ten (10) days each calendar year the amount available to the Borrower for working capital purposes is at least $8,000,000. So long as the Accounts Agreement is in effect, the Borrower is not required to maintain such accounts or reserves other than pursuant to the Accounts Agreement.

 

ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES THEREFOR

 

Section 6.1      Events of Default . The occurrence and continuance of any of the following events shall constitute an “event of default” hereunder:

 

(a)            failure of the Borrower to pay any installment of interest, premium, if any, or principal on the Series 2007A Bonds or any other payment required by Section 4.1, 4.2, or 4.10 hereof when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or by acceleration or otherwise, and the continuance of such failure for five days; or

 

(b)            failure of the Borrower to comply with or perform any of the covenants, conditions, or provisions hereof or of the Tax Exemption Agreement and to remedy such default within 30 days after written notice thereof from the Issuer to the Borrower; provided, however, that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Borrower to remedy such default within such 30-day period shall not constitute a default hereunder if the Borrower shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or

 

(c)            failure of the Borrower to comply with or perform its covenant under Section 5.1 hereof to cause the discharge, vacation, bonding or stay of any order, writ or warrant of attachment, garnishment, execution, replevin or similar process filed against any part of the funds or accounts held by the Bond Trustee under the Bond Indenture; or

 

(d)            if any representation or warranty made by the Borrower herein or in any statement or certificate furnished to the Issuer or the Bond Trustee in connection with the sale of the Series 2007A Bonds or furnished by the Borrower pursuant hereto proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within 30 days after written notice thereof to the Borrower by the Issuer; or

 

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(e)            any event of default shall occur under the Senior Debt which would permit the acceleration of any obligation; or

 

(f)             if the Borrower admits insolvency or bankruptcy or its inability to pay its debts as they mature, or is generally not paying its debts as such debts become due, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee, custodian or receiver for the Borrower, or for the major part of its Property; or

 

(g)            if a trustee, custodian or receiver is appointed for the Borrower or for the major part of its Property and is not discharged within 30 days after such appointment; or

 

(h)            if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, proceedings under Title 11 of the United States Code, as amended, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against the Borrower (other than bankruptcy proceedings instituted by the Borrower against third parties), and if instituted against the Borrower are allowed against the Borrower or are consented to or are not dismissed, stayed or otherwise nullified within 30 days after such institution; or

 

(i)             if payment of any installment of interest or principal, or any premium, on any Series 2007A Bond shall not be made when the same shall become due and payable under the provisions of the Bond Indenture.

 

Upon the occurrence and during the continuance of any event of default hereunder, the Bond Trustee shall have the following rights and remedies, in addition to any other remedies herein or by law provided:

 

(1)            Acceleration of Maturity. Waiver of Event of Default and Rescission of Acceleration . The Bond Trustee may, by written notice to the Borrower all amounts hereunder to be immediately due and payable anything in this Loan Agreement contained to the contrary notwithstanding.

 

(2)            Right to Bring Suit, Etc. The Bond Trustee may, with or without entry, personally or by attorney, in its discretion, proceed to protect and enforce its rights by pursuing any available remedy including a suit or suits in equity or at law, whether for damages or for the specific performance of any obligation, covenant or agreement contained in this Loan Agreement or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable remedy, as the Bond Trustee shall deem most effectual to collect the payments then due and thereafter to become due hereunder, to enforce performance and observance of any obligation, agreement or covenant of the Borrower hereunder or to protect and enforce any of the Issuer’s rights or duties hereunder.

 

Section 6.2      Application of Proceeds of Remedies . The proceeds or avails resulting from the exercise of any such remedies, together with any other sums which then may be held under this Loan Agreement, whether under the provisions of this Article or otherwise, and which are available for such application shall be applied as follows:

 

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FIRST:  To the payment of the costs and expenses of the exercise of such remedies, including reasonable compensation to the Issuer and the Bond Trustee, their agents, attorneys and counsel, and the expenses of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by the Issuer as permitted by this Loan Agreement, together with interest at the announced prime rate per annum of the Bond Trustee on all advances made by the Issuer, and to the payment of all taxes, assessments or claims prior to the claim of this Loan Agreement, except any taxes, assessments, liens or other charges, subject to which Property may have been sold.

 

SECOND:  To the payment of the whole amount then due, owing and unpaid hereunder for principal, interest and premium, if any, and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid hereunder, then ratably according to the aggregate of such principal and the accrued and unpaid interest and premium, if any, without preference or priority as between principal, interest or premium.

 

THIRD:  To the payment of any amounts then due and payable under the Tax Exemption Agreement.

 

FOURTH:  To the payment of any other sums required to be paid by the Borrower pursuant to any provisions of this Loan Agreement or of the Series 2007A Obligation pledged under the Bond Indenture.

 

FIFTH:  To the payment of the surplus, if any, to the Borrower, its successors or assigns, upon the Written Request of the Borrower or to whomsoever may be lawfully entitled to receive the same upon its written request, or as any court of competent jurisdiction may direct.

 

Section 6.3      Remedies Cumulative . No remedy herein conferred upon or reserved to the Issuer or the Bond Trustee is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

 

Section 6.4      Delay or Omission Not a Waiver . No delay or omission of the Issuer or the Bond Trustee to exercise any right or power accruing upon any event of default shall impair any such right or power, or shall be construed to be a waiver of any such event of default or an acquiescence therein; and every power and remedy given by this Loan Agreement to the Issuer or the Bond Trustee may be exercised from time to time and as often as may be deemed expedient by the Issuer or the Bond Trustee.

 

Section 6.5      Waiver of Extension, Valuation and Appraisement Laws . To the extent permitted by law, the Borrower will not during the continuance of any event of default hereunder insist upon or plead, or in any manner whatever claim or take any benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Loan Agreement; nor claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or

 

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appraisement of the Property, or any part thereof, prior to any sale or sales thereof which may be made pursuant to any provision herein contained, or pursuant to the decree, judgment or order of any court of competent jurisdiction;  nor after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted by the United States of America or by any state or territory, or otherwise, to redeem the Property so sold or any part thereof; and the Borrower hereby expressly waives all benefits or advantage of any such law or laws and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to the Issuer, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted.

 

Section 6.6      Remedies Subject to Provisions of Law . All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of the law of the State and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of the law of the State which may be controlling and to be limited to the extent necessary so that they will not render this Loan Agreement invalid or unenforceable under the provisions of any applicable law.

 

ARTICLE VII
SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT

 

Section 7.1      Supplements and Amendments to this Loan Agreement . The Borrower, with the consent of the Issuer and the Bond Trustee, may from time to time enter into such supplements and amendments to this Loan Agreement as to them may seem necessary or desirable to effectuate the purposes or intent hereof; provided, however, that no such amendment shall be effective if not adopted in accordance with the terms of the Bond Indenture.

 

ARTICLE VIII
DEFEASANCE

 

Section 8.1      Defeasance . If the Borrower shall pay and discharge or provide, in the manner set forth in the Bond Indenture, for the payment and discharge of the whole amount of the principal of, premium, if any, and interest on the Series 2007A Bonds, shall pay or cause to be paid all sums payable hereunder and under the Bond Indenture, or shall make arrangements satisfactory to the Bond Trustee for such payment and discharge, including, the payment of such amounts incurred prior to such discharge, and shall obtain the written consent of the Issuer to such discharge, then and in that case all property, rights and interest hereby conveyed or assigned or pledged shall revert to the Borrower, and the estate, right, title and interest of the Issuer therein shall thereupon cease, terminate and become void; and this Loan Agreement and the covenants of the Borrower contained herein shall be discharged and the Issuer in such case on demand of the Borrower and at its cost and expense, shall execute and deliver to the Borrower a proper instrument or proper instruments acknowledging the satisfaction and termination of this Loan Agreement, and shall convey, assign and transfer or cause to be conveyed, assigned or transferred, and shall deliver or cause to be delivered, to the Borrower, all Property, including money, then held by the Issuer other than moneys deposited with the Bond Trustee for the payment of the principal of or interest on the Series 2007A Bonds.

 

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ARTICLE IX
MISCELLANEOUS PROVISIONS

 

Section 9.1      Payment of Expenses of Issuance of Series 2007A Bonds . The Borrower agrees to pay for any recording expenses, Bond Trustee’s fees, escrow and title insurance costs, legal fees, bond insurance premiums and fees, printing expenses and other fees and fair and customary expenses incurred or to be incurred by or on behalf of the Issuer in connection with or as an incident to the issuance and sale of the Series 2007A Bonds.

 

Section 9.2      Loan Agreement for Benefit of Parties Hereto . Nothing in this Loan Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than the parties hereto, any right, remedy or claim under or by reason of this Loan Agreement or any covenant, condition or stipulation hereof; and the covenants, stipulations and agreements in this Loan Agreement contained are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns.

 

Section 9.3      Severability . In case any one or more of the provisions contained in this Loan Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby.

 

Section 9.4      Notices . All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, sent by reputable registered overnight mail or delivery service, or send by personal delivery or confirmed facsimile delivery, with proper address as indicated below. The Issuer, the Borrower, and the Bond Trustee may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Loan Agreement. Until otherwise provided by the respective parties, all notices, certificates and communications to each of them shall be addressed as follows:

 

To the Issuer:

To the Borrower:

 

 

Brown County, South Dakota

Heartland Grain Fuels, L.P.

25 Market Street, Suite 2

10201 Wayzata Blvd., Suite 250

Aberdeen, South Dakota 57401

Minneapolis, Minnesota 55305

Attention: County Auditor

Attention: General Partner

 

 

To the Bond Trustee:

 

 

 

Wells Fargo Bank, National Association

 

MAC N9311-115

 

625 Marquette Avenue , 11 th floor

 

Minneapolis, Minnesota 55479

 

Attention: Corporate Trust

 

 

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Section 9.5      Successors and Assigns . Whenever in this Loan Agreement any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included and all the covenants, promises and agreements in this Loan Agreement contained by or on behalf of the Borrower, or by or on behalf of the Issuer, shall bind and inure to the benefit of the respective successors and assigns whether so expressed or not.

 

Section 9.6      Counterparts . This Loan Agreement is being executed in any number of counterparts, each of which is an original and all of which are identical. Each counterpart of this Loan Agreement is to be deemed an original hereof and all counterparts collectively are to be deemed but one instrument.

 

Section 9.7      Governing Law . It is the intention of the parties hereto that this Loan Agreement and the rights and obligations of the parties hereunder shall be governed by and construed and enforced in accordance with the laws of the State.

 

Section 9.8      Immunity of Officers, Employees and Members of the Issuer and the Borrower . No recourse shall be had for the payment of the principal of or premium or interest on any of the Obligations pledged under the Bond Indenture or for any claim based thereon or upon any representation, obligation, covenant or agreement in this Loan Agreement contained against any past, present or future officer, member, employee, director of agent of the Issuer, the Borrower or the Bond Trustee, respectively, any successor public or private corporation under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such officers, members, employees, directors or agents as such is hereby expressly waived and released as a condition of and consideration for the execution of this Loan Agreement.

 

Section 9.9      Intercreditor Agreement . Notwithstanding anything herein to the contrary, any right to payment hereunder, the lien or security interest granted to the Bond Trustee under the Bond Indenture, as trustee, in this Loan Agreement, the exercise of any right hereunder and each provision hereof are subject to the express provisions of the Intercreditor Agreement. In the event of a conflict between the terms of the Intercreditor Agreement and this Loan Agreement, the terms of the Intercreditor Agreement shall govern and control.

 

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IN WITNESS WHEREOF, the Borrower and the Issuer have caused this Loan Agreement to be executed in their respective names and the Issuer has caused its corporate seal to be hereunto affixed and attested by its duly authorized officer, all as of the date first above written.

 

 

Heartland Grain Fuels, L.P.

 

A Delaware limited partnership

 

 

 

By: Dakota Fuels, Inc.

 

Its: General Partner

 

 

 

 

 

/s/ Revis L. Stephenson III

 

 

By: Revis L. Stephenson III

 

Its: Chairman of the Board

 


 

 

BROWN COUNTY, SOUTH DAKOTA

 

 

 

 

 

By

/s/ Mike Wiese

 

 

Chairman

(SEAL)

 

Attest:

 

 

 

 

/s/ Maxine Taylor

 

 

 

 

Its: County Auditor

 

 

EXHIBIT 10.5

 

AMENDMENT TO

GRAIN ORIGINATION AGREEMENT

 

THIS AMENDMENT TO GRAIN ORIGINATION AGREEMENT (this “Amendment”), is made and entered into as of the 1st day of October, 2007, between Heartland Grain Fuels, L.P. a Delaware limited partnership (“HGF”), and South Dakota Wheat Growers Association, a South Dakota cooperative (“SDWG”).

 

BACKGROUND

 

1.              HGF and SDWG are parties to that certain Grain Origination Agreement, made and entered into as of the 8 th day of November, 2006 (the “Agreement”);

 

2.              HGF and SDWG wish to amend the Agreement pursuant to the terms and conditions set forth herein;

 

4.              All capitalized terms used but not otherwise defined herein shall have the meanings assigned in the Agreement.

 

AGREEMENT

 

In consideration of the mutual promises and agreements contained herein, it is hereby agreed as follows:

 

1.              Section 3.2 . Section 3.2 of the Agreement is deleted in its entirety and replaced with the following:

 

“3.2          Termination . Except as set forth under Section 3.1 and 3.4, (i) HGF will only have the right to terminate this Agreement upon the occurrence of an Event of Default (as defined in Section 4.1) and (ii) SDWG shall have no right to terminate this Agreement. Except as otherwise provided below, upon the occurrence of an Event of Default by SDWG, HGF will have the right to terminate this Agreement effective immediately by sending written notice thereof to SDWG and to receive payment from SDWG as set forth in Sections 3.3 and 4.2, and as is otherwise allowed by applicable law (except that no party will be entitled to consequential damages for any claim arising under this Agreement). Notwithstanding the foregoing, HGF will only have the right to terminate this Agreement with respect to the Ethanol Plant to which the Event of Default relates.”

 

2.              Section 3.4 . Section 3.4 of the Agreement is deleted in its entirety and replaced with the following:

 


 

“3.4          Suspension of Operations . If the operation of an Ethanol Plant is suspended for any reason (including pursuant to Section 7.3), including for repairs, modifications, expansions or damage to the Ethanol Plant for at least fifteen (15) months, then either party may terminate this Agreement with respect to such Ethanol Plant by providing the other party with written notice of such termination, which shall be effective as of the date of such written notice.”

 

3.              Section 4.1(c) . Section 4.1(c) of the Agreement shall be deleted in its entirety and replaced with the following:

 

“(c)         HGF fails to pay any amount due to SDWG under this Agreement by 5:00 p.m. of the business day following the due date of such payment; or”

 

4.              Section 4.2(b) . Section 4.2(b) of the Agreement is deleted in its entirety and replaced with the following:

 

“(b)          SDWG Remedies. If an Event of Default occurs under Section 4.1(a), (b) or (c), in addition to recovering payment of any amounts under Section 3.3, SDWG shall have the right to pursue any one or more of the following remedies:

 

(1)            SDWG may withhold future deliveries of corn until such Event of Default is either cured or waived by SDWG; provided, however, SDWG will resume delivery of corn under this Agreement if (1) prior to SDWG resuming deliveries of corn hereunder, HGF pays SDWG an amount equal to average cost of one day’s supply of corn determined by reference to 30 day period prior to the Event of Default; (2) HGF pays SDWG for all deliveries of corn in immediately available funds by 5 p.m. of the day following the day of delivery and in the case of deliveries on any day that is not a business day by 10 a.m. on the next succeeding business day for the remainder of the term of this Agreement; and (3) HGF pays all past due amounts (including interest at the rate set forth in Section 2.4 hereof) in equal monthly installments of principal and interest in such an amount as is necessary to fully recover all past due amounts plus interest within two years from the date of the initial Event of Default; provided, however, that if HGF has fully repaid all past due amounts (including interest at the rate set forth in Section 2.4 hereof) owed under this Agreement within 3 days of the initial due date of the payment which caused the Event of Default and has paid all other amounts due for the purchase of corn on a current

 


 

basis for such period, the initial failure to timely pay which resulted in the exercise of remedies hereunder, will no longer be treated as an Event of Default and HGF may again make payments in accordance with the terms set forth in Section 2.4 hereof. Notwithstanding anything to the contrary stated in this Section 4.2(b)(1), SDWG may immediately suspend corn deliveries if HGF breaches the terms of clauses 2 or 3 above. Further, notwithstanding anything to the contrary stated in this Section 4.2(b)(1), if HGF has fully repaid all past due amounts (including the amounts referred to in clause (3) above) and has paid all other amounts due for the purchase of corn on a current basis, if HGF delivers to SDWG a written notice indicating that it desires to pay for deliveries of corn in increments of days or a week (although in no case shall the payment cycle be longer than that provided for in Section 2.4 hereof) together with a letter of credit (from a commercial banking institution reasonably acceptable to SDWG and in form and substance reasonably acceptable to SDWG) or other form of adequate assurance (reasonably acceptable to SDWG) that demonstrates and supports HGF’s ability to pay according to the longer payment cycle, the payment date referred to in Section 2.4 shall be adjusted accordingly to match the terms of the letter of credit or other assurance and any failure to pay within one day of that modified payment date shall be treated as an Event of Default described in Section 4.1(c) hereof, allowing SDWG’s to exercise remedies at its discretion pursuant to this Section 4.2(b).

 

(2)            SDWG may seek and receive injunctive relief or a decree of specific performance; and/or

 

(3)            SDWG may pursue any other remedy (except for consequential damages) to which it may be entitled in law or equity for breach of contract, except that SDWG may not terminate this Agreement.”

 

5.              Section 4.2 . (“Rights to Withhold Future Deliveries”). Section 4.2 on page 14 of the Agreement, identified as “Rights to Withhold Future Deliveries,” is hereby renumbered as Section 4.3. This Section is otherwise unchanged.

 

6.              Insurance . The following shall be added as Section 8.13:

 

“8.13        Insurance . So long as those certain Leases dated as of October    , 2007 by and between SDWG and HGF relating to SDWG’s property in Huron and

 


 

Aberdeen, South Dakota remain in effect (the “Leases”), to the extent that the cost of any insurance SDWG is required to obtain and maintain under the Leases exceeds the cost of the insurance SDWG is required to obtain and maintain hereunder, HGF shall pay SDWG such difference within 15 days of SDWG delivering an invoice to HGF.

 

6.              Representations and Warranties . Each of the parties hereto represents and warrants to the other that this Amendment has been duly and validly authorized, executed and delivered by such party and, assuming this Amendment constitutes a valid and binding obligation of the other party, this Amendment constitutes a valid and binding obligation of the such party, enforceable against such party in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium, and other laws affecting creditors’ rights generally and to general equitable principles.

 

7.              Governing Law . This Amendment shall be governed and construed in accordance with the laws of the State of South Dakota without regard to any applicable conflicts of law.

 

8.              Counterparts . This Amendment my be executed by facsimile signature in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when a counterpart has been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

9.              Limited Effect . Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its terms without amendment or modification.

 

[Signature Pages Follow]

 


 

The parties hereto have duly executed this Amendment as of the date and year first above written.

 

 

 

HGF:

 

 

 

Heartland Grain Fuels, L.P.,

 

 

 

By:

 Dakota Fuels, Inc.

 

Its:

General Partner

 

 

 

 

 

By:

 /s/ Revis L. Stephenson III

 

 

 

 Name: Revis L. Stephenson III

 

 

Title: Chairman of the Board

 

 

 

 

 

SDWG:

 

 

 

South Dakota Wheat Growers Association

 

 

 

 

 

By:

/s/ Dale Locken

 

 

Printed Name:

Dale Locken

 

 

Title:

CEO/Treasurer

 

 

EXHIBIT 99.1

 

FOR IMMEDIATE RELEASE

 

For more information contact:

 

Richard Peterson

Chief Financial Officer

Advanced BioEnergy, LLC

10201 Wayzata Boulevard, Suite 250

Minneapolis, MN 55305

(763) 226-2700

 

ADVANCED BIOENERGY ANNOUNCES CLOSING OF $118 MILLION

FINANCING FOR SOUTH DAKOTA FACILITIES

 

Minneapolis, Minnesota, October 15, 2007 – Advanced BioEnergy, LLC (ABE) today announced that its wholly-owned subsidiary, Heartland Grain Fuels, L.P., has closed on a $118 million financing for its South Dakota ethanol production facilities.  The financing consists of a $98.7 million senior secured facility (consisting of a $90.7 million construction and term facility and an $8.0 million working capital facility) and a $19 million tax exempt, subordinate secured financing.  The credit facilities will be used in combination to refinance Heartland Grain Fuels’ existing debt, complete construction of a 40 million gallons nameplate per year expansion facility at Heartland’s existing Aberdeen plant, and pay for operating costs at both the Aberdeen and Huron production facilities.

 

West LB AG, New York Branch, acted as administrative agent, collateral agent, issuing bank, sole bookrunner and syndication agent.  West LB AG, New York Branch, RaboBank and Santander acted as co-lead arrangers.  Dougherty & Company, LLC acted as financial advisor and Wells Fargo Bank, N.A. acted as bond trustee in connection with the $19 million subordinate financing package, consisting of Brown County, South Dakota tax exempt revenue bonds.

 

Advanced BioEnergy’s CEO, Revis L. Stephenson III, stated, “We believe that this financing provides us with sufficient debt financing to complete construction of our 40 million gallon nameplate capacity per year Aberdeen expansion facility.  Together with our third facility in Fairmont, Nebraska, which we expect will come on line in October of this year, and our existing operating facilities in Huron and Aberdeen, South Dakota, Advanced BioEnergy’s ethanol production capacity when fully operational will approach 200 million gallons per year.  Further, this financing demonstrates our lenders’ confidence in our business model.”

 


About Advanced BioEnergy, LLC

 

Organized in early 2005, ABE is a company specializing in corn-based ethanol production.  ABE presently operates 9 million gallons per year and 30 million gallons per year dry mill corn-production ethanol plants in Aberdeen and Huron, South Dakota, respectively.  ABE is currently building a 100-million gallons per year dry mill corn-processing ethanol plant near Fairmont, Nebraska (anticipated to be operational later this month) and an additional 40 million gallons per year of production capacity at its existing Aberdeen facility.  ABE also has development sites near Rochester, Indiana and Northfield, Minnesota.

 

Forward-Looking Statements

 

Any statements in this release that are not historical or current facts are forward-looking statements.  All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These statements involve known and unknown risks, uncertainties and other factors that may cause ABE’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.  Certain of these risks and uncertainties are described in ABE’s periodic reports and other filings with the SEC, which are available at the SEC’s web site at www.sec.gov.

 

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