SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of February 14, 2007, between NEDAK
Ethanol, LLC, a Nebraska limited liability company ("Borrower"), and Farm Credit
Services of Grand Forks, FLCA ("Lender").
Recitals:
A. Borrower has entered into a Master Credit Agreement dated as of the date
hereof (together with the "Supplements" defined therein, and as further amended,
supplemented and in effect from time to time, the "Credit Agreement") with
Lender, pursuant to which Lender, subject to the terms and conditions contained
therein, is to make loans to Borrower; and
B. It is a condition precedent to Lender's making any Loans to Borrower
that Borrower execute and deliver to Lender a security agreement in
substantially the form hereof; and
C. Borrower wishes to grant security interests in favor of Lender as herein
provided.
Agreement:
In consideration of the promises herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender agree as follows:
1. Definitions. All capitalized terms which are not defined herein have the
meanings provided for in the Credit Agreement. The term "State" as used herein
means the State of North Dakota. All terms defined in Article 9 of the Uniform
Commercial Code of the State and used herein shall have the same meanings as
specified therein. The term "Event of Default" as used herein means any Event of
Default described or listed in the Credit Agreement, including the failure of
Borrower to pay or perform any of the Obligations as and when due to be paid or
performed.
2. Grant of Security Interest. Borrower hereby grants to Lender, to secure
the payment and performance in full of all of the Obligations, a security
interest in, and pledges and assigns to Lender, the following properties, assets
and rights of Borrower, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds (including casualty insurance proceeds)
and products thereof (all of the same being hereinafter called the
"Collateral"): all personal and fixture property of every kind and nature
including without limitation all goods (including inventory, equipment and any
accessions thereto), instruments (including notes), documents, accounts
(including health-care-insurance receivables), chattel paper (whether tangible
or electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other
investment property, supporting obligations, any other contract rights or rights
to the payment of money (including without limitation all United States
Department of Agriculture payments and Commodity Credit Corporation payments
such as payments related to the bioenergy program described at 7 C.F.R. Part
1424), including without limitation all Material Contracts, insurance claims and
proceeds, tort claims, and all general intangibles including, without
limitation, all payment intangibles, patents, patent applications, trademarks,
trademark applications, trade names, copyrights, copyright applications,
software, engineering drawings, service marks, customer lists, goodwill, and all
licenses, permits, agreements of any kind or nature pursuant to which Borrower
possesses, uses or has authority to possess or use property (whether tangible or
intangible) of others or others possess, use or have authority to possess or use
property (whether tangible or intangible) of Borrower, and all recorded data of
any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics.
3. Authorization to File Financing Statements. Borrower hereby irrevocably
authorizes Lender at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statements and amendments
thereto that (a) indicate the Collateral (i) as all assets of Borrower or words
of similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Uniform Commercial Code of
the State or such jurisdiction, or (ii) as being of an equal or lesser scope or
with greater detail, and (b) contain any other information required by Article 9
of the Uniform Commercial Code of the State or any other state for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether Borrower is an organization, the type of organization and
any organization identification number issued to Borrower and, (ii) in the case
of a financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Borrower agrees to furnish any such
information to Lender promptly upon request. Borrower also ratifies its
authorization for Lender to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
4. Other Actions. Further to insure the attachment, perfection and first
priority of, and the ability of Lender to enforce, Lender's security interest in
the Collateral, Borrower agrees, in each case at Borrower's own expense, to take
the following actions with respect to the following Collateral:
4.01. Notes and Tangible Chattel Paper. If Borrower at any time holds
or acquires any notes or tangible chattel paper, Borrower will forthwith
endorse, assign and deliver the same to Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as Lender may
from time to time specify.
4.02. Deposit Accounts. For each deposit account that Borrower at any
time opens or maintains, Borrower will, at Lender's request and option,
pursuant to an agreement in form and substance satisfactory to Lender,
either (a) cause the depositary bank to agree to comply at any time with
instructions from Lender to such depositary
bank directing the disposition of funds from time to time credited to such
deposit account, without further consent of Borrower, or (b) arrange for
Lender to become the customer of the depositary bank with respect to the
deposit account, with Borrower being permitted, only with the consent of
Lender, to exercise rights to withdraw funds from such deposit account. The
provisions of this paragraph do not apply to any deposit account for which
Borrower, the depositary bank and Lender have entered into a cash
collateral agreement specially negotiated among Borrower, the depositary
bank and Lender for the specific purpose set forth therein.
4.03. Investment Property. If Borrower at any time holds or acquires
any certificated securities, Borrower will forthwith endorse, assign and
deliver the same to Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as Lender may from time to time specify.
If any securities now or hereafter acquired by Borrower are uncertificated
and are issued to Borrower or its nominee directly by the issuer thereof,
Borrower will immediately notify Lender thereof and, at Lender's request
and option, pursuant to an agreement in form and substance satisfactory to
Lender, either (a) cause the issuer to agree to comply with instructions
from Lender as to such securities, without further consent of Borrower or
such nominee, or (b) arrange for Lender to become the registered owner of
the securities. If any securities, whether certificated or uncertificated,
or other investment property now or hereafter acquired by Borrower are held
by Borrower or its nominee through a securities intermediary or commodity
intermediary, Borrower will immediately notify Lender thereof and, at
Lender's request and option, pursuant to an agreement in form and substance
satisfactory to Lender, either (i) cause such securities intermediary or
(as the case may be) commodity intermediary to agree to comply with
entitlement orders or other instructions from Lender to such securities
intermediary as to such securities or other investment property, or (as the
case may be) to apply any value distributed on account of any commodity
contract as directed by Lender to such commodity intermediary, in each case
without further consent of Borrower or such nominee, or (ii) in the case of
financial assets or other investment property held through a securities
intermediary, arrange for Lender to become the entitlement holder with
respect to such investment property, with Borrower being permitted, only
with the consent of Lender, to exercise rights to withdraw or otherwise
deal with such investment property. The provisions of this paragraph shall
not apply to any financial assets credited to a securities account for
which Lender is the securities intermediary.
4.04. Collateral in the Possession of a Bailee. If any goods are at
any time in the possession of a bailee, Borrower will promptly notify
Lender thereof and, if requested by Lender, will promptly obtain an
acknowledgment from the bailee, in form and substance satisfactory to
Lender, that the bailee holds such Collateral for the benefit of Lender and
will act upon the instructions of Lender, without the further consent of
Borrower.
4.05. Electronic Chattel Paper and Transferable Records. If Borrower
at any time holds or acquires an interest in any electronic chattel paper
or any "transferable
record," as that term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act, or in Section 16 of the
Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Borrower will promptly notify Lender thereof and, at the
request of Lender, will take such action as Lender may reasonably request
to vest control in Lender, under Section 9-105 of the Uniform Commercial
Code, of such electronic chattel paper or control under Section 201 of the
Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as
so in effect in such jurisdiction, of such transferable record. Lender
agrees with Borrower that Lender will arrange, pursuant to procedures
satisfactory to Lender and so long as such procedures will not result in
Lender's loss of control, for Borrower to make alterations to the
electronic chattel paper or transferable record permitted under UCC Section
9-105 or, as the case may be, Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or Section 16 of the Uniform
Electronic Transactions Act for a party in control to make without loss of
control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by Borrower with respect to such
electronic chattel paper or transferable record.
4.06. Letter-of-Credit Rights. If Borrower is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of
Borrower, Borrower will promptly notify Lender thereof and, at the request
and option of Lender, Borrower will, pursuant to an agreement in form and
substance satisfactory to Lender, either (i) arrange for the issuer and any
confirmer of such letter of credit to consent to an assignment to Lender of
the proceeds of any drawing under the letter of credit or (ii) arrange for
Lender to become the transferee beneficiary of the letter of credit.
4.07 Commercial Tort Claims. If Borrower at any time holds or acquires
a commercial tort claim, Borrower will immediately notify Lender in a
writing signed by Borrower of the brief details thereof and grant to Lender
in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to Lender.
4.08 Other Actions as to any and all Collateral. Borrower further
agrees to take any other action reasonably requested by Lender to insure
the attachment, perfection and first priority of, and the ability of Lender
to enforce, Lender's security interest in any and all of the Collateral
including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, (b) causing Lender's name to be noted as
secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or
ability of Lender to enforce, Lender's security interest in such
Collateral, (c) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or
ability of Lender to enforce, Lender's security interest in such
Collateral, (d) obtaining governmental and other third party consents and
approvals, including without limitation any consent of any licensor, lessor
or other person
obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to Lender and (f) taking all
actions required by any earlier versions of the Uniform Commercial Code or
by other law, as applicable in any relevant Uniform Commercial Code
jurisdiction, or by other law as applicable in any foreign jurisdiction.
5. Relation to Other Security Documents. The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by Borrower to Lender and securing the payment or performance of any of the
Obligations. Nothing contained in any such real estate mortgage or deed of trust
derogates from any of the rights or remedies of Lender hereunder.
6. Representations and Warranties Concerning Borrower's Legal Status.
Borrower represents and warrants to Lender as follows: (a) Borrower's exact
legal name is that indicated on the signature page hereof, (b) Borrower is a
limited liability company organized under the laws of the State of Nebraska, (c)
Borrower's organizational identification number is N/A, (d) Borrower's federal
taxpayer identification number is 00-0000000 and (e) Borrower's place of
business, chief executive office, as well as mailing address is 00000 Xxxxxxxxx
Xxxx, XX Xxx 000, Xxxxxxxx, XX 00000. Borrower hereby certifies that the
Taxpayer Identification Number shown in this Section 6 is correct and that
Borrower is not subject to backup withholding either because it is exempt, has
not been notified that it is subject to backup withholding due to failure of
reporting interest or dividends, or the Internal Revenue Service has notified it
that it is no longer subject to backup withholding. Borrower is a U.S. person
(including U.S. resident alien).
7. Covenants Concerning Borrower's Legal Status. Borrower covenants with
Lender as follows: (a) without providing at least 30 days prior written notice
to Lender, Borrower will not change its name, its place of business or, if more
than one, chief executive office, or its mailing address or organizational
identification number if it has one, (b) if Borrower does not have an
organizational identification number and later obtains one, Borrower will
forthwith notify Lender of such organizational identification number, and (c)
Borrower will not change its type of organization, jurisdiction of organization
or other legal structure.
8. Representations and Warranties Concerning Collateral, Etc. Borrower
further represents and warrants to Lender as follows: (a) Borrower is the owner
of the Collateral, free from any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement and
other liens permitted by the Credit Agreement, (b) to the extent that any of the
Collateral constitutes, or is the proceeds of, "farm products" as defined in
Section 9-102(a)(34) of the Uniform Commercial Code of the State or any other
relevant state, Borrower has taken all required acts to ensure that Lender's
security interest in such Collateral is first and prior, (c) none of the account
debtors or other persons obligated on any of the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act or like federal, state
or local statute or rule in respect of such Collateral, (d) Borrower holds no
commercial tort claim, and (e) Borrower has at all times operated its business
in compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable
provisions of federal, state and local statutes and ordinances dealing with the
control, shipment, storage or disposal of hazardous materials or substances.
9. Covenants Concerning Collateral, Etc. Borrower further covenants with
Lender as follows: (a) the Collateral, to the extent not delivered to Lender
pursuant to Section 4, will be kept at the address of Real Estate which is
subject to the Mortgage and Borrower will not remove the Collateral from such
locations, without providing at least 30 days prior written notice to Lender,
(b) except for the security interest herein granted and liens permitted by the
Credit Agreement, Borrower will be the owner of the Collateral free from any
lien, security interest or other encumbrance, and Borrower will defend the same
against all claims and demands of all persons at any time claiming the same or
any interests therein adverse to Lender, (c) Borrower will not pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than Lender except for liens permitted by the Credit Agreement,
(d) Borrower will keep the Collateral in good order and repair and will not use
the same in violation of law or any policy of insurance thereon, (e) Borrower
will permit Lender, or its designee, to inspect the Collateral at any reasonable
time, wherever located, (f) Borrower will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement, (g) Borrower will operate its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, and (h) Borrower will not sell or
otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or
any interest therein except for (i) sales of inventory and licenses of general
intangibles in the ordinary course of business and (ii) sales or other
dispositions of obsolescent items of equipment in the ordinary course of
business consistent with past practices and permitted by the Credit Agreement.
10. Insurance.
10.01. Maintenance of Insurance. Borrower will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such
minimum amounts that Borrower will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be
in such amounts, contain such terms, be in such forms and be for such
periods as may be reasonably satisfactory to Lender. In addition, all such
insurance shall be payable to Lender as lender loss payee under a standard
lender loss payee clause. Without limiting the foregoing, Borrower will (i)
keep all of its physical property insured with casualty or physical hazard
insurance on an "all risks" basis, with electronic data processing
coverage, with a full replacement cost endorsement and in an amount equal
to 100% of the full replacement cost of such property, (ii) maintain all
such workers' compensation or similar insurance as may be required by law
and (iii) maintain, in amounts and with deductibles equal to those
generally maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of Borrower; business interruption insurance; and product
liability insurance.
10.02. Insurance Proceeds. The proceeds of any casualty insurance in
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby, (i) so long as no Default or Event of Default has occurred
and is continuing and to the extent that the amount of such proceeds is
less than $25,000, be disbursed to Borrower for direct application by
Borrower solely to the repair or replacement of Borrower's property so
damaged or destroyed and (ii) in all other circumstances, be held by Lender
as cash collateral for the Obligations. Lender may, at its sole option,
disburse from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as Lender may reasonably
prescribe, for direct application by Borrower solely to the repair or
replacement of Borrower's property so damaged or destroyed, or Lender may
apply all or any part of such proceeds to the Obligations with the
Commitments (if not then terminated) being reduced by the amount so applied
to the Obligations.
10.03. Notice of Cancellation, etc. All policies of insurance will
provide for at least 30 days prior written cancellation notice to Lender.
In the event of failure by Borrower to provide and maintain insurance as
herein provided, Lender may, at its option, provide such insurance and
charge the amount thereof to Borrower. Borrower will furnish Lender with
certificates of insurance and copies policies evidencing compliance with
the foregoing insurance provision.
11. Collateral Protection Expenses; Preservation of Collateral.
11.01. Expenses Incurred by Lender. In its discretion, Lender may
discharge taxes and other encumbrances at any time levied or placed on any
of the Collateral, make repairs thereto and pay any necessary filing fees
or, if the debtor fails to do so, insurance premiums. Borrower agrees to
reimburse Lender on demand for any and all expenditures so made. Lender has
no obligation to Borrower to make any such expenditures, and the making
thereof will not relieve Borrower of any default.
11.02. Lender's Obligations and Duties. Anything herein to the
contrary notwithstanding, Borrower will remain liable under each contract
or agreement comprised in the Collateral to be observed or performed by
Borrower thereunder. Lender shall not have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by Lender of any payment relating to any of the
Collateral, nor shall Lender be obligated in any manner to perform any of
the obligations of Borrower under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by Lender in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to
Lender or to which Lender may be entitled at any time or times. Lender's
sole duty with
respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Uniform Commercial
Code of the State or otherwise, is to deal with such Collateral in the same
manner as Lender deals with similar property for its own account.
12. Securities and Deposits. Lender may at any time at its option, transfer
to itself or any nominee any securities constituting Collateral, receive any
income thereon and hold such income as additional Collateral or apply it to the
Obligations. Whether or not any Obligations are due, Lender may demand, xxx for,
collect, or make any settlement or compromise which it deems desirable with
respect to the Collateral. Regardless of the adequacy of Collateral or any other
security for the Obligations, any deposits or other sums at any time credited by
or due from Lender to Borrower may at any time be applied to or set off against
any of the Obligations then due and owing.
13. Notification to Account Debtors and Other Persons Obligated on
Collateral. If a Default or an Event of Default has occurred and is continuing,
Borrower will, at the request of Lender, notify account debtors and other
persons obligated on any of the Collateral of the security interest of Lender in
any account, chattel paper, general intangible, instrument or other Collateral
and that payment thereof is to be made directly to Lender or to any financial
institution designated by Lender as Lender's agent therefor, and Lender may
itself, if a Default or an Event of Default has occurred and is continuing
beyond the applicable cure period, if any, without notice to or demand upon
Borrower, so notify account debtors and other persons obligated on Collateral.
After the making of such a request or the giving of any such notification,
Borrower will hold any proceeds of collection of accounts, chattel paper,
general intangibles, instruments and other Collateral received by Borrower as
trustee for Lender without commingling the same with other funds of Borrower and
will turn the same over to Lender in the identical form received, together with
any necessary endorsements or assignments. Lender will apply the proceeds of
collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by Lender to the Obligations, such proceeds to be
immediately entered after final payment in cash or other immediately available
funds of the items giving rise to them.
14. Power of Attorney.
14.01. Appointment and Powers of Lender. Borrower hereby irrevocably
constitutes and appoints Lender and any officer or agent thereof, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of Borrower or in
Lender's own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and
all documents and instruments that may be necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and
right, on behalf of Borrower, without notice to or assent by Borrower, to
do the following:
(a) upon the occurrence and during the continuance of an Event of
Default beyond the applicable cure period, if any, generally to sell,
transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral in
such manner as is consistent with the Uniform Commercial Code of the State
and as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do at Borrower's expense, at any time, or
from time to time, all acts and things which Lender deems necessary to
protect, preserve or realize upon the Collateral and Lender's security
interest therein, in order to effect the intent of this Agreement, all as
fully and effectively as Borrower might do, including, without limitation,
(i) the filing and prosecuting of registration and transfer applications
with the appropriate federal or local agencies or authorities with respect
to trademarks, copyrights and patentable inventions and processes, (ii)
upon written notice to Borrower, the exercise of voting rights with respect
to voting securities, which rights may be exercised, if Lender so elects,
with a view to causing the liquidation in a commercially reasonable manner
of assets of the issuer of any such securities and (iii) the execution,
delivery and recording, in connection with any sale or other disposition of
any Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to the extent that Borrower's authorization given in Section 3 is
not sufficient, to file such financing statements with respect hereto, with
or without Borrower's signature, or a photocopy of this Agreement in
substitution for a financing statement, as Lender may deem appropriate and
to execute and/or file in Borrower's name such financing statements and
amendments thereto and continuation statements which may require Borrower's
signature.
14.02. Ratification by Borrower. To the extent permitted by law,
Borrower hereby ratifies all that said attorneys lawfully do or cause to be
done by virtue of this Agreement. This power of attorney is a power coupled
with an interest and is irrevocable.
14.03. No Duty on Lender. The powers conferred on Lender hereunder are
solely to protect its interests in the Collateral and do not impose any
duty upon it to exercise any such powers. Lender will be accountable only
for the amounts that it actually receives as a result of the exercise of
such powers and neither it nor any of its officers, directors, employees or
agents shall be responsible to Borrower for any act or failure to act,
except for Lender's own gross negligence or willful misconduct.
15. Remedies. If an Event of Default has occurred and continues beyond the
applicable cure period, if any, Lender may, without notice to or demand upon
Borrower, declare this Agreement to be in default, and Lender shall thereafter
have in any jurisdiction in which enforcement hereof is sought, in addition to
all other rights and remedies, the rights and remedies of a secured party under
the Uniform Commercial Code of the State or of any jurisdiction in which
Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose Lender may, so far as
Borrower can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. Lender may in its
discretion require Borrower to assemble all or any part of the Collateral at
such location or locations within the jurisdictions of Borrower's principal
office(s) or at such other locations as Lender may reasonably designate. Unless
the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Lender will give to Borrower at least 10 Business Days prior written
notice of the time and place of any public sale of Collateral or of the time
after which any private sale or any other intended disposition is to be made.
Borrower hereby acknowledges that 10 Business Days prior written notice of such
sale or sales is reasonable notice. In addition, Borrower waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of Lender's rights hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights with respect thereto.
16. Standards for Exercising Remedies. To the extent that applicable law
imposes duties on Lender to exercise remedies in a commercially reasonable
manner, Borrower acknowledges and agrees that it is not commercially
unreasonable for Lender (a) to fail to incur expenses reasonably deemed
significant by Lender to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against account debtors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (l) to
the extent deemed appropriate by Lender, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section 16 is to provide non-exhaustive
indications of what actions or omissions by Lender would not be commercially
unreasonable in Lender's exercise of remedies against the Collateral and that
other actions or omissions by Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 16.
Without limitation upon the foregoing, nothing contained in this Section 16
shall be construed to grant any rights to Borrower or to impose any duties on
Lender that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 16.
17. No Waiver by Lender, etc. Lender shall not be deemed to have waived any
of its rights upon or under the Obligations or the Collateral unless such waiver
shall be in writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion will not be construed as a bar to or waiver of any right on any future
occasion. All rights and remedies of Lender with respect to the Obligations or
the Collateral, whether evidenced hereby or by any other instrument or papers,
will be cumulative and may be exercised singularly, alternatively, successively
or concurrently at such time or at such times as Lender deems expedient.
18. Suretyship Waivers by Borrower. Borrower waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With respect to
both the Obligations and the Collateral, Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as Lender may deem advisable. Lender will have no duty as to
the collection or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the preservation of
any rights pertaining thereto beyond the safe custody thereof as set forth in
Section 11.02. Borrower further waives any and all other suretyship defenses.
19. Marshaling. Lender will not be required to marshal any present or
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment are cumulative and in
addition to all other rights, however existing or arising. To the extent that it
lawfully may, Borrower hereby agrees that it will not invoke any law relating to
the marshalling of collateral which might cause delay in or impede the
enforcement of Lender's rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
Borrower hereby irrevocably waives the benefits of all such laws.
20. Proceeds of Dispositions; Expenses. Borrower will pay to Lender on
demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by Lender in protecting, preserving or enforcing
Lender's rights under or in respect of any of the Obligations or any of the
Collateral. After deducting all of said expenses, the residue of any proceeds of
collection or sale of the Obligations or Collateral shall, to the extent
actually received in cash, be applied to the payment of the Obligations in such
order or preference as Lender may determine, proper allowance and provision
being made for any Obligations not then due. Upon the final payment and
satisfaction in full of all of the Obligations and after making any payments
required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial
Code of the State, any excess shall be returned to Borrower, and Borrower shall
remain liable for any deficiency in the payment of the Obligations.
21. Overdue Amounts. Until paid, all amounts due and payable by Borrower
hereunder are a debt secured by the Collateral and shall bear, whether before or
after judgment, interest at the rate of interest for overdue principal set forth
in the Credit Agreement.
22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE. Borrower
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the State or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court. Borrower hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
23. Waiver of Jury Trial. THE PARTIES WAIVE THEIR RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, Borrower waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Borrower (i)
certifies that neither Lender nor any representative, agent or attorney of
Lender has represented, expressly or otherwise, that Lender would not, in the
event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges
that, in entering into the Credit Agreement and the other loan documents to
which Lender is a party, Lender is relying upon, among other things, the waivers
and certifications contained in this Section 23.
24. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder are binding upon Borrower and
its respective successors and assigns, and will inure to the benefit of Lender
and its successors and assigns. If any term of this Agreement is held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. Borrower acknowledges receipt of a copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
NEDAK ETHANOL, LLC
By: /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: President and General Manager
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Board Chairman
LENDER:
FARM CREDIT SERVICES OF GRAND FORKS, FLCA
By:/s/ Xxxx XxXxx
----------------------------------
Name: Xxxx XxXxx
Title: Vice President
