SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q TRANSITION REPORT
(Mark One)
[ ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended
[X] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from June 1, 1998 to
August 31, 1998.
Commission File Number 333-17865
CENEX HARVEST STATES COOPERATIVES
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0251095
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
5500 CENEX DRIVE, INVER GROVE HEIGHTS, MN 55077 (651) 451-5151
(Address of principal executive offices and (Registrant's telephone
zip code) number including area code)
Include by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES __X__ NO _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
NONE NONE
(Class) (Number of shares outstanding at
August 31, 1998)
<PAGE>
INDEX
PAGE
NO.
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PART I. FINANCIAL INFORMATION
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
Item 1. Financial Statements
Consolidated Balance Sheets as of May 31, 1998 and August 31, 1997
and 1998 (unaudited)
Consolidated Statements of Earnings for the three months ended
August 31, 1997 and 1998 (unaudited)
Consolidated Statements of Cash Flows for the three months
ended August 31, 1997 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
Item 1. Financial Statements
Balance Sheets as of May 31, 1998 and August 31, 1997 and 1998
(unaudited)
Statements of Earnings for the three months ended August 31,
1997 and 1998 (unaudited)
Statements of Cash Flows for the three months ended August 31,
1997 and 1998 (unaudited)
Notes to Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
WHEAT MILLING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
Item 1. Financial Statements
Balance Sheets as of May 31, 1998 and August 31, 1997 and 1998
(unaudited)
Statements of Earnings for the three months ended August 31,
1997 and 1998 (unaudited)
Statements of Cash Flows for the three months ended August 31,
1997 and 1998 (unaudited)
Notes to Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Items 1 through 5 have been omitted since all items are
inapplicable or answers are negative
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE PAGE
<PAGE>
PART I. FINANCIAL INFORMATION
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-Q Transition Report may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to:
SUPPLY AND DEMAND FORCES. The Company may be adversely affected by supply and
demand relationships, both domestic and international. Supply is affected by
weather conditions, disease, insect damage, acreage planted, government
regulation and policies and commodity price levels. Demand may be affected by
foreign governments and their programs, relationships of foreign countries
with the United States, the affluence of foreign countries, acts of war,
currency exchange fluctuations, and substitution of commodities. The current
monetary crisis's in Asia has impacted, and is expected to continue to impact
exports of U.S. agricultural products. Reduced demand for U.S. agricultural
products may also adversely effect the demand for fertilizer, chemicals, and
petroleum products sold by the Company and used to produce the crop. Demand
may also be affected by changes in eating habits, by population growth and
increased or decreased per capita consumption of some products.
PRICE RISKS. Upon purchase, the Company has risks of carrying grain and
petroleum, including price changes and performance risks (including delivery,
quality, quantity and shipment period), depending upon the type of purchase
contract. The Company is exposed to risk of loss in the market value of
positions held, consisting of grain and petroleum inventory and purchase
contracts at a fixed or partially fixed price, in the event market prices
decrease. The Company is also exposed to risk of loss on its fixed price or
partially fixed price sales contracts in the event market prices increase. To
reduce the price change risks associated with holding fixed priced positions,
the Company generally takes opposite and offsetting positions by entering into
commodity futures contracts (either a straight futures contract or an option
futures contract) on regulated commodity futures exchanges.
PROCESSING AND REFINING BUSINESS COMPETITION. The industry is highly
competitive. Competitors are adding new plants and expanding capacity of
existing plants. Unless exports increase or existing refineries are closed,
this extra capacity is likely to put additional pressure on prices and erode
margins, adversely affecting the profitability of the Processing and Refining
Defined Business Unit.
MILLING BUSINESS COMPETITIVE TRENDS. Certain major competitors of the Wheat
Milling Defined Business Unit have developed long-term relationships with
customers by locating plants adjacent to pasta manufacturing plants. This
trend could potentially decrease the future demand for semolina from
nonintegrated millers.
Commencing in June 1998, the Wheat Milling Defined Business Unit began
conversion of a semolina line to bakery flour at the Huron mill. This project
is anticipated to be completed in late October 1998 and until then, will
negatively impact profitability.
The forward-looking statements herein are qualified in their entirety by the
cautions and risk factors set forth in Exhibit 99, under the caption "Cautionary
Statement" to the Form 10-Q Transition Report for the period June 1, 1998 to
August 31, 1998.
<PAGE>
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
May 31, August 31, August 31,
1998 1997 1998
-------------- --------------------------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 76,740,575 $ 25,226,328 $ 112,485,699
Receivables 555,197,542 543,692,013 453,559,492
Inventories 523,019,559 477,519,865 478,997,710
Other current assets 36,996,360 57,393,212 51,477,895
-------------- --------------------------------
Total current assets 1,191,954,036 1,103,831,418 1,096,520,796
OTHER ASSETS:
Investments 356,546,154 327,213,415 358,081,678
Other 96,116,277 91,880,809 96,674,735
-------------- --------------------------------
Total other assets 452,662,431 419,094,224 454,756,413
PROPERTY PLANT AND EQUIPMENT 893,426,710 847,131,007 915,675,439
-------------- --------------------------------
$2,538,043,177 $2,370,056,649 $2,466,952,648
============== ================================
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Notes payable $ 53,500,000 $ 35,030,548 $ 475,200
Patrons credit balances 42,876,236 39,935,763 41,324,189
Patrons advance payments 107,935,453 154,007,555 147,009,462
Drafts outstanding 33,568,876 26,403,934 26,366,742
Accounts payable and accrued expenses 636,518,268 554,147,504 530,099,592
Patronage dividends and retirements payable 60,019,000 69,300,000 62,262,331
Current portion of long-term debt 39,548,281 27,691,588 13,855,262
-------------- --------------------------------
Total current liabilities 973,966,114 906,516,892 821,392,778
LONG-TERM DEBT 374,869,784 314,527,611 442,655,640
OTHER LIABILITIES 72,113,175 81,901,538 75,800,972
MINORITY INTERESTS IN SUBSIDIARIES 58,603,489 60,550,789 59,926,302
COMMITMENTS AND CONTINGENCIES
CAPITAL 1,058,490,615 1,006,559,819 1,067,176,956
-------------- --------------------------------
$2,538,043,177 $2,370,056,649 $2,466,952,648
============== ================================
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE>
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
--------------------------------
1997 1998
---- ----
<S> <C> <C>
REVENUES:
Sales:
Grain and oilseed $1,030,047,706 $ 810,722,850
Petroleum products 414,947,841 343,747,507
Agronomy 138,672,929 91,231,145
Processed grain and oilseed 130,769,655 145,644,623
Feed and farm supplies 126,568,160 126,906,519
--------------------------------
1,841,006,291 1,518,252,644
Patronage dividends 7,419,761 14,042,100
Other revenues 19,067,081 18,518,541
--------------------------------
1,867,493,133 1,550,813,285
--------------------------------
COSTS AND EXPENSES:
Cost of good sold 1,780,171,256 1,485,322,219
Marketing, general and administrative 29,586,496 31,105,355
Interest 8,197,413 12,303,315
Minority Interests 5,461,750 3,251,022
--------------------------------
1,823,416,915 1,531,981,911
--------------------------------
EARNINGS BEFORE INCOME TAXES 44,076,218 18,831,374
INCOME TAXES 8,865,000 2,895,000
--------------------------------
NET EARNINGS $ 35,211,218 $ 15,936,374
================================
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE>
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
-------------------------------
1997 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 35,211,218 $ 15,936,374
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 18,313,845 20,551,534
Noncash net (income) loss from joint ventures (4,571,338) 8,502,146
Noncash portion of patronage dividends received (5,183,080) (9,305,325)
Gain on sale of property, plant and
equipment (1,010,392) (458,176)
Changes in operating assets and liabilities:
Receivables 60,703,797 102,666,975
Inventories 59,467,737 44,021,849
Prepaid expenses, deposits and other 76,209 (17,211,995)
Patrons credit balances 15,404,252 (1,552,047)
Patrons advance payments 3,015,614 39,074,009
Accounts payable, accrued expenses,
drafts outstanding and other (55,390,055) (109,933,013)
-------------------------------
Total adjustments 90,826,589 76,355,957
-------------------------------
Net cash provided by operating
activities 126,037,807 92,292,331
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property, plant and
equipment 2,379,486 824,495
Investments redeemed 2,162,281 390,890
Acquisition of property, plant and equipment (32,764,509) (41,152,399)
Changes in notes receivable (975,634) 272,313
Investments 3,956,318 (1,591,953)
Other 734,755 327,127
-------------------------------
Net cash used in investing activities (24,507,303) (40,929,527)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of notes payable (113,347,307) (53,024,800)
Long-term debt borrowings 359,077,740
Principal payments on long-term debt (9,876,230) (317,219,868)
Principal payments under capital lease obligations (4,874,956) (8,970)
Redemptions of equity (2,152,613) (4,441,782)
-------------------------------
Net cash used in financing
activities (130,251,106) (15,617,680)
-------------------------------
(DECREASE) INCREASE IN CASH (28,720,602) 35,745,124
CASH, BEGINNING OF PERIOD 53,946,930 76,740,575
-------------------------------
CASH, END OF PERIOD $ 25,226,328 $ 112,485,699
===============================
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE>
CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ACCOUNTING POLICIES
The unaudited consolidated statements of earnings for the three-month period
ended August 31, 1998 and 1997, reflect, in the opinion of management of Cenex
Harvest States Cooperatives (the Company), all normal, recurring adjustments
necessary for a fair statement of the results of operations for the interim
periods. The results of operations for any interim period are not necessarily
indicative of results for the full year. The consolidated balance sheet data as
of May 31, 1998 was derived from audited consolidated financial statements but
does not include all disclosures required by generally accepted accounting
principles.
The unaudited consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
Reclassifications have been made to the prior year's financial statements to
conform to the current year presentation.
NOTE 2. RECEIVABLES
<TABLE>
<CAPTION>
May 31, August 31, August 31,
1998 1997 1998
------------- -------------------------------
<S> <C> <C> <C>
Trade ................................ $ 540,215,491 $ 513,481,922 $ 436,869,609
Elevator accounts .................... 23,478,016 45,072,095 36,390,250
Other ................................ 15,691,171 10,219,285 3,614,191
------------- -------------------------------
579,384,678 568,773,302 476,874,050
Less allowance for losses .......... (24,187,136) (25,081,289) (23,314,558)
------------- -------------------------------
$ 555,197,542 $ 543,692,013 $ 453,559,492
============= ===============================
</TABLE>
NOTE 3. INVENTORIES
<TABLE>
<CAPTION>
May 31, August 31, August 31,
1998 1997 1998
------------- -------------------------------
<S> <C> <C> <C>
Petroleum products ................... $ 208,055,542 $ 223,637,957 $ 178,792,039
Grain and oilseed .................... 148,381,119 134,345,410 152,874,078
Agronomy ............................. 82,167,871 69,422,844 80,029,854
Processed grain and oilseed products . 37,543,688 22,147,222 37,463,894
Feed and Farm supplies ............... 46,871,339 27,966,432 29,837,845
------------- -------------------------------
$ 523,019,559 $ 477,519,865 $ 478,997,710
============= ===============================
</TABLE>
NOTE 4. COMPREHENSIVE INCOME
As of June 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting of Comprehensive Income" (SFAS 130). SFAS 130
establishes new rules for the reporting of comprehensive income and its
components. The adoption of SFAS 130 had no impact on the Company's net income.
SFAS 130 requires unrealized gains and losses on the Company's
available-for-sale securities as well as the Company's charge to equity related
to its pension liability to be included as components of other comprehensive
income.
During the three months ended August 31, 1998 and 1997, total comprehensive
income amounted to $14,641,974 and $35,211,218, respectively. Accumulated other
comprehensive income (loss) at August 31, 1998 and 1997 and May 31, 1998 was
$(99,465), $1,281,207 and $1,194,935, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Pursuant to a Plan of Combination dated May 29, 1998 (the Plan of
Combination), CENEX, Inc. (Cenex) and Harvest States Cooperatives combined
through merger on June 1, 1998 (the Combination) with Harvest States the
surviving corporation. In accordance with the Plan of Combination, the Articles
of Incorporation and bylaws of Harvest States Cooperatives were restated and the
name Harvest States Cooperatives was changed to "Cenex Harvest States
Cooperatives" (the Company).
As a result of the Combination, the Company has changed its fiscal year to
August 31, and is filing this Form 10-Q Transition Report under Rule 15
(d)(10)(c) for the three-month period ended August 31, 1998.
As a result of the Combination, each holder of common stock of Cenex became
a member of Cenex Harvest States Cooperatives, to the extent eligible for
membership, and all equity interests of Cenex were determined and exchanged for
equal equity interests in Cenex Harvest States Cooperatives at its stated dollar
amount on a dollar for dollar basis as more thoroughly set forth in the Plan of
Combination, a copy of which was filed as part of the Company's Form 8-K dated
June 10, 1998.
This Combination has been accounted for as a pooling of interest and as a
result all comparative financial information has been restated to include the
financial statements of Cenex and Harvest States.
Effective June 1, 1998 the Company adopted Statement of Financial Accounting
Standards (SFAS) 130, which establishes standards for reporting and display of
comprehensive income and its components in a full set of general financial
statements. See notes to the consolidated financial statements for disclosures
relative to this Standard.
In June, 1997, the Financial Accounting Standards Board (FASB) issued SFAS
131, Disclosures about Segments of an Enterprise and Related Information, which
relates to financial reporting of operating or business segments of a company.
The new standard is effective for fiscal years beginning after December 15,
1997. Disclosures relative to SFAS 131 are not required for interim periods in
the initial year of application. Management is currently evaluating this new
standard and has not yet determined its applicability or impact on the
presentation of the Company's financial statements.
<PAGE>
In June 1998, the FASB issued SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, which relates to the accounting for
derivative transactions and hedging activities. This new standard is effective
for years beginning after June 15, 1999. While management does not believe this
standard will materially impact financial results of the Company, it is
currently evaluating the reporting requirements under this new standard.
The Year 2000 issue is the result of computer systems being written using
two digits rather than four to define the applicable year. Any of the computer
programs used by the Company that have date-sensitive software may recognize a
date using "00" for the year 1900 rather than as the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations
including an inability to process transactions or engage in similar normal
business activities. Furthermore, should other companies or entities with whom
the Company has a supplier or a customer relationship encounter business
disruption because of the year 2000 issue, the Company in turn could experience
disruption of normal business processes and as a result incur additional costs
or loss of revenue.
In preparation for the Year 2000, the Company has reviewed the primary
internally-developed software programs used within the divisions and defined
business units comprising the Company before the June 1, 1998 merger with Cenex.
Appropriate changes were made to that software to accommodate the Year 2000. In
addition, the Company has engaged an information technology consulting firm for
the purpose of appraising the Company's Year 2000 readiness, identifying
critical software applications which are not Year 2000 compliant, remediating
such applications, testing corrections to software, developing contingency plans
in the event that all software problems are not corrected by the year 2000, and
assisting with certifications of key supplier's Year 2000 readiness. This Year
2000 plan and action program encompasses all areas of the Company. The Company
will also assess, to the extent practical, embedded technology in its processing
equipment. It is expected that the assessment phase of the project will be
completed by December 31, 1998, and that the remedial portion of the project
will be completed by June 30, 1999. Management believes that the total cost to
the Company to review and correct its own computer systems will not exceed $1
million, of which approximately $300,000 was expended through August 31, 1998.
Based on its assessment, the Company's management presently believes that
problems related to the Year 2000 computer issue will not have a material effect
on operations and financial results. The Company continues to bear some risk
related to the Year 2000 issue if other entities not affiliated with the Company
do not appropriately address their own Year 2000 compliance issues. The Company
has not yet evaluated the full impact of the Year 2000 issue if third-party
vendors and/or customers do not resolve this issue on a timely basis.
Furthermore, a contingency plan has not been completed as of this time, and will
be
<PAGE>
developed after the Company, through its Year 2000 project, identifies the
software applications requiring remediation.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED AUGUST 31, 1998 AND 1997
The Company's consolidated net earnings for the three months ended August
31, 1998 and 1997 were $16,000,000 and $35,200,000, respectively, which
represents a $19,200,000 (55%) decrease for the period ended in 1998. Relatively
low commodity prices had a direct impact on volume at the Company's country
elevator and grain exporting facilities, and influenced demand for crop
protection and plant food products. With reduced volumes in most of the
Company's business operations, gross margins were eroded considerably by fixed
costs.
Consolidated net sales of $1,518,000,000 decreased $323,000,000 (18%) during
the three-month period ended August 31, 1998 compared to the same period in
1997. Grain volume of approximately 230,000,000 bushels during the three months
ended August 31, 1998 declined 27,000,000 bushels compared to 1997. In addition
to decreased volumes, the average weighted sales price for all grains and
oilseeds marketed by the Company declined by 41 cents a bushel. Total grain and
oilseed sales decreased approximately $220,000,000 as a result of these two
factors.
While the gallon sales of refined fuels increased slightly during the
three-month period ended August 31, 1998 compared with the same period in 1997,
a reduced average sales price of 18 cents a gallon resulted in a decline in
sales of approximately $71,000,000 for petroleum products during the 1998 period
compared with 1997.
Wholesale agronomy product sales declined approximately $48,000,000 during
the three months ended August 31, 1998 compared to the same period in 1997, the
result of a 12% decrease in fertilizer volumes, and 10% decrease in the average
per ton sales price of such product.
Processed grain and oilseed sales increased approximately $15,000,000 during
the three months ended August 31, 1998 compared to the same period in 1997. This
change is primarily attributable to increased volume within the Company's
Oilseed Processing and Refining Defined Business Unit, where soymeal sales
volume increased from approximately 105,000 tons during the three months ended
August 31, 1997 to approximately 215,000 tons in 1998. During the three months
ended August 31, 1997, the crushing plant was closed for 41 days to allow for
the installation of new equipment. During the 1998 period, the crushing plant
operated at its normal capacity.
Retail feed and farm supply sales remained essentially unchanged between the
two periods, although sales during the 1998 period represented a decline in
sales relationship to actual retail capacity due to the addition of several
retail locations since the end of the 1997 period.
Cost of goods sold of $1,485,000,000 decreased approximately
<PAGE>
$295,000,000 (17%) during the three months ended August 31, 1998 compared to the
same period in 1997. Reduced volumes and raw material costs in most of the
Company's business activities, as discussed in the sales section of this
analysis, produced most of this reduction in costs. Although the commodity and
other raw material costs which are a component of costs of goods sold changed in
relative proportion to sales dollars, fixed operating costs remain constant
regardless of volume and price activity. This factor contributed to an erosion
in total gross margin of approximately $28,000,000 (46%) during the three months
ended August 31, 1998 compared with the same period in 1997.
Patronage dividends increased approximately $6,600,000 (89%) during the
three months ended August 31, 1998 compared to the same period in 1997 resulting
from higher patronage earnings distributed by cooperative customers and
suppliers.
Other revenue of $18,500,000 decreased $500,000 (3%) for the three months
ended August 31, 1998 compared to the same period in 1997. Earnings from the
Company's nonconsolidated consumer products packaging joint venture decreased
approximately $1,100,000 for the three months ended August 31, 1998 compared to
the same period in 1997. Earnings from the Company's share of a grain exporting
joint venture declined approximately $900,000 during the 1998 period compared to
1997. In addition, the Company experienced a decline in service income at its
export terminals due to reduced bushel volume activity at these locations. These
reductions in other revenues were partially offset by a $2,900,000 increase in
interest income. Because of the relatively low cost of grain during the period
ended August 31, 1998, the Company had no short term borrowing requirements. In
addition, the Company's refinancing program in anticipation of long term capital
requirements, completed in June of 1998, produced temporary cash available for
short term investment.
Marketing, general, and administrative expenses of $31,100,000 for the three
months ended August 31, 1998 increased $1,500,000 (5%) compared to the same
three months ended in 1997. Costs related to the relocation of staff and
consolidation of the business units, and a warranty claim for the re-roofing of
a building which had been part of the Company's capital contribution to the
consumer products packaging joint venture comprised the majority of this
increase.
Interest expense of $12,300,000 for the three months ended August 31, 1998
represents a increase of $4,100,000 (50%) compared to the same period in 1997.
Long-term borrowing to finance the acquisition of property, plant and equipment
generated most of this additional expense. Long-term debt proceeds not yet
expended for fixed assets generated interest income as discussed in the Other
Revenue discussion above, and should be considered as an offset to a portion of
the increase in interest expense.
Minority interest in operations for the three-month periods ended August 31,
1998 and 1997 were $3,250,000 and $5,450,000, respectively. Substantially all of
the minority interest is in National Cooperative
<PAGE>
Refinery Association (NCRA), which operates a refinery near McPherson, Kansas.
The Company owns approximately 75% of that operation.
Income tax expense of $2,900,000 and $8,900,000 for the three-month periods
ended August 31, 1998 and 1997, respectively, resulted in effective tax rates of
15.4% and 20.1%.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS FROM OPERATIONS
Operating activities of the Company used net cash of $92,300,000 and
$126,000,000 for the three months ended August 31, 1998 and 1997,
respectively. Net cash from operating activities during both periods is
primarily attributable to earnings and the reduction of working capital
requirements. Working capital requirements decreased $57,100,00 and $83,300,000
for the three months ended August 31, 1998 and 1997, respectively, thereby
contributing to cash provided by operating activities.
CASH FLOWS FROM INVESTING
Investing activities of the Company used net cash of $40,900,000 during the
three-month period ended August 31, 1998. Expenditures for the acquisition of
property, plant and equipment of $41,200,000 and additional investments in joint
ventures of $1,600,000 were partially offset by proceeds from the disposition of
property, plant and equipment and the redemption of prior investments. Capital
expenditures for the fiscal year beginning on September 1, 1998 are projected to
be approximately $196,000,000.
During the three months ended August 31, 1997, the Company used net cash of
$24,500,000 in its investing activities. Cash used for the acquisition of
property, plant and equipment of $32,800,000 was partially offset by proceeds
received for the disposition of fixed assets of $2,400,000, and cash from
cooperative and joint venture investments of approximately $6,100,000.
CASH FLOWS FROM FINANCING
The Company finances its working capital needs through short-term lines of
credit with the banks for cooperatives and commercial banks. In June, 1998 the
Company established a 364-day credit facility of $400,000,000 and a five-year
revolving facility of $200,000,000, all of which is committed. In addition to
these credit lines, the Company has a 364-day credit facility dedicated to NCRA,
with the St. Paul Bank for Cooperatives in the amount of $52,000,000, all of
which is committed, and a 364-day credit facility dedicated to Swiss Valley
Cooperative, a subsidiary of which the Company owns 60%, with CoBank in the
amount of $750,000, all of which is committed. On August 31, 1998 the Company
had total short-term indebtedness on these various facilities totaling $475,000.
On May 31, 1998, the Company had $53,500,000
<PAGE>
outstanding on its short-term lines of credit. This decrease in short-term
borrowing is primarily attributable to a decrease in grain volume and prices, as
well as to the seasonality of petroleum and agronomy activity.
The Company has in the past financed its long-term capital needs, primarily
for the acquisition of property, plant, and equipment, with long-term loan
agreements through the banks for cooperatives. On May 31, 1998, the Company had
total indebtedness related to these long-term lines of credit of $373,800,000,
of which approximately $36,000,000 represented long-term borrowings by NCRA. In
June, 1998, the Company established a new long-term credit agreement through the
banks for cooperatives whereby the Company repaid $280,200,000 of the loan
balance, and borrowed $134,000,000 on the new long-term facility with the banks
for cooperatives. This new facility commits $200,000,000 of long-term borrowing
capacity to the Company, with repayments through the year 2009. The amount
outstanding on this credit agreement on August 31, 1998 was $134,000,000 with
$66,000,000 remaining available. Regarding the $94,200,000 of long-term
indebtedness not included as part of the refinancing, $36,200,000 was repaid
during the three months ended August 31, 1998, leaving an outstanding balance on
separate facilities of $58,000,000, with payments due through the year 2008.
Also in June 1998, as part of the refinancing program for the merged
operations, the Company issued a private placement with several insurance
companies for long-term debt in the amount of $225,000,000. Repayments will be
made in equal installments of $37,500,000 each in the years 2008 through 2013.
In addition, the Company had long-term indebtedness on May 31, 1998 and
August 31, 1998 of $40,600,000 and $39,500,000, respectively, in the form of
Industrial Revenue Bonds, capitalized leases, and miscellaneous notes payable.
In accordance with the bylaws and by action of the Board of Directors,
annual net earnings from patronage sources are distributed to consenting patrons
following the close of each year and are based on amounts reportable for federal
income tax purposes as adjusted in accordance with the bylaws. In September,
1998, the Company distributed patronage dividends to patrons based upon the
operating results of the former Harvest States portion of the business for its
year ended May 31, 1998. The cash portion of this distribution, deemed by the
Board of Directors to be 80% for Equity Participation Units and 30% for regular
patronage was approximately $15,100,000. The patronage earnings of the former
Cenex portion of the business for the period ended May 31, 1998, and the
patronage earnings resulting from the combined operations for the three months
ended August 31, 1998 will be distributed in early calendar year 1999, and is
expected to be approximately $29,000,000. The cash portion of that distribution,
as authorized by the Board of Directors, will be 80% for Equity Participation
Units and 30% for regular patronage.
<PAGE>
Beginning June 1, 1998, inactive direct members and patrons and active
direct members and patrons age 61 and older on that date continue to be eligible
for patronage certificate redemptions at the age of 72 or death. For active
direct members and patrons who were age 60 or younger on June 1, 1998, and
member cooperatives, equities will be redeemed annually based on a prorata
formula where the numerator is dollars available for such purpose as determined
by the Board of Directors, and the denominator is the sum of the patronage
certificates held by such eligible members and patrons. Total equity
redemptions, related to the May 31, 1998 fiscal year end of the former Harvest
States operating units, the eight-month reporting period of the former Cenex
operating units ended on May 31, 1998, and the three-month period ended August
31, 1998 for the combined operations of Cenex Harvest States Cooperatives, is
expected to be approximately $24,000,000, of which approximately $4,400,000 was
redeemed during the three months ended August 31, 1998. Total equity redemptions
during the three months ended August 31, 1997 were approximately $2,200,000.
<PAGE>
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
ITEM 1. FINANCIAL STATEMENTS
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MAY 31, AUGUST 31, AUGUST 31,
1998 1997 1998
----------- --------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Receivables $32,585,292 $27,236,349 $28,703,118
Inventories 23,758,625 8,597,711 18,569,191
Prepaid expenses and deposits 185,399 2,689,345
----------- --------------------------
Total current assets 56,529,316 38,523,405 47,272,309
PROPERTY, PLANT AND EQUIPMENT 34,952,626 40,840,799 35,596,082
----------- --------------------------
$91,481,942 $79,364,204 $82,868,391
=========== =========== ===========
LIABILITIES AND DEFINED BUSINESS UNIT EQUITY
CURRENT LIABILITIES:
Due to Cenex Harvest States Cooperatives $22,890,878 $15,315,742 $15,071,383
Accounts payable and accrued expenses 10,527,468 10,657,464 9,319,963
----------- --------------------------
Total current liabilities $33,418,346 $25,973,206 $24,391,346
COMMITMENTS AND CONTINGENCIES
DEFINED BUSINESS UNIT EQUITY 58,063,596 53,390,998 58,477,045
----------- --------------------------
$91,481,942 $79,364,204 $82,868,391
=========== ==========================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
----------
1997 1998
---- ----
<S> <C> <C>
REVENUES:
Processed oilseed sales $ 86,349,147 $ 98,919,540
Other revenue 1,204,155 979,807
---------------------------
87,553,302 99,899,347
COSTS AND EXPENSES:
Cost of goods sold 82,461,185 95,169,378
Marketing, general and administrative 1,247,279 1,256,805
Interest 9,451 250,776
---------------------------
83,717,915 96,676,959
---------------------------
EARNINGS BEFORE INCOME TAXES 3,835,387 3,222,388
INCOME TAXES 675,000 525,000
---------------------------
NET EARNINGS $ 3,160,387 $ 2,697,388
===========================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
----------
1997 1998
----- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $ 3,160,387 $ 2,697,388
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 471,819 551,360
Gain on disposal of property,
plant and equipment (456,102)
Changes in operating assets and liabilities:
Receivables 6,933,327 3,882,174
Inventories 14,252,988 5,189,434
Prepaid expenses and deposits (379,182) 185,399
Accounts payable and accrued
expenses (2,783,458) (1,207,505)
--------------------------------
Total adjustments 18,039,392 8,600,862
Net cash provided by --------------------------------
operating activities 21,199,779 11,298,250
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property,
plant and equipment 456,102
Acquisition of property, plant and
equipment (8,227,058) (1,194,816)
--------------------------------
Net cash used in investing activities (7,770,956) (1,194,816)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from Cenex Harvest
States Cooperatives (10,268,436) (7,819,495)
Defined business unit equity distributed (3,160,387) (2,283,939)
Net cash used in --------------------------------
financing activities (13,428,823) (10,103,434)
--------------------------------
INCREASE (DECREASE) IN CASH -- --
CASH, BEGINNING OF PERIOD -- --
--------------------------------
CASH, END OF PERIOD -- --
================================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
OILSEED PROCESSING AND REFINING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES
The unaudited statements of earnings for the three-month period ended August 31,
1998 and 1997, reflect, in the opinion of management of Cenex Harvest States
Cooperatives (the Company), all normal, recurring adjustments necessary for a
fair statement of the results of operations for the interim periods. The results
of operations for any interim period are not necessarily indicative of results
for the full year. The balance sheet data as of May 31, 1998 was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles.
These statements should be read in conjunction with the financial statements and
footnotes included in the Defined Business Unit financial statements for the
year ended May 31, 1998 which is included in the Cenex Harvest States
Cooperatives' Report on Form 10-K dated August 27, 1998, previously filed with
the Commission.
NOTE 2. INVENTORIES
May 31, August 31, August 31,
1998 1997 1998
----------- ---------------------------
(unaudited) (unaudited)
Oilseed .................... $ 6,925,703 $ 1,682,570 $ 712,466
Processed Oilseed Products . 16,832,922 6,915,141 17,856,725
----------- ---------------------------
$23,758,625 $ 8,597,711 $18,569,191
=========== ===========================
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Pursuant to a Plan of Combination dated May 29,1998 (the Plan of
Combination), CENEX, Inc. and Harvest States Cooperatives combined through
merger on June 1, 1998 (the Combination) with Harvest States the surviving
corporation. In accordance with the Plan of Combination, the Articles of
Incorporation and bylaws of Harvest States Cooperatives were restated and the
name of Harvest States Cooperatives was changed to "Cenex Harvest States
Cooperatives" (the Company).
As a result of the Combination, the Company has changed its fiscal year to
August 31, and is filing this Form 10-Q Transition Report under Rule 15
(d)(10)(c) for the three-month period ended August 31, 1998.
RESULTS OF OPERATIONS
Patronage refunds to the Oilseed Processing and Refining Defined Business
Unit holders are calculated on the basis of tax earnings per bushel. Because of
this, the Company believes that the calculation below is an important measure of
the Defined Business Unit's performance.
THREE MONTHS ENDED
AUGUST 31,
----------------------------
1997 1998
----- ----
Pretax Earnings $ 3,835,387 $ 3,222,388
Earnings from purchased oil (1,928,819) (57,794)
Nonpatronage joint venture income (737,836) (975,957)
Book to tax differences (121,409)
----------------------------
Tax basis earnings $ 1,168,732 $ 2,067,228
============================
Bushels Processed 4,607,366 9,467,186
Earnings per Bushel $ 0.254 $ 0.218
============================
Certain operating information pertaining to the Oilseed Processing and
Refining Defined Business Unit is set forth below, as a percentage of sales.
THREE MONTHS ENDED
AUGUST 31,
---------------------
1997 1998
----- ----
Gross Margin percentage 4.50% 3.79%
Marketing, General and Administrative 1.44% 1.27%
Interest 0.01% 0.25%
COMPARISON OF THREE MONTHS ENDED AUGUST 31, 1998 AND 1997
The Oilseed Processing and Refining Defined Business Unit's net earnings of
$2,700,000 for the three months ended August 31, 1998 represents a $500,000
decrease (15%) compared to the same period in 1997. This decrease is primarily
attributable to lower gross margins for refined oil. The average gross margin
per pound on refined oil generated by the Oilseed Processing and Refining
Defined Business Unit during the three months ended August 31, 1998 declined 33%
compared to that margin for the same three-month period of a year ago. The
impact of that reduction in profitability was partially offset by increased
sales volume of soymeal, at an average gross margin per ton 40% higher than that
of a year ago.
Net sales of $98,900,000 for the three-month period ended August 31, 1998
increased by $12,600,000 (15%) compared to the same period in 1997. During the
three months ended August 31, 1997, the crushing portion of the
<PAGE>
plant was shutdown for 41 days to allow for the installation of new equipment.
As a result, soymeal and soyflour sales activity was reduced to approximately
110,000 tons during the 1997 period, compared with almost 230,000 tons during
the current three-month period. While increased processing volume increased
sales dollars, a significant decline of approximately $110 a ton in the sales
price partially offset the volume variance. Together, these factors increased
sales approximately $6,000,000. For the refined oil portion of the business,
volumes were approximately the same in each of the three-month periods, while an
increase in the per pound price of refined soybean oil increased sales
approximately $6,600,000.
Other revenues of $980,000 during the three months ended August 31, 1998
decreased approximately $225,000 (19%) compared to the same period in 1997.
During the 1997 period, the Oilseed Processing and Refining Defined Business
Unit recognized gains on disposal of replaced equipment sold at salvage value of
approximately $450,000. Also included in other revenues for both of the
three-month periods is income from an oilseed joint venture. Income from this
source during the 1998 period exceeded that recognized in the 1997 period by
approximately $240,000.
Cost of goods sold of $95,200,000 for the three months ended August 31, 1998
increased $12,700,000 (15%) compared to the same period ended in 1997. This
change is primarily attributable to the increase in soymeal volume discussed
above in the sales analysis, partially offset by a decline of approximately $2
per bushel in cost of soybeans.
Marketing, general and administrative expenses of $1,250,000 for the three
months ended August 31, 1998 was essentially unchanged from the same period in
1997.
Interest expense for the three months ended August 31, 1998 was $250,000,
compared with $10,000 of a year ago. This $240,000 increase is primarily
attributable to increased average inventory levels during the current period.
During the 1997 period, soybean and processed product inventories were minimal
during the shutdown period discussed above, as were receivables related to the
sale of processed soybean products.
LIQUIDITY AND CAPITAL RESOURCES
The Oilseed Processing and Refining Defined Business Unit's cash
requirements result from capital improvements and from a need to finance
additional inventories and receivables based on increased raw material costs or
levels. These cash needs are expected to be fulfilled by the Company.
CASH FLOWS FROM OPERATIONS
Operating activities for the three months ended August 31, 1998 and 1997,
respectively, provided net cash of $11,300,000 and $21,200,000 due to net
earnings of $2,700,000 and $3,200,000 and decreased working capital requirements
of $8,000,000 and $17,400,000, respectively.
CASH FLOWS FROM INVESTING
The Oilseed Processing and Refining Defined Business Unit used cash of
$1,200,000 and $8,200,000 during the three months ended August 31, 1998 and
1997, respectively, for the purchase of property, plant and equipment. During
the 1997 period, the Oilseed Processing and Refining Defined Business Unit
received cash of approximately $450,000 as proceeds for replaced equipment sold
at salvage value.
During the second quarter of the fiscal year ended May 31, 1998 the Oilseed
Processing and Refining Defined Business Unit received cash of approximately
$10,267,000 for the sale of soybean processing equipment. Most of the equipment
was purchased during the three months ended August 31, 1997, then entered into a
leaseback transaction.
CASH FLOWS FROM FINANCING
The Defined Business Unit's financing activities are coordinated
<PAGE>
through the Company's cash management department. Cash from all of the Company's
operations is deposited with the Company's cash management department and
disbursements are made centrally. As a result, the Defined Business Unit has a
zero cash position. Financing is available from the Company to the extent of the
Company's working capital position and corporate loan agreements with various
banks, and cash requirements of all other Company operations.
Working capital requirements for each division and Defined Business Unit of
the Company are reviewed on a periodic basis, and could potentially be
restricted based upon management's evaluation of the prevailing business
conditions and availability of funds.
The Oilseed Processing and Refining Defined Business Unit had debt
outstanding to the Company of $15,100,000 on August 31, 1998 compared with
$22,900,000 on May 31, 1998. These interest bearing balances reflect working
capital and fixed asset financing requirements.
In July 1998 the Company announced its site selection for the construction
of a new soybean processing and refining plant in southwestern Minnesota. The
facility, to be constructed near the city of Fairmont, Minnesota, is expected to
cost between $60 million and $90 million. The precise configuration and size of
the facility has yet to be determined. The new facility may be financed with
debt, open membership equity, additional equity participation units, or a
combination of these financing alternatives.
As a result of the year end change (from May 31 to August 31) as noted at
the beginning of this discussion, the total net income from the Defined Business
Unit will be withdrawn by the Company from the Defined Business Unit except to
the extent that patronage dividends are not paid in cash and are retained in the
Business Unit as equity. Such dividends retained as equity from Equity
Participation Unit share of earnings are expected to be approximately $4,000 and
will be matched with equity on behalf of the Company's open membership in
proportion to Non-Equity Participation Unit bushels processed of approximately
$410,000.
<PAGE>
WHEAT MILLING DEFINED BUSINESS UNIT
ITEM 1. FINANCIAL STATEMENTS
WHEAT MILLING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MAY 31, AUGUST 31, AUGUST 31,
1998 1997 1998
------------ ----------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Receivables $ 35,757,497 $ 38,279,324 $ 35,227,643
Due from Cenex Harvest States Cooperatives 8,838,871
Inventories 13,785,062 13,549,511 18,894,703
Prepaid expenses and deposits 393,085 303,555 429,771
------------ ----------------------------
Total current assets 49,935,644 60,971,261 54,552,117
OTHER ASSETS 10,747,876 11,547,885 10,481,206
PROPERTY, PLANT AND EQUIPMENT 85,627,365 70,472,298 97,428,174
------------ ----------------------------
$146,310,885 $142,991,444 $162,461,497
============ ============================
LIABILITIES AND DEFINED BUSINESS UNIT EQUITY
CURRENT LIABILITIES:
Due to Cenex Harvest States Cooperatives $ 16,738,969 $ 33,238,251
Accounts payable and accrued expenses 10,404,665 $ 17,868,851 12,669,809
Current portion of long-term debt 10,005,000 10,005,000 10,005,000
------------ ----------------------------
Total current liabilities 37,148,634 27,873,851 55,913,060
LONG-TERM DEBT 41,204,270 48,520,521 38,515,520
COMMITMENTS AND CONTINGENCIES
DEFINED BUSINESS UNIT EQUITY 67,957,981 66,597,072 68,032,917
------------ ----------------------------
$146,310,885 $142,991,444 $162,461,497
============ ============================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
WHEAT MILLING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
----------
1997 1998
---- ----
<S> <C> <C>
REVENUES:
Processed grain sales $ 44,420,508 $ 46,914,301
Other income 286,767
-----------------------------
44,707,275 46,914,301
COSTS AND EXPENSES:
Cost of goods sold 40,570,296 43,738,152
Marketing, general and administrative 1,641,583 2,065,806
Interest 1,079,412 843,564
-----------------------------
43,291,291 46,647,522
-----------------------------
EARNINGS BEFORE INCOME TAXES 1,415,984 266,779
INCOME TAXES 125,000 25,000
-----------------------------
NET EARNINGS $ 1,290,984 $ 241,779
=============================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
WHEAT MILLING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
----------
1997 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $ 1,290,984 $ 241,779
Adjustments to reconcile net earnings
to net cash used in operating activities:
Depreciation and amortization 1,218,342 1,257,050
Changes in operating assets and liabilities:
Receivables (11,418,552) 529,854
Inventories (1,277,896) (5,109,641)
Prepaid expenses and deposits 537,175 (36,686)
Accounts payable and accrued
expenses 8,375,446 2,265,144
-----------------------------
Total adjustments (2,565,485) (1,094,279)
Net cash used in operating -----------------------------
activities (1,274,501) (852,500)
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and
equipment (2,293,449) (12,791,189)
-----------------------------
Net cash used in investing activities (2,293,449) (12,791,189)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments to) borrowings from
Cenex Harvest States Cooperatives (31,252,316) 16,499,282
Capital from Cenex Harvest States Cooperatives 38,800,000
Principal payments on long-term debt (2,688,750) (2,688,750)
Defined business unit equity distributed (1,290,984) (166,843)
Net cash provided by financing -----------------------------
activities 3,567,950 13,643,689
-----------------------------
INCREASE (DECREASE) IN CASH -- --
CASH, BEGINNING OF PERIOD -- --
-----------------------------
CASH, END OF PERIOD -- --
=============================
</TABLE>
See notes to financial statements (unaudited)
<PAGE>
WHEAT MILLING DEFINED BUSINESS UNIT
(A DEFINED BUSINESS UNIT OF CENEX HARVEST STATES COOPERATIVES)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES
The unaudited statements of earnings for the three-month period ended August 31,
1998 and 1997, reflect, in the opinion of management of Cenex Harvest States
Cooperatives (the Company), all normal, recurring adjustments necessary for a
fair statement of the results of operations for the interim periods. The results
of operations for any interim period are not necessarily indicative of results
for the full year. The balance sheet data as of May 31, 1998 was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles.
These statements should be read in conjunction with the financial statements and
footnotes included in the Defined Business Unit's financial statements for the
year ended May 31, 1998 which is included in the Cenex Harvest States
Cooperatives' Report on Form 10-K dated August 27, 1998, previously filed with
the Commission.
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Pursuant to a Plan of Combination dated May 29, 1998 (the Plan of
Combination), CENEX, Inc. and Harvest States Cooperatives combined through
merger on June 1, 1998 (the Combination) with Harvest States the surviving
corporation. In accordance with the Plan of Combination, the Articles of
Incorporation and bylaws of Harvest States Cooperatives were restated and the
name of Harvest States Cooperatives was changed to "Cenex Harvest States
Cooperatives" (the Company).
As a result of the Combination, the Company has changed its fiscal year to
August 31, and is filing this Form 10-Q Transition Report under Rule 15
(d)(10)(c) for the three-month period ended August 31, 1998.
RESULTS OF OPERATIONS
Patronage refunds to the Wheat Milling Defined Business Unit holders are
calculated on the basis of tax earnings per bushel. Because of this, the Company
believes that the calculation below is an important measure of the Defined
Business Unit's performance.
THREE MONTHS ENDED
AUGUST 31,
---------------------------
1997 1998
---- ----
Pretax Earnings $ 1,415,984 $ 266,779
Book to tax differences 103,694
---------------------------
Tax basis earnings $ 1,415,984 $ 370,473
===========================
Bushels Milled 7,099,685 8,156,304
Earnings per Bushel $ 0.199 $ 0.045
===========================
Certain operating information pertaining to the Wheat Milling Defined
Business Unit is set forth below, as a percentage of sales.
THREE MONTHS ENDED
AUGUST 31,
--------------------------
1997 1998
----- ----
Gross Margin percentage 8.67% 6.77%
Marketing and Administrative 3.70% 4.40%
Interest 2.43% 1.80%
COMPARISON OF THREE MONTHS ENDED FEBRUARY 28, 1998 AND 1997
The Wheat Milling Defined Business Unit's net earnings of $242,000 for the
three-month period ended August 31, 1998 decreased $1,049,000 (81%) compared to
the same period in 1997. Commencing in June and continuing throughout the
period, the Defined Business Unit began conversion of a semolina line at the
Huron mill to hard wheat bakery flour. This disruption of production resulted in
a 35% decline in volume, compared to the same period in 1997. While fixed costs
at the facility remained relatively constant with the prior period, revenues net
of raw material costs declined significantly. This situation caused operating
earnings to decline approximately $1,400,000. This decline in profit
contribution from the Huron mill was partially offset by increased
<PAGE>
volume from the other mills. The Huron conversion project is anticipated to be
completed in late October 1998 and until then, will negatively impact
profitability.
Net sales for the three months ended August 31, 1998 of $46,900,000
increased $2,500,000 (6%) compared to the same period in 1997. Increased sales
volume for all products of approximately 600,000 hundred weights, offset by a 76
cent per hundred weight average reduction in sales price produced this increase
in sales dollars. The increased sales volume was primarily through the Houston
and Rush City mills, offset by a decline in production at the Huron mill. The
Houston mill was in its early startup period last year at this time, while the
Rush City mill was not operating in June and early July of last year due to a
shortage of business. The Huron mill operated at approximately 65% of its normal
volume during the three months ended August 31, 1998 as one of the Semolina
milling lines at that facility was in the process of being converted to hard
wheat bakery flour milling capacity.
Cost of goods sold of $43,700,000 for the three months ended August 31,
1998, increased $3,200,000 (8%) compared to the same period in 1997. The raw
material component of cost of goods sold increased $3,000,000 for the 1998
period compared with 1997. Increased volume contributed $5,400,000 to this
increase, partially offset by $2,400,000 in lower per bushel costs. Mill
expenses were essentially the same between the two periods.
Marketing, general and administrative expenses were $2,100,000 during the
three months ended August 31, 1998, an increase of $425,000 (26%) compared to
1997. This increase is primarily attributable to additional staffing and system
expansion costs related to the Houston mill, and in anticipation of future
volumes from the Mt. Pocono mill.
During the three months ended August 31, 1998, the Wheat Milling Defined
Business Unit incurred interest expense of $840,000. During the same period of a
year ago, the Wheat Milling Defined Business Unit generated interest income of
approximately $300,000 on its working capital account with Cenex Harvest States,
which is attributable to the capital contribution of $38,800,000 made by the
Company on June 1, 1997 for the purpose of constructing the Mt. Pocono,
Pennsylvania mill. During the three months ended August 31, 1997, the Wheat
Milling Defined Business Unit incurred interest expense on its long-term debt of
$1,100,000, for a net interest expense during the period of approximately
$800,000. While the working capital credit balance which generated last year's
interest income has been depleted as construction costs for Mt. Pocono mill were
paid, resulting interest costs have been capitalized as part of the new mill
fixed asset. Consequently, net interest expense for the two periods are
essentially unchanged.
LIQUIDITY AND CAPITAL RESOURCES
The Wheat Milling Defined Business Unit's cash requirements result from
capital improvements and from a need to finance additional inventories and
receivables based on increased raw material cost and levels.
In September 1997, the Wheat Milling Defined Business Unit began
construction of a mill at Mt. Pocono, Pennsylvania. As discussed in the
registration statement for the original equity participation unit offering, this
mill is to be financed with equity from the Company. Anticipated cost is
$41,350,000, of which approximately $26,200,000 was expended through August 31,
1998. Projected completion of the mill is in the spring of 1999.
In June of 1998, the Wheat Milling Defined Business Unit began conversion of
a semolina line at the Huron Mill to hard wheat bakery flour production.
Anticipated cost of this project is $2,400,000, with completion anticipated
<PAGE>
in late October of 1998.
The Cenex Harvest States Board of Directors has authorized the purchase of
land near Orlando, Florida as the site for a new mill. The Board has authorized
expenditures up to $1,755,000 for the cost of the land and an access road. Plans
for this mill are subject to due diligence, routine regulatory review and cost
verification. Anticipated costs for this mill are approximately $35,000,000, and
may be financed with debt, open member equity, additional equity participation
units, or a combination of these financing alternatives.
Commencement of operations at a particular facility involves increased
working capital to fund required inventories and receivables related to
increased sales. New facilities may not be immediately profitable, which would
then have a negative impact on cash flows and may require additional financing
as a result. In addition, increased carrying value of inventories and
receivables because of higher prices, increased receivables because of slow
collections or increased inventories above historical levels requires additional
financing.
CASH FLOWS FROM OPERATIONS
Operating activities for the three months ended August 31, 1998 and 1997,
respectively, used net cash of $850,000 and $1,300,000. For the three-month
period ended in 1998, net cash was provided by earnings of $240,000 and noncash
depreciation and amortization of $1,250,000 were offset by increased working
capital requirements of $2,400,000. For the same period ended in 1997, net cash
was provided by earnings of $1,300,000 and noncash depreciation and amortization
of $1,200,000, offset by increased working capital requirements of $3,800,000.
CASH FLOWS USED FOR INVESTING
Cash expended for the acquisition of property, plant and equipment during
the three-month periods ended August 31, 1998 and 1997 totaled $12,800,000 and
$2,300,000, respectively. The 1998 increase is related to the construction of
Mt. Pocono, Pennsylvania discussed above.
CASH FLOWS FROM FINANCING
The Wheat Milling Defined Business Unit's financing activities are
coordinated through the Company's cash management department. Cash from all of
the Company's operations is deposited with the Company's cash management
department and disbursements are made centrally. As a result, the Wheat Milling
Defined Business Unit has a zero cash position. Financing is available from the
Company to the extent of the Company's working capital position and corporate
loan agreements with various banks and cash requirements of all other Company
operations.
Working capital requirements for each division and Defined Business Unit of
the Company are reviewed on a periodic basis, and could potentially be
restricted based upon management's evaluation of the prevailing business
conditions and availability of funds.
Short term debt outstanding and payable to the Company on August 31, 1998
was $33,200,000 compared to $16,700,000 on May 31, 1998. This increase is
primarily due to payments for Mount Pocono capital expenditures, for which the
Company had contributed $38,800,000 of capital to this account on June 1, 1997.
On May 31, 1998 the Wheat Milling Defined Business Unit had long-term
<PAGE>
debt of $51,200,000 which was incurred for the acquisition, expansion and
construction of its various plants since 1990. During the three months ended
August 31, 1998 and 1997, respectively, this balance was reduced by repayments
of $2,700,000.
As a result of the year end change (from May 31 to August 31) as noted at
the beginning of this discussion, the total net income from the Wheat Milling
Defined Business Unit will be withdrawn by the Company from the Wheat Milling
Defined Business Unit except to the extent that patronage dividends are not paid
in cash and are retained in the Business Unit as equity. Such dividends retained
as equity from Equity Participation Unit share of earnings are expected to be
approximately $2,300 and will be matched with equity on behalf of the Company's
open membership in proportion to Non-Equity Participation Unit bushels milled of
approximately $72,600.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
------- -----------
10.20 Limited Liability Company Agreement of Country Energy, LLC
dated June 29, 1998 between Cenex Harvest States
Cooperatives and Farmland Industries, Inc.
10.21 Addendum to Limited Liability Company Agreement of Country
Energy, LLC dated July 23, 1998 by Cenex Harvest States
Cooperatives and Farmland Industries, Inc.
10.22 $225,000,000 Note Agreement (Private Placement Agreement)
dated as of June 19, 1998 among Cenex Harvest States
Cooperatives and each of the Purchasers of the Notes.
10.23 $400 Million 364-Day and $200 Million 5-Year Revolving Loan
Credit Agreement dated as of June 1, 1998 among Cenex
Harvest States Cooperatives, CoBank, ACB, St. Paul Bank for
Cooperatives, et al., including Exhibit 2.4 (form of 364-Day
Facility Note) and Exhibit 3.4 (form of 5-Year Note).
10.24 $200 Million Term Loan Credit Agreement dated as of June 1,
1998 among Cenex Harvest States Cooperatives, CoBank, ACB,
and St. Paul Bank for Cooperatives, including Exhibit 2.4
(form of $200 Million Promissory Note).
10.25 Employment Agreement dated June 1, 1998 between John D.
Johnson and Cenex Harvest States Cooperatives.
10.26 Employment Agreement dated June 1, 1998 between Noel K.
Estenson and Cenex Harvest States Cooperatives.
99 Cautionary Statement
27 Financial Data Schedule (EDGAR filing only)
(b) Reports on Form 8-K
Form 8-K filed June 10, 1998 regarding the merger of Harvest States
Cooperatives and Cenex, Inc.
Form 8-K/A filed August 13, 1998 to amend Item 7 of Form 8-K filed June 10,
1998. The filing includes financial information of Cenex, Inc. and
pro-forma financial information of Cenex Harvest States Cooperatives.
<PAGE>
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 thereunto duly authorized.
CENEX HARVEST STATES COOPERATIVES
(Registrant)
October 14, 1998 /s/ T. F. Baker
---------------- ---------------
(Date) T. F. Baker
Executive Vice-President - Finance & Administration
EXHIBIT 10.20
LIMITED LIABILITY COMPANY AGREEMENT
OF
COUNTRY ENERGY, LLC
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1 Terms Defined in the Act 1
1.2 Terms Defined Herein 1
1.3 Other Definitional Provisions. 13
ARTICLE II BUSINESS PURPOSE 13
2.1 Name; Business Purpose 13
2.2 Powers 14
2.3 Registered Office and Registered Agent 14
2.4 Amendment of the Certificate 14
2.5 Effective Date 14
2.6 Agreement to Finalize Certain Operative Documents 14
2.7 Due Diligence 14
2.8 Liability of Members 15
2.9 Authority; Investment Intent; Restriction Against Transfer 15
2.10 Business Plan 15
2.11 Risk Management Policy 16
2.12 Representations Regarding 1997 Sales Figures 16
ARTICLE III CAPITALIZATION 16
3.1 Initial Contributions 16
3.2 Capital Calls 17
3.3 Defaults on Initial Contributions or Capital Calls 17
3.4 Capital Accounts. 19
3.5 Capital Withdrawal Rights, Interest and Priority 20
3.6 Loans 20
ARTICLE IV ALLOCATIONS AND DISTRIBUTIONS 21
4.1 Non-Liquidating Cash Distributions 21
4.2 Liquidation Distributions 21
4.3 Profits, Losses and Distributive Shares of Tax Items 22
4.4 Allocation of Income, Loss and Credits 22
4.5 Special Rules Regarding Allocations 22
4.6 Preferred Return 25
4.7 Withholding of Distributions 25
4.8 No Priority 25
4.9 Tax Withholding 25
4.10 Reserves 25
4.11 Setoff 26
ARTICLE V MANAGEMENT AND OPERATIONS 26
<PAGE>
5.1 Management 26
5.2 Co-Presidents/President 27
5.3 Officers and Employees 28
5.4 Agency 29
5.5 Agency Fee 29
5.6 Sales Split 29
5.7 Exchange Agreements 31
5.8 Management Services 31
5.9 Lease of Office Space 31
5.10 Contracts with Members or their Affiliates 31
5.11 Other Business Ventures 31
5.12 Competition 32
5.13 Confidentiality 32
5.14 Truck Transportation 32
5.15 Claims Arising from the Sale of Energy Products 32
5.16 Execution of Documents Filed with Secretary of State of
Delaware 33
5.17 Liability and Indemnification 33
ARTICLE VI ACCOUNTING AND BANK ACCOUNTS 36
6.1 Fiscal Year 36
6.2 Books and Records 37
6.3 Financial Reports 37
6.4 Tax Returns and Elections; Tax Matters Member 37
6.5 Section 754 Election 38
6.6 Bank Accounts 38
ARTICLE VII TRANSFERS OF INTERESTS 38
7.1 Prohibition on Transfer 38
7.2 Involuntary Transfers 38
7.3 Substitute Member 39
7.4 Binding on Transferee 39
ARTICLE VIII DISPUTE RESOLUTION 39
8.1 General Management Issues 39
8.2 Business Issues and Legal Issues 40
ARTICLE IX DISSOLUTION AND TERMINATION 41
9.1 Events Causing Dissolution 41
9.2 Effect of Dissolution 43
9.3 Plan of Liquidation 43
9.4 Application of Proceeds 44
9.5 Continuing Obligations 44
ARTICLE X MISCELLANEOUS 44
10.1 Title to Assets 44
<PAGE>
10.2 Nature of Interest in the Company 44
10.3 Notices 44
10.4 Waiver of Default 44
10.5 No Third Party Rights 45
10.6 Entire Agreement 45
10.7 Amendments to this Agreement 45
10.8 Severability 45
10.9 Binding Agreement 45
10.10 Headings 45
10.11 Counterparts 45
10.12 Governing Law 46
SCHEDULES:
Schedule 2.12(a)
Schedule 2.12(b)
Schedule 5.6(d)
EXHIBITS:
Exhibit A Asset Contribution Agreements
Exhibit B Management Services Agreements
Exhibit C Personnel Lease Agreements
Exhibit D Agency Agreements
Exhibit E Exchange Agreements
Exhibit F Office Lease Agreements
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
COUNTRY ENERGY, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT is entered into as of June 29,
1998, by Cenex Harvest States Cooperatives, a Minnesota cooperative corporation
("CHS") and Farmland Industries, Inc., a Kansas cooperative corporation
("Farmland") (each, a "Member," and collectively, the "Members").
RECITAL
The Members have caused Country Energy, LLC (the "Company") to be
formed under the Delaware Limited Liability Company Act for the following
purposes: (a) to serve as the exclusive agent for the Members for (i) the
marketing, sales and distribution of Energy Products to Customers, (ii) the
invoicing and collection of receivables arising from the sale of Energy Products
to Customers and (iii) the purchasing of Energy Products; and (b) to perform all
acts necessary and incidental to the foregoing. The Members adopt this Agreement
as the Limited Liability Company Agreement of the Company as contemplated in the
Delaware Limited Liability Company Act.
AGREEMENT
In consideration of the foregoing and the mutual covenants and promises
contained herein, the Members agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined in the Act. Unless defined specifically herein, terms
relating to a limited liability company shall have the meanings given in the
Delaware Limited Liability Company Act.
1.2 Terms Defined Herein. As used herein, the following terms shall
have the following meanings, unless the context otherwise specifies:
"ACT" means the Delaware Limited Liability Company Act, as
amended from time to time.
<PAGE>
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to each
Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the relevant fiscal year, after giving effect to the
following adjustments: (i) increased for any amounts such Member is
unconditionally obligated to restore and the amount of such Member's
share of Company Minimum Gain and Member Minimum Gain after taking into
account any changes during such year; and (ii) reduced by the items
described in Treasury Regulations ss. 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
"AFFILIATE" of a Person means an entity which controls, is
controlled by or is under common control with such Person.
"AGENCY AGREEMENT" means an agreement between the Company and
a Member in the form attached as Exhibit D, pursuant to which the
Company will serve as the exclusive agent for the Member for (i) the
marketing, sales and distribution of Energy Products to Customers, (ii)
the invoicing and collection of receivables arising from the sale of
Energy Products to Customers, and (iii) the purchasing of Energy
Products.
"AGENCY FEE" means the fee to be paid to the Company by each
Member as compensation for serving as such Member's agent pursuant to
the Agency Agreement.
"AGENCY FEE PERCENTAGE" means, for each fiscal year or other
period, with respect to a Member, the total amount of Agency Fees
payable to the Company by such Member with respect to such period
divided by the total amount of Agency Fees payable to the Company by
all Members with respect to such period, multiplied by 100.
"AGREEMENT" means this Limited Liability Company Agreement of
Country Energy, LLC, as amended from time to time.
"ANNUAL CAPITAL BUDGET" shall have the meaning set forth in
Section 2.10.
"ANNUAL OPERATING BUDGET" shall have the meaning set forth in
Section 2.10.
"ASSET CONTRIBUTION AGREEMENT" means an agreement between the
Company and a Member in the form attached hereto as Exhibit A, pursuant
to which such Member shall make its Initial Contribution to the
Company.
"AVAILABLE CASH" means the aggregate amount of cash on hand or
in bank, money market or similar accounts of the Company as of the end
of each fiscal year derived from any source (other than Capital
Contributions and Liquidation Proceeds) that the Members determine is
available for Distribution to the Members after taking into account any
amount required or appropriate to maintain a reasonable amount of
Reserves.
<PAGE>
"BANKRUPTCY" means, with respect to any Person, the entry of
an order for relief against such Person or the voluntary filing for
relief by such Person under the Federal Bankruptcy Code.
"BRANDED FUEL" means Refined Fuel that is sold by a Member in
truckload or smaller quantities (i) to members of such Member on a
patronage basis, (ii) to AMPRIDE non-member dealers or (iii) to CHS
owned or direct brand non-member dealers.
"BRANDED FUEL BASE FEE" means the fee to be paid to the
Company by each Member for each gallon of Branded Fuel sold by the
Company as an agent for such Member, which fee shall be as set forth in
the Business Plan.
"BRANDED LUBE OIL" means gallons of Lube Oil packaged and sold
in a container bearing the Cenex or Farmland logo and bulk gallons of
Lube Oil sold under the Cenex or Farmland logo, irrespective of
patronage treatment by the Members; provided, however, that for
purposes of this Agreement, the SF Services logo will be considered a
Farmland logo in the event that the proposed merger between Farmland
and SF Services, Inc. is consummated.
"BRANDED LUBE OIL BASE FEE" means the fee to be paid to the
Company by each Member for each gallon of Branded Lube Oil sold by the
Company as an agent for such Member, which fee shall be as set forth in
the Business Plan.
"BUSINESS DAY" means any day other than: (a) a Saturday or
Sunday; (b) any of the following holidays: Christmas Day, New Year's
Day, Memorial Day Holiday, Independence Day, Labor Day Holiday,
Thanksgiving Day and the Friday following Thanksgiving Day; or (c) with
respect to a Member receiving any Notice required or permitted
hereunder, a day on which such Member's offices are closed.
"BUSINESS ISSUE" means a dispute between the Members that
involves the failure to reach agreement with respect to (i) a Business
Plan, or any portion thereof (including an Annual Operating Budget or
an Annual Capital Budget), or (ii) the election of the Co-Presidents or
the President.
"BUSINESS ISSUE EXPIRATION DATE" means, in the event a
Business Issue shall arise during the term of this Agreement, that date
on which the previous agreement between the Members with respect to
such Business Issue expires, which shall be, as applicable, the
expiration date of the then current Business Plan or the date that is
three years from the date the Co-Presidents or the President was last
elected by the Members.
"BUSINESS PLAN" means any business plan adopted by the Members
pursuant to Section 2.10.
"CAPITAL ACCOUNT" means the separate account established and
maintained by the Company for each Member pursuant to Section 3.4.
<PAGE>
"CAPITAL CALL" shall have the meaning set forth in Section
3.2.
"CAPITAL CONTRIBUTION" means, with respect to each Member, the
total amount of cash and the Fair Value of Contributed Assets
contributed by such Member (or such Member's predecessor-in-interest)
to the capital of the Company for such Member's Interest.
"CHS" means Cenex Harvest States Cooperatives, a Minnesota
cooperative corporation.
"CHS BASE LINE VOLUME" means the base line sales volume of CHS
with respect to a Product Line, as determined in accordance with the
provisions of Section 5.6.
"CERTIFICATE" means the Certificate of Formation of the
Company filed with the Secretary of State of Delaware, as amended from
time to time.
"CHANGE IN CONTROL" means, with respect to a Member, (a) any
merger, consolidation, sale of all or substantially all of the assets
or similar transaction as a result of which a majority of the directors
of such Member no longer constitutes a majority of the directors of the
surviving entity, (b) the liquidation or dissolution of such Member,
(c) entering into any Bankruptcy, insolvency or other proceeding
whereby such Member seeks protection from its creditors or (d) any
public offering or other transaction, as a result of which such Member
ceases to be organized under the cooperative form of organization.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, or the corresponding provisions of future laws.
"COMPANY" means Country Energy, LLC, a Delaware limited
liability company.
"COMPANY MINIMUM GAIN" shall have the same meaning as the term
"partnership minimum gain" set forth in Treasury Regulation ss.
1.704-2(d)(1). Company Minimum Gain shall be determined, first, by
computing for each Nonrecourse Debt any gain that the Company would
realize if the Company disposed of the property subject to that
liability for no consideration other than full satisfaction of such
liability and, then, aggregating the separately computed gains. For
purposes of computing gain, the Company shall use the basis of such
property that is used for purposes of determining the amount of the
Capital Accounts under Section 3.4. In any taxable year in which a
Revaluation occurs, the net increase or decrease in Company Minimum
Gain for such taxable year shall be determined by: (a) calculating the
net decrease or increase in Company Minimum Gain using the current
year's book value and the prior year's amount of Company Minimum Gain;
and (b) adding back any decrease in Company Minimum Gain arising solely
from the Revaluation.
"COMPANY'S BUSINESS" shall have the meaning set forth in
Section 2.1.
<PAGE>
"CONTRIBUTED ASSETS" of a Member shall have the meaning
assigned in the Asset Contribution Agreement between such Member and
the Company.
"CREDITS" means all tax credits allowed by the Code with
respect to activities of the Company or the Property.
"CUSTOMERS" means customers of any Member for Energy Products,
including customers that are local cooperatives that are members or
patrons of one or more Members, independent dealers and other
purchasers of Energy Products.
"DEDICATED EMPLOYEES" means employees of any Member assigned
to fill specific work positions of the Company in accordance with the
terms of a Personnel Lease Agreement.
"DEFAULT" shall have the meaning set forth in Section 3.3(a).
"DEFAULT DATE" shall have the meaning set forth in Section
3.3(b).
"DEFAULT NOTICE" shall have the meaning set forth in Section
3.3(a).
"DEFAULTED AMOUNT" shall have the meaning set forth in Section
3.3(b).
"DEFAULTING MEMBER" shall have the meaning set forth in
Section 3.3(b).
"DISTRIBUTIONS" means any distributions by the Company to the
Members of Available Cash, Liquidation Proceeds or other amounts.
"EFFECTIVE DATE" means September 1, 1998.
"EMERGENCY SITUATION" means an unforeseen situation in which
immediate action is necessary to prevent personal injury or substantial
property damage.
"ENERGY PRODUCTS" means Refined Fuels, Lubricants and Propane.
"EXCHANGE AGREEMENTS" means the agreements among the Members
and the Company in the forms attached hereto as Exhibit E, pursuant to
which the Members shall exchange Energy Products with each other and
purchase Energy Products from each other.
"FAIR VALUE" of an asset means: (a) with respect to a Member's
Contributed Assets, the book value of such Contributed Assets as
reflected on the books and records of such Member as of the date of the
contribution; and (b) for all other purposes, the actual fair market
value of such asset.
<PAGE>
"FARMLAND" means Farmland Industries, Inc., a Kansas
cooperative corporation.
"FARMLAND BASE LINE VOLUME" means the base line sales volume
of Farmland with respect to a Product Line, as determined in accordance
with the provisions of Section 5.6.
"GENERAL MANAGEMENT ISSUE" means a disagreement between the
Members with respect to (i) the execution or implementation of a
Business Plan, (ii) the action that should be taken by the Company in
an Emergency Situation or (iii) any other matter concerning the
Company, this Agreement or any Operating Agreement that is not a
Business Issue or a Legal Issue.
"GREASE" means a mixture of a fluid lubricant and a thickener
dispersed in the oil.
"GREASE BASE FEE" means the fee to be paid to the Company by
each Member for each pound of Grease sold by the Company as an agent
for such Member, which fee shall be as set forth in the Business Plan.
"INCOME" and "LOSS" mean, respectively, for each fiscal year
or other period, an amount equal to the Company's taxable income or
loss for such year or period, determined in accordance with Code
Section 703(a), except that for this purpose: (a) all items of income,
gain, deduction or loss required to be separately stated by Code
Section 703(a)(1) shall be included in taxable income or loss; (b) tax
exempt income shall be added to taxable income or loss; (c) any
expenditures described in Code Section 705(a)(2)(B) (or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation ss.
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing
taxable income or loss shall be subtracted; and (d) taxable income or
loss shall be adjusted to reflect any item of income or loss specially
allocated in Article IV.
"INITIAL CONTRIBUTION" means the Contributed Assets and cash
contributed by each Member for its Interest pursuant to Section 3.1.
"INITIAL PERIOD" means the period commencing on the Effective
Date and ending on August 31, 2000.
"INTEREST" refers to all of a Member's rights and interests in
the Company in such Member's capacity as a Member, as provided in the
Certificate, this Agreement and the Act, including, without limitation,
the Member's right to vote and its interest in the total capital,
profits and losses of the Company.
"INVESTMENT CHANGE" means (i) the capital investment or
divestment (individually or in a series of related transactions) of
capital assets (including by merger, joint venture, etc.) as a result
of which a Member acquires or divests sales volume of Energy Products
or (ii) a transaction between a Member and a regional agricultural
<PAGE>
cooperative that results in a direct patronage relationship between
such Member and a group of local cooperatives with respect to Energy
Products.
"LATE PAYMENT FEE" shall have the meaning set forth in Section
3.3(b).
"LEGAL ISSUE" means a dispute between the Members that
involves (i) any claim for damages, (ii) the determination of any CHS
Base Line Volume, Farmland Base Line Volume, Total Base Line Volume or
Sales Split pursuant to Section 5.6(d) or (iii) a dispute as to the
interpretation of this Agreement or any Operative Agreement.
"LIQUIDATION PROCEEDS" means all Property at the time of
liquidation of the Company and all proceeds thereof.
"LUBE OIL" means oils used for the control of friction and
wear between moving surfaces in contact.
"LUBRICANTS" means products that generally control friction
and wear between moving surfaces in contact, including Branded Lube
Oil, Unbranded Lube Oil and Grease.
"MANAGEMENT COMMITTEE" means the committee composed of
Representatives of the Members pursuant to Section 5.1.
"MANAGEMENT SERVICES AGREEMENT" means an agreement between the
Company and a Member in the form attached hereto as Exhibit B, pursuant
to which such Member will provide management services to the Company
and the Company will provide management services to such Member.
"MATERIAL ITEM" means any item having a material affect on the
business or financial condition of the Company and any other item that
is specifically designated as a "Material Item" in the then current
Business Plan.
"MEMBER" means each Person executing this Agreement, including
any Substitute Member.
"MEMBER MINIMUM GAIN" shall have the same meaning as the term
"partner nonrecourse debt minimum gain" as set forth in Treasury
Regulation ss. 1.704-2(i)(3). With respect to each Member Nonrecourse
Debt, Member Minimum Gain shall be determined by computing for each
Member Nonrecourse Debt any gain that the Company would realize if the
Company disposed of the property subject to that liability for no
consideration other than full satisfaction of such liability. For
purposes of computing gain, the Company shall use the basis of such
property that is used for purposes of determining the amount of the
Capital Accounts under Section 3.4. In any taxable year in which a
Revaluation occurs, the net increase or decrease in Member Minimum Gain
for such taxable year shall be determined by: (a) calculating the net
decrease or increase in
<PAGE>
Member Minimum Gain using the current year's book value and the prior
year's amount of Member Minimum Gain; and (b) adding back any decrease
in Member Minimum Gain arising solely from the Revaluation.
"MEMBER NONRECOURSE DEBT" shall have the same meaning as the
term "partner nonrecourse debt" set forth in Treasury Regulation ss.
1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" shall have the same meaning as
the term "partner nonrecourse deductions" set forth in Treasury
Regulation ss. 1.704-2(i)(2). Generally, the amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
fiscal year equals the net increase during the year in the amount of
the Member Minimum Gain (determined in accordance with Treasury
Regulation ss. 1.704-2(i)) reduced (but not below zero) by the
aggregate distributions made during the year of proceeds of Member
Nonrecourse Debt and allocable to the increase in Member Minimum Gain
determined according to the provisions of Treasury Regulation ss.
1.704-2(i).
"NON-DEFAULTING MEMBER" shall have the meaning set forth in
Section 3.3(b).
"NON-TRANSFERRING MEMBER," means, in the case of a Transfer by
a Member of its Interest, the Member that did not Transfer its
Interest.
"NONRECOURSE DEDUCTIONS" shall have the same meaning as the
term "nonrecourse deductions" set forth in Treasury Regulation ss.
1.704-2(c). Generally, the amount of Nonrecourse Deductions for a
fiscal year equals the net increase in the amount of Company Minimum
Gain (determined in accordance with Treasury Regulation ss. 1.704-2(d))
during such year reduced (but not below zero) by the aggregate
distributions made during the year of proceeds of a Nonrecourse Debt
that are allocable to the increase in Company Minimum Gain, determined
according to the provisions of Treasury Regulation ss. 1.704-2(c) and
(h).
"NONRECOURSE DEBT" means a Company liability with respect to
which no Member bears the economic risk of loss as determined under
Treasury Regulations ss.ss. 1.752-1(a)(2) and 1.752-2.
"NOTICE" shall have the meaning set forth in Section 10.3.
"OFFICE LEASE AGREEMENT" means an agreement between the
Company and a Member in the form attached hereto as Exhibit F, pursuant
to which such Member shall provide office facilities for use by the
Company.
"OPERATIVE AGREEMENTS" means, collectively, the Asset
Contribution Agreements, Management Services Agreements, Personnel
Lease Agreements, Agency Agreements, Exchange Agreements and Office
Lease Agreements.
<PAGE>
"PAYMENT DATE" shall have the meaning set forth in Section
3.3(b).
"PERCENTAGE INTEREST" means, with respect to each Member, such
Member's percentage interest in the Company. The Percentage Interest of
each Member, prior to any adjustments required by the provisions of
this Agreement, shall be as follows:
Percentage
Member Interest
------------------------------------------
CHS 50%
Farmland 50%
"PERSON" means any individual, partnership, limited liability
company, corporation, cooperative association, estate, trust,
custodian, nominee or other entity in its own or any representative
capacity.
"PERSONNEL LEASE AGREEMENT" means an agreement between the
Company and a Member in the form attached hereto as Exhibit C, pursuant
to which such Member will lease Dedicated Employees to the Company.
"PREFERRED RETURN" shall have the meaning set forth in Section
4.6.
"PRESIDENT" or "CO-PRESIDENT" means the individual or
individuals designated by the Members pursuant to Section 5.2 to manage
the day-to-day operations of the Company.
"PRIME RATE" means the prime lending rate published from time
to time in The Wall Street Journal; provided, however, that if no prime
lending rate is then published in The Wall Street Journal, the term
"Prime Rate" shall mean the rate of interest announced from time to
time by The Chase Manhattan Bank, or its successor, as its prime
lending rate.
"PRODUCT LINE" means any one of the following types of Energy
Products: Branded Fuel, Unbranded Fuel, Tender Sale Fuel, Branded Lube
Oil, Unbranded Lube Oil, Grease and Propane.
"PROPANE" means a hydrocarbon with the composition C3H8 that
meets HD-5 or Commercial Grade specifications, as those specifications
are defined in the Natural Gas Processors Association Publication
#2140-62, and all revisions thereof.
"PROPANE BASE FEE" means the fee to be paid to the Company by
each Member for each gallon of Propane sold by the Company as an agent
for such Member, which fee shall be as set forth in the Business Plan.
"PROPERTY" means all properties and assets (including
supplies, equipment, real estate or leasehold or subleasehold interests
therein, intellectual property, contract rights
<PAGE>
and other intangible assets) that the Company may own or otherwise have
an interest in from time to time.
"REFINED FUEL SALES SPLIT" means the combined Sales Split for
Branded Fuel and Unbranded Fuel; specifically, the Refined Fuel Sales
Split shall be "A% CHS/B% Farmland," where
A = CHS Base Line Volume for Branded Fuel + CHS Base Line
Volume for Unbranded Fuel X 100
Total Base Line Volume for Branded Fuel + Total Base Line
Volume for Unbranded Fuel
and
B = Farmland Base Line Volume for Branded Fuel + Farmland Base
Line Volume for Unbranded Fuel X 100.
Total Base Line Volume for Branded Fuel + Total Base Line
Volume for Unbranded Fuel,
provided, however, that A and B shall be rounded to the nearest whole
percentage.
"REFINED FUELS" means gasoline and distillates, including
Branded Fuels, Unbranded Fuels and Tender Sale Fuels.
"REGULAR PRODUCT LINE" means any one of the following types of
Energy Products: Branded Fuel, Unbranded Fuel, Branded Lube Oil,
Unbranded Lube Oil, Grease and Propane.
"REPRESENTATIVES" shall mean a Member's representative on the
Management Committee.
"RESERVES" means amounts set aside from time to time by the
Members pursuant to Section 4.10.
"RETAINED EARNINGS BALANCE" means, with respect to a Member,
the difference between (i) the sum of all allocations made to such
Member, pursuant to Article IV, of Company income and gain (or items
thereof) during the term of this Agreement and (ii) the sum of (A) the
sum of all allocations made to such Member, pursuant to Article IV, of
Company loss and deductions (or items thereof) during the term of this
Agreement, (B) the amount of money distributed to such Member during
the term of this Agreement and (C) the Fair Value of property
distributed to such Member (net of liabilities secured by such
distributed property that such Member is considered to assume or take
subject to under Code Section 752) during the term of this Agreement.
"RETAINED EARNINGS BALANCE PERCENTAGE" means, with respect to
a Member, the Retained Earnings Balance of such Member divided by the
sum of the Retained Earnings Balances of all of the Members, multiplied
by 100.
<PAGE>
"REVALUATION" means the occurrence of any event described in
clause (x), (y) or (z) of Section 3.4(c) in which the book basis of
Property is adjusted to its Fair Value.
"SALES SPLIT" means the percentage of each sale of an Energy
Product made to a Customer by the Company as an agent for the Members
that is deemed to be made by each of the Members, as determined in
accordance with the provisions of Section 5.6.
"SALES YEAR" shall have the meaning set forth in Section
5.6(d).
"SPOT SALE GALLONS" means, for a given fiscal year, (a) with
respect to Farmland, the Zone 1 Member Spot Sale Gallons for Farmland
for such year, and (b) with respect to CHS, the sum of the Zone 1
Member Spot Sale Gallons for CHS for such year and the Zone 2 CHS Spot
Sale Gallons for such year.
"SPOT SALE GALLON BASE FEE" means the fee to be paid to the
Company by each Member for each Spot Sale Gallon of the Member, which
fee shall be as set forth in the Business Plan.
"SUBSTITUTE MEMBER" means a Transferee admitted to the Company
as a Member in accordance with Section 7.3.
"TAX MATTERS MEMBER" means the Member designated pursuant to
Section 6.4 to represent the Company in matters before the Internal
Revenue Service.
"TENDER SALE FUEL" means (i) Refined Fuel that is sold by a
Member by the barrel in pipeline or terminal locations (other than
Refined Fuel that is Branded Fuel or Unbranded Fuel), which fuel may be
sold on a patronage or non-patronage basis, or (ii) any other Refined
Fuel that is sold by a Member to Customers that is not Branded Fuel or
Unbranded Fuel.
"TOTAL BASE LINE VOLUME" means the sum of the Farmland Base
Line Volume and the CHS Base Line Volume.
"TRANSFER" means: (a) when used as a verb, to give, sell,
exchange, assign, transfer, lease, pledge, hypothecate, bequeath,
devise or otherwise dispose of or encumber; and (b) when used as a
noun, the nouns corresponding to such verbs, in either case voluntarily
or involuntarily, by operation of law or otherwise.
"TRANSFEREE" shall have the meaning set forth in Section 7.2.
"TRANSFEROR" shall have the meaning set forth in Section 7.2.
"TREASURY REGULATIONS" means the regulations promulgated by
the Treasury Department with respect to the Code, as such regulations
are amended from time to time, or the corresponding provisions of
future regulations.
<PAGE>
"UNBRANDED FUEL" means Refined Fuel that is sold by a Member
(i) in truckload quantities on a non-patronage basis, (ii) by the
barrel in pipeline or terminal locations on a non-patronage basis to a
Customer that regularly purchased Refined Fuel from such Member in
truckload quantities on a non-patronage basis prior to the date of this
Agreement but subsequently changed its purchasing practices to
purchases at pipeline or terminal locations as a result of changes in
the industry or the size of such Customer, or (iii) to a regional
agricultural cooperative (other than a Member); provided, however, that
the term "Unbranded Fuel" shall not include any fuel that is Branded
Fuel.
"UNBRANDED FUEL BASE FEE" means the fee to be paid to the
Company by each Member for each gallon of Unbranded Fuel sold by the
Company as an agent for such Member, which fee shall be as set forth in
the Business Plan.
"UNBRANDED LUBE OIL" means Lube Oil that is not Branded Lube
Oil, including, without limitation, Lube Oil sold under non-premium
brand logos such as Ampride, Bull's Eye and Viking, irrespective of
patronage treatment by the Members.
"UNBRANDED LUBE OIL BASE FEE" means the fee to be paid to the
Company by each Member for each gallon of Unbranded Lube Oil sold by
the Company as an agent for such Member, which fee shall be as set
forth in the Business Plan.
"ZONE 1 MEMBER SPOT SALE GALLONS" means, with respect to a
Member, for a given fiscal year, that number of gallons of Refined Fuel
that is equal to amount, if any, by which (a) is greater than (b),
where (a) is equal to the total number of gallons of Refined Fuel
produced during such year at all petroleum refineries owned by such
Member that are located in Zone 1 (as defined in the Refined Fuel
Exchange Agreement attached hereto as part of Exhibit E) and (b) is
equal to the sum of (i) the number of gallons of Branded Fuel sold by
the Company as an agent for such Member in Zone 1 during such year,
(ii) the number of gallons of Unbranded Fuel sold by the Company as an
agent for such Member in Zone 1 during such year and (iii) the number
of gallons of Refined Fuel owned by such Member that was moved from
Zone 1 to another Zone (as defined in the Refined Fuel Exchange
Agreement attached hereto as part of Exhibit E) during such year in
order to deliver Refined Fuel to third parties pursuant to third party
exchange agreements or to move Refined Fuel among the Zones without
transferring it to a third party; provided, however, that with respect
to a petroleum refinery that is only partially owned by a Member, the
total number of gallons of Refined Fuel produced at such refinery
during such year for purposes of this Agreement shall be equal to the
product obtained by multiplying (A) the total number of gallons of
Refined Fuel produced at such refinery during such year by (B) such
Member's percentage ownership interest in such refinery.
"ZONE 2 CHS SPOT SALE GALLONS" means, for a given fiscal year,
that number of gallons of Refined Fuel that is equal to the amount, if
any, by which (a) is greater than (b), where (a) is equal to the total
number of gallons of Refined Fuel produced during such year at all
petroleum refineries owned by CHS that are located in Zone 2 (as
defined
<PAGE>
in the Refined Fuel Exchange Agreement attached hereto as part of
Exhibit E) and (b) is equal to the sum of (i) the number of gallons of
Branded Fuel sold by the Company as an agent for CHS in Zone 2 during
such year, (ii) the number of gallons of Unbranded Fuel sold by the
Company as an agent for CHS in Zone 2 during such year and (iii) the
number of gallons of Refined Fuel owned by CHS that was moved from Zone
2 to another Zone (as defined in the Refined Fuel Exchange Agreement
attached hereto as part of Exhibit E) during such year in order to
deliver Refined Fuel to third parties pursuant to third party exchange
agreements or to move Refined Fuel among the Zones without transferring
it to a third party; provided, however, that with respect to a
petroleum refinery that is only partially owned by CHS, the total
number of gallons of Refined Fuel produced at such refinery during such
year for purposes of this Agreement shall be equal to the product
obtained by multiplying (A) the total number of gallons of Refined Fuel
produced at such refinery during such year by (B) CHS's percentage
ownership interest in such refinery.
1.3 Other Definitional Provisions.
(a) As used in this Agreement, accounting terms not defined in
this Agreement, and accounting terms partly defined to the extent not
defined, shall have the respective meanings given to them under
generally accepted accounting principles.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified.
(c) Words of the masculine gender shall be deemed to include
the feminine or neuter genders, and vice versa, where applicable. Words
of the singular number shall be deemed to include the plural number,
and vice versa, where applicable.
ARTICLE II
BUSINESS PURPOSE
2.1 Name; Business Purpose
(a) The name of the Company shall be Country Energy, LLC. The
name of the Company may be changed from time to time by the Members.
(b) The purpose of the Company (the "Company's Business") is:
(i) to serve as the exclusive agent for the Members for (A) the
marketing, sales and distribution of Energy Products to Customers, (B)
the invoicing and collection of receivables arising from the sale of
Energy Products to Customers and (C) the purchasing of Energy Products;
and (ii) to perform all acts necessary or incidental to the foregoing.
<PAGE>
(c) The Members expect that significant benefits will flow
from the formation and operation of the Company that are unavailable to
the Members independently. Specifically, the Members expect that the
Company, through integrating the resources of the Members, will be able
to: (i) reduce the overall costs of production of Energy Products; (ii)
minimize the costs of distribution of Energy Products; (iii) expand and
enhance the products and services offered to the members and Customers
of the Members; (iv) fully develop and exploit the intellectual
property rights of the Members; (v) increase the membership of the
Members and the membership opportunities for current and prospective
members of the Members; and (vi) expand the overall production and
sales of Energy Products to members and Customers of the Members. The
Members acknowledge that all of the various Energy Products included in
this Agreement utilize the same sales and marketing channels and
resources, and that the formation and operation of the Company would
not be feasible without the inclusion of all of the Energy Products
included herein.
2.2 Powers. The Company may carry on any lawful business, purpose or
activity permitted by the Act and shall possess and may exercise all powers
granted by the Act, any other law or this Agreement, together with any powers
incidental, necessary or convenient to the conduct, promotion or attainment of
the business, purposes or activities of the Company.
2.3 Registered Office and Registered Agent. The location of the
registered office and the name of the registered agent of the Company in the
State of Delaware shall be as stated in the Certificate. The registered office
and registered agent of the Company in the State of Delaware may be changed from
time to time by the Members.
2.4 Amendment of the Certificate. The Company shall amend the
Certificate at such time or times and in such manner as may be approved by the
Members or required by the Act or this Agreement.
2.5 Effective Date. This Agreement shall be effective as of the
Effective Date.
2.6 Agreement to Finalize Certain Operative Documents. The Members
recognize that certain Exhibits to this Agreement, which consist of certain
Operative Agreements, have not been agreed upon as of the date hereof. The
Members agree to negotiate and work together in good faith to finalize such
Operative Agreements in accordance with the understandings of the Members as of
the date hereof. If the Members are able to reach agreement with respect to the
terms of all of the Operative Agreements prior to July 31, 1998, the Members and
the Company shall execute such agreements prior to July 31, 1998 and attach such
agreements as Exhibits to this Agreement as indicated. In the event that the
Members have not executed all of the Operative Agreements prior to July 31,
1998, then this Agreement and all other
<PAGE>
previously executed Operative Agreements shall automatically terminate on
September 1, 1998 and shall be null and void and of no effect.
2.7 Due Diligence. Each Member (for purposes of this Section 2.7, an
"Investigated Member") shall permit the other Member (for purposes of this
Section 2.7, an "Investigating Member") to conduct such investigations and due
diligence with respect to the marketing, sale, distribution and purchasing of
Energy Products previously conducted by the Investigated Member as the
Investigating Member deems advisable. Each Member shall have completed its due
diligence activities prior to July 31, 1998. In the event that the due diligence
activities of an Investigating Member lead to the discovery of discrepancies
between the representations and warranties set forth in Section 2.12 and the
actual Farmland or CHS sales volumes for the 1997 fiscal years of each of
Farmland and CHS, then the data currently listed in Schedule 5.6(d) regarding
the Farmland or CHS Base Line Volumes shall be adjusted to correct any such
discrepancies. In the event that the due diligence activities of an
Investigating Member lead to the discovery of any other information which
impacts the assumptions made by such Member in entering into this Agreement (for
purposes of this Section 2.7, a "Due Diligence Issue"), the Members shall meet
to discuss in good faith and resolve such Due Diligence Issue. In the event any
Due Diligence Issue is not resolved to the satisfaction of the Members prior to
September 1, 1998, then either Member may elect to terminate this Agreement and
all other previously executed Operative Agreements by giving notice to the other
Member of such election.
2.8 Liability of Members. No Member, Representative, Co-President or
President, solely by reason of such status, shall be liable, under a judgment,
decree or order of a court, or in any other manner, for any debt, obligation or
liability of the Company, whether arising in contract, tort, by statute or
otherwise, or for the acts or omissions of any other Member, Representative or
employee of the Company. The failure of the Company to observe any formalities
or requirements relating to the exercise of its powers or management of its
business or affairs under this Agreement or the Act shall not be grounds for
imposing liability on the Members, Representatives or any Co-President or
President for liabilities of the Company.
2.9 Authority; Investment Intent; Restriction Against Transfer. Each
Member warrants to the Company and the other Member that: (a) the Member is duly
organized, validly existing and in good standing under the laws of its state of
organization and has the requisite power and authority to execute this Agreement
and the Operative Agreements and perform its obligations hereunder and
thereunder; (b) the Member is acquiring an Interest for such Member's own
account as an investment and without any intent to distribute such Interest or
any portion thereof or interest therein; and (c) the Member acknowledges that
the Interests have not been registered under the Securities Act of 1933 or any
state securities laws, and such Member's Interest may not be resold or
transferred except pursuant to a registration statement under or an exemption
from the registration provisions of the federal and applicable state securities
laws, and in no event except in compliance with the terms of this Agreement.
<PAGE>
2.10 Business Plan
(a) Prior to the Effective Date, the Members agree to work
together in good faith to adopt a Business Plan covering the three
fiscal years commencing on September 1, 1998 (the "Initial Business
Plan"). In the event that the Members are unable to agree upon an
Initial Business Plan prior to September 1, 1998, then this Agreement
shall automatically terminate on September 1, 1998 and shall be null
and void and of no effect.
(b) On or before June 30 of each year, commencing June 30,
1999, the Management Committee shall adopt a Business Plan covering the
three fiscal years immediately following the then current fiscal year.
(c) Each Business Plan shall include: (i) an annual operating
budget (the "Annual Operating Budget") for each of the three fiscal
years, including projected operating revenues, expenses and working
capital reserves; (ii) an annual capital budget (the "Annual Capital
Budget") for each of the three fiscal years, including projected
capital expenditures and investments; (iii) the Branded Fuel Base Fee,
Unbranded Fuel Base Fee, Spot Sale Gallon Base Fee, Branded Lube Oil
Base Fee, Unbranded Lube Oil Base Fee, Grease Base Fee and Propane Base
Fee with respect to each of the three fiscal years; (iv) the monthly
estimated Agency Fee payment to be paid to the Company by each Member
during each of the three fiscal years, pursuant to the terms and
conditions of the Agency Agreements attached hereto as Exhibit D; (v)
any Capital Calls to be made in support of the Company's Business
during the three-year period covered by the Business Plan; and (vi)
such other information, plans and strategies as the Members deem
advisable. The Business Plan shall be as detailed as is practical in
order to minimize disputes with respect to the execution of the
Business Plan. The Members may amend the Company's Business Plan at any
time.
2.11 Risk Management Policy. Prior to the Effective Date, the Members
shall work together in good faith to adopt a risk management policy for the
Company.
2.12 Representations Regarding 1997 Sales Figures
(a) Farmland hereby represents and warrants to CHS that the
volumes listed on Schedule 2.12(a) hereto represent the sales volumes
of Farmland for each Product Line listed on Schedule 2.12(a) for
Farmland's 1997 fiscal year and do not differ in any material respect
from such actual sales volumes.
(b) CHS hereby represents and warrants to Farmland that the
volumes listed on Schedule 2.12(b) hereto represent the sales volumes
of CHS for each Product
<PAGE>
Line listed on Schedule 2.12(b) for CHS's 1997 fiscal year and do not
differ in any material respect from such actual sales volumes.
2.13 Term. The term of this Agreement shall commence on the Effective
Date. The Company shall have perpetual existence unless sooner dissolved as
provided herein.
ARTICLE III
CAPITALIZATION
3.1 Initial Contributions
(a) Each Member shall execute, deliver and perform all
obligations of such Member under its respective Asset Contribution
Agreement. On the Effective Date, each Member shall make an Initial
Contribution to the Company consisting of: (i) such Member's
Contributed Assets, in accordance with the terms and conditions of such
Member's Asset Contribution Agreement; plus (ii) an amount, in cash,
equal to the difference between $1,250,000 and the Fair Value of such
Member's Contributed Assets.
(b) Each Member's Contributed Assets shall be transferred to
the Company on the Effective Date free and clear of any and all liens,
claims, liabilities, restrictions and encumbrances.
3.2 Capital Calls. The Members recognize that the Company may from time
to time require capital in addition to the Initial Contributions in order to
conduct the Company's Business or accomplish further objectives approved by the
Members. Accordingly, the Members may provide in the Business Plan that
additional cash capital contributions shall be due and payable by the Members in
designated amounts at designated times. A call for such additional capital
contributions shall be referred to herein as a "Capital Call." The Co-Presidents
or President shall make Capital Calls in accordance with the Business Plan. The
Co-Presidents or President shall make a Capital Call by giving at least 30
Business Days' prior written notice to the Members of the amount of the required
additional capital contribution and the date that such contribution is due. Each
Member shall be obligated to comply with a Capital Call by making the
contribution required thereunder on or prior to the date such contribution is
due. A failure to comply with a Capital Call shall be deemed a material breach
of this Agreement.
<PAGE>
3.3 Defaults on Initial Contributions or Capital Calls
(a) If any Member fails for any reason to make all or any
portion of its Initial Contribution or fails for any reason to meet a
Capital Call by the due date therefor (which failure shall be referred
to as a "Default"), the Company, acting pursuant to the vote of the
Member which has made the Initial Contribution or met the Capital Call,
as the case may be (the "Non-Defaulting Member"), may give written
notice of such failure (a "Default Notice") to the non-paying Member.
The non-paying Member may cure such failure by paying the entire unpaid
amount within five Business Days after receipt of the Default Notice,
in which event such Member shall not be deemed a "Defaulting Member."
(b) If the non-paying Member does not cure such Default
within five Business Days after receipt of the Default Notice, such
Member shall be deemed a "Defaulting Member," and the following shall
apply:
(i) Effective on the sixth Business Day after the
date of the Defaulting Member's receipt of the Default Notice
(the "Default Date"), the Percentage Interests of the Members
shall be automatically adjusted to take into account the
failure of the Defaulting Member to make such Initial
Contribution or meet such Capital Call. The Percentage
Interest of each Member shall be the respective percentage
obtained by dividing the total amount contributed by such
Member to the Company through and including the Default Date
by the total amount contributed by all the Members through and
including the Default Date. The sum of the Percentage
Interests of the Members, as adjusted in accordance with this
Section 3.3(b)(i), shall equal 100%.
(ii) Effective as of the Default Date and continuing
until the Defaulting Member cures its Default in the manner
provided in Section 3.3(b)(v), the Defaulting Member shall no
longer have the right to vote as a Member, give its approval
or consent as Member, name Representatives to the Management
Committee or participate in the management of the business and
affairs of the Company, and the vote, consent or approval of
the Non-Defaulting Member shall be sufficient for taking all
action required or permitted to be taken by the Members under
this Agreement.
(iii) The portion of any Initial Contribution or
Capital Call not made when due by a Defaulting Member (the
"Defaulted Amount") shall bear interest at the Prime Rate plus
four percentage points until the Defaulting Member cures its
Default in whole. Such interest shall be payable to the
Company and be allocated and distributed in accordance with
Section 4.6.
(iv) The Defaulted Amount shall also bear a 10% late
payment fee ("Late Payment Fee"). The Late Payment Fee shall
be payable to the Company and be allocated and distributed in
accordance with Section 4.6.
<PAGE>
(v) Notwithstanding the foregoing provisions of this
Section 3.3, the Defaulting Member may cure its Default at any
time prior to the expiration of 30 days after the Default Date
by paying to the Company the entire Defaulted Amount, together
with interest at the rate provided in Section 3.3(b)(iii) and
the Late Payment Fee. If the Defaulting Member cures its
Default in such manner, the Percentage Interests of the
Members shall be re-adjusted to take such cure into account.
The Percentage Interest of the Defaulting Member and of the
Non-Defaulting Member shall be the respective percentage
obtained by dividing the total amount contributed (excluding
interest and the Late Payment Fee) by such Member to the
Company through and including the date on which the Defaulting
Member cured its Default (the "Payment Date") by the total
amount contributed to the Company by all the Members through
and including the Payment Date. The sum of the Percentage
Interests of the Members, as adjusted in accordance with this
Section 3.3(b)(v), shall equal 100%. The foregoing adjustment
shall not take into account any interest or Late Payment Fee
paid by the Defaulting Member. Any payment by a Non-Defaulting
Member of a Defaulting Member's Defaulted Amount shall
constitute a loan to the Company in accordance with Section
3.6 and shall not be deemed part of such Member's Capital
Contribution. The Defaulting Member shall no longer be a
Defaulting Member upon cure of its Default in accordance with
this Section 3.3(b)(v).
(c) The Defaulting Member shall remain liable to the Company
and to creditors of the Company that extended credit prior to such
Default for the Defaulted Amount and shall remain liable to the Company
for interest at the rate provided in Section 3.3(b)(iii) and for the
Late Payment Fee, until the Defaulting Member cures its Default as
provided in Section 3.3(b)(v) or until such Defaulted Amount is
recovered by the Company in accordance with this Section 3.3(c) or is
otherwise paid by the Defaulting Member. The Company, upon the vote of
the Non-Defaulting Member, is hereby empowered to collect from the
Defaulting Member for the account of the Company the Defaulted Amount,
together with interest at the rate provided in Section 3.3(b)(iii) and
the Late Payment Fee. The Company is authorized to institute an action
at law against the Defaulting Member in a court of competent
jurisdiction to recover such amounts. If the Company is the prevailing
party in such action, the Company shall be entitled to recover from the
Defaulting Member, in addition to the Defaulted Amount plus interest
and the Late Payment Fee, its costs of collection, including the
reasonable fees and expenses of attorneys incurred in connection
therewith. The Non-Defaulting Member may in its sole discretion cause
the Company to settle or compromise any such claim. If the Company
recovers from the Defaulting Member the Defaulted Amount plus all
additional amounts contemplated by this Section 3.3(c), the Defaulting
Member shall no longer be a Defaulting Member.
3.4 Capital Accounts.
(a) A separate Capital Account shall be maintained for each
Member. Each Member's Capital Account shall be: (i) increased by: (A)
the amount of money contributed by such Member; (B) the Fair Value of
property contributed by such Member (net of liabilities secured by such
contributed property that the Company is considered to
<PAGE>
assume or take subject to under Code Section 752, but in any event not
in limitation of the provisions of Section 3.1(b)); (C) allocations to
such Member, pursuant to Article IV, of Company income and gain (or
items thereof); and (D) to the extent not already netted out under
clause (ii)(b) below, the amount of any Company liabilities assumed by
the Member or which are secured by any property distributed to such
Member; and (ii) decreased by: (A) the amount of money distributed to
such Member; (B) the Fair Value of property distributed to such Member
(net of liabilities secured by such distributed property that such
Member is considered to assume or take subject to under Code Section
752); (C) allocations to such Member, pursuant to Article IV, of
Company loss and deductions (or items thereof); and (D) to the extent
not already netted out under clause (i)(B) above, the amount of any
liabilities of the Member assumed by the Company or which are secured
by any property contributed by such Member to the Company.
(b) In the event any Interest is transferred in accordance
with the terms of this Agreement, the Transferee shall succeed to the
Capital Account of the Transferor to the extent it relates to the
transferred Interest and the Capital Account of the Transferee shall be
increased and decreased in the manner set forth in Section 3.4(a).
(c) In the event of: (x) a Defaulting Member's Default or a
Defaulting Member's cure of its Default that results in a shift in
Percentage Interests; (y) the distribution by the Company to a Member
of Property (other than cash) or a distribution of Property as
consideration for an Interest; or (z) the liquidation of the Company
within the meaning of Treasury Regulation ss. 1.704-1(b)(2)(ii)(g), the
book basis of the Property shall be adjusted to Fair Value, and the
Capital Accounts of the Members shall be adjusted simultaneously to
reflect the aggregate net adjustment to book basis as if the Company
recognized gain or loss equal to the amount of such aggregate net
adjustment; provided, however, that the adjustments resulting from
clause (x) or (y) above shall be made only if the Members determine
that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members.
(d) In the event Property is subject to Code Section 704(c) or
is revalued on the books of the Company in accordance with Section
3.4(c) pursuant to Treasury Regulation ss. 1.704-1(b)(2)(iv)(f), the
Members' Capital Accounts shall be adjusted in accordance with Treasury
Regulation ss. 1.704-1(b)(2)(iv)(g) for allocations to the Members of
depreciation, amortization and gain or loss, as computed for book
purposes (and not tax purposes) with respect to such Property.
(e) The provisions of this Section 3.4 and the other
provisions of this Agreement relating to the maintenance of the Capital
Accounts are intended to comply with Treasury Regulations ss.ss.
1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Treasury Regulations. If the Members
determine it is prudent or advisable to modify the manner in which the
Capital Accounts, or any increases or decreases therein, are computed
in order to comply with such Treasury Regulations, the Members may
cause such modification to be made, provided
<PAGE>
such modification is not likely to have a material effect on the
amounts distributable to any Member upon dissolution of the Company.
3.5 Capital Withdrawal Rights, Interest and Priority. Except as
expressly provided in this Agreement, no Member shall be entitled to reduce its
Capital Account or to receive any Distributions. No Member shall be entitled to
demand or receive any Distributions in any form other than in cash. No Member
shall be entitled to receive or be credited with any interest on the balance in
its Capital Account at any time. Except as otherwise expressly provided herein,
no Member shall have priority over any other Member as to the return of the
balance in such Member's Capital Account.
3.6 Loans
(a) Subject to unanimous approval by the Members (which for
purposes of this 3.6(a) may include the loaning Member), any Member may
advance funds as a loan to the Company in such amounts and at such
times as may be approved by such Members. Any such loan shall bear a
rate of interest and shall be on terms no more favorable to the loaning
Member as are then available on similar loans from independent
financial institutions.
(b) Notwithstanding the provisions of Section 3.6(a), in the
event of a Defaulting Member's Default, any Non-Defaulting Member may
elect to advance all or a portion of the Defaulted Amount to the
Company. Such advance shall be deemed a loan to the Company and not a
Capital Contribution. Any such loan shall be repayable in monthly
installments of principal together with interest at the Prime Rate over
a term of not greater than 60 months.
(c) Loans by a Member to the Company shall not be considered
contributions to the capital of the Company.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
4.1 Non-Liquidating Cash Distributions. The amount, if any, of
Available Cash shall be determined by the Members after each fiscal year end and
shall be distributed to the Members within 90 days following the end of such
fiscal year, or at such other time(s) as determined by the Members, in the
following order of priority:
(a) First, to each Member in an amount equal to the sum of the
mutually agreed upon fees and expenses of outside counsel, all fees and
expenses of accountants and consultants and all other organization
expenses that are paid by such Member in connection with the formation
of the Company and the negotiation, preparation and closing of this
Agreement and the Operative Agreements, less all prior Distributions
made in accordance with this Section 4.1(a); provided, in no event
shall the
<PAGE>
aggregate Distributions to each Member pursuant to this Section 4.1(a)
exceed $250,000. The amounts reimbursed in accordance with this Section
4.1(a) shall constitute organizational expenses of and shall be
amortizable by the Company.
(b) Next, to the Members in proportion to their respective
Retained Earnings Balance Percentages, until the cumulative amount of
the distribution made pursuant to this Section 4.1(b) equals the sum of
the Retained Earnings Balances of all of the Members.
(c) Next, to the Members in proportion to and to the extent of
their respective positive Capital Account balances.
(d) Finally, to the Members in accordance with each Member's
Percentage Interest.
4.2 Liquidation Distributions. Liquidation Proceeds shall be
distributed in the following order of priority:
(a) First, to the payment of debts and liabilities of the
Company (including to Members to the extent otherwise permitted by law)
and the expenses of liquidation.
(b) Next, to the setting up of such reserves as the Person
required or authorized by law to wind up the Company's affairs may
reasonably deem necessary or appropriate for any disputed, contingent
or unforeseen liabilities or obligations of the Company, provided that
any such reserves shall be paid over by such Person to an independent
escrow agent, to be held by such agent or its successor for such period
as such Person shall deem advisable for the purpose of applying such
reserves to the payment of such liabilities or obligations and, at the
expiration of such period, the balance of such reserves, if any, shall
be distributed as hereinafter provided.
(c) Next, in the event the Company was dissolved pursuant to
Section 9.1(c), then (i) the Member that terminated the Company in
accordance with the provisions of Section 9.1(c) (for purposes of this
Section 4.2(c), the "Terminating Member") and the other Member (for
purposes of this Section 4.2(c), the "Nonterminating Member") shall
each retain the exclusive right to any brand name owned by such Member,
(ii) all additive system equipment owned by the Company will be
distributed in kind to the Nonterminating Member and (iii) the
exclusive right to any brand names developed and owned by the Company
will be distributed in kind to the Nonterminating Member.
(d) Next, to the Members in proportion to and to the extent of
their respective Capital Account balances after taking into account the
allocation of all Income or Loss pursuant to this Agreement for the
fiscal year(s) in which the Company is liquidated.
<PAGE>
(e) Finally, to the Members in accordance with their
respective Percentage Interests.
4.3 Profits, Losses and Distributive Shares of Tax Items. The Company's
net income or net loss, as the case may be, for each fiscal year of the Company
or part thereof, as determined in accordance with such method of accounting as
may be adopted for the Company pursuant to Article VI, shall be allocated to the
Members for both financial accounting and income tax purposes as set forth in
this Article IV, except as otherwise provided for herein or unless the Members
agree otherwise.
4.4 Allocation of Income, Loss and Credits. Income or Loss and Credits
shall be allocated between the Members in proportion to their respective Agency
Fee Percentages for the applicable fiscal year or other period.
4.5 Special Rules Regarding Allocations. Notwithstanding the foregoing
provisions of this Article IV, the following special rules shall apply in
allocating the net income or net loss of the Company:
(a) Section 704(c) and Revaluation Allocations. In accordance
with Code Section 704(c) and the Treasury Regulations thereunder,
income, gain, loss and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the Company
for federal income tax purposes and its Fair Value at the time of
contribution. In the event of a Revaluation, subsequent allocations of
income, gain, loss and deduction with respect to such property shall
take account of any variation between the adjusted basis of such
property to the Company for federal income tax purposes and its Fair
Value immediately after the adjustment in the same manner as under Code
Section 704(c) and the Treasury Regulations thereunder. Any elections
or other decisions relating to such allocations shall be made by the
Members in a manner that reasonably reflects the purpose and intention
of this Agreement. Allocations pursuant to this Section 4.5(a) are
solely for income tax purposes and shall not affect, or in any way be
taken into account in computing, for book purposes, each Member's
Capital Account or share of income or loss, pursuant to any provision
of this Agreement.
(b) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV, if there is a net decrease in Company
Minimum Gain during a Company taxable year, each Member shall be
allocated items of income and gain for such year (and, if necessary,
for subsequent years) in an amount equal to that Member's share of the
net decrease in Company Minimum Gain during such year (hereinafter
referred to as the "Minimum Gain Chargeback Requirement"). A Member's
share of the net decrease in Company Minimum Gain is the amount of the
total decrease multiplied by the Member's percentage share of the
Company Minimum Gain at the end of the
<PAGE>
immediately preceding taxable year. A Member is not subject to the
Minimum Gain Chargeback Requirement to the extent: (i) the Member's
share of the net decrease in Company Minimum Gain is caused by a
guarantee, refinancing or other change in the debt instrument causing
it to become partially or wholly recourse debt or a Member Nonrecourse
Debt, and the Member bears the economic risk of loss for the newly
guaranteed, refinanced or otherwise changed liability; (ii) the Member
contributes capital to the Company that is used to repay the
Nonrecourse Debt and the Member's share of the net decrease in Company
Minimum Gain results from the repayment; or (iii) the Minimum Gain
Chargeback Requirement would cause a distortion and the Commissioner of
the Internal Revenue Service waives such requirement.
A Member's share of Company Minimum Gain shall be computed in
accordance with Treasury Regulation ss. 1.704-2(g) and as of the end of
any Company taxable year shall equal: (1) the sum of the Nonrecourse
Deductions allocated to that Member up to that time and the
distributions made to that Member up to that time of proceeds of a
Nonrecourse Debt allocable to an increase of Company Minimum Gain;
minus (2) the sum of that Member's aggregate share of net decrease in
Company Minimum Gain plus that Member's aggregate share of decreases
resulting from revaluations of Property subject to Nonrecourse Debts.
In addition, a Member's share of Company Minimum Gain shall be adjusted
for the conversion of recourse and Member Nonrecourse Debts into
Nonrecourse Debts in accordance with Treasury Regulation ss.
1.704-2(g)(3). In computing the above, amounts allocated or distributed
to the Member's predecessor in interest shall be taken into account.
(c) Member Minimum Gain Chargeback. Notwithstanding any other
provision of this Article IV other than Section 4.5(b) above, if there
is a net decrease in Member Minimum Gain during a Company taxable year,
each Member which has a share of the Member Minimum Gain (determined
under Treasury Regulation ss. 1.704-2(i)(5) as of the beginning of the
year) shall be allocated items of income and gain for such year (and,
if necessary, for subsequent years) equal to that Member's share of the
net decrease in Member Minimum Gain. In accordance with Treasury
Regulation ss. 1.704-2(i)(4), a Member is not subject to this Member
Minimum Gain Chargeback requirement to the extent the net decrease in
Member Minimum Gain arises because the liability ceases to be Member
Nonrecourse Debt due to a conversion, refinancing or other change in
the debt instrument that causes it to be partially or wholly a
Nonrecourse Debt. The amount that would otherwise be subject to the
Member Minimum Gain Chargeback requirement is added to the Member's
share of Company Minimum Gain.
(d) Qualified Income Offset. In the event a Member
unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulation ss. 1.704.1(b)(2)(ii)(d)(4), (5) or
(6), that causes or increases such Member's Adjusted Capital Account
Deficit, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as possible, provided that
an allocation under this Section 4.5(d) shall be made if and only to
the extent such Member would have an Adjusted Capital Account Deficit
after all other allocations under this Article IV have been made.
<PAGE>
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other period shall be allocated to the Members in
proportion to their Agency Fee Percentages for such fiscal year or
other period.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be allocated to the Members which bear the risk of
loss with respect to the loan to which such Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation ss.
1.704-2(i).
(g) Curative Allocations. Any special allocations of items of
income, gain, deduction or loss pursuant to Sections 4.5(b), (c), (d),
(e) and (f) hereof shall be taken into account in computing subsequent
allocations of income and gain pursuant to this Article IV, so that the
net amount of any items so allocated and all other items allocated to
each Member pursuant to this Article IV shall, to the extent possible,
be equal to the net amount that would have been allocated to each such
Member pursuant to the provisions of this Article IV if such
adjustments, allocations or distributions had not occurred. In
addition, allocations pursuant to this Section 4.5(g) with respect to
Nonrecourse Deductions in Section 4.5(e) and Member Nonrecourse
Deductions in Section 4.5(f) shall be deferred to the extent the
Members reasonably determine that such allocations are likely to be
offset by subsequent allocations of Company Minimum Gain or Member
Minimum Gain, respectively.
(h) Loss Allocation Limitation. Notwithstanding the other
provisions of this Article IV, unless otherwise agreed to by all the
Members, no Member shall be allocated Loss in any taxable year that
would cause or increase an Adjusted Capital Account Deficit as of the
end of such taxable year.
(i) Share of Nonrecourse Liabilities. Solely for purposes of
determining a Member's proportionate share of the "excess nonrecourse
liabilities" of the Company within the meaning of Treasury Regulation
ss. 1.752-3(a)(3), each Member's interest in Company profits is equal
to such Member's respective Agency Fee Percentages for the fiscal year
in which such determination is made.
(j) Compliance with Treasury Regulations. The foregoing
provisions of this Section 4.5 are intended to comply with Treasury
Regulation ss.ss.1.704-1(b), 1.704-2 and 1.752-1 through 1.752-5, and
shall be interpreted and applied in a manner consistent with such
Treasury Regulations. In the event it is determined by the Members that
it is prudent or advisable to amend this Agreement in order to comply
with such Treasury Regulations, the Members are empowered to so amend
or modify this Agreement, notwithstanding any other provision of this
Agreement.
<PAGE>
(k) General Allocation Provisions. For purposes of determining
Income, Loss or any other items for any period, Income, Loss or any
such other items shall be determined on a daily basis, using any
permissible method under Code Section 706 and the Treasury Regulations
thereunder.
4.6 Preferred Return. The Company shall allocate an amount of gross
income and shall distribute to the Non-Defaulting Member an amount equal to any
interest and Late Payment Fee paid to the Company by or collected by the Company
from a Defaulting Member under Section 3.3(b) or (c) (the "Preferred Return"),
less the amount of interest paid by the Company pursuant to Section 3.6(a) on a
loan to the Company by the Non-Defaulting Member of the Defaulting Member's
Defaulted Amount pursuant to Section 3.3(b)(v).
4.7 Withholding of Distributions. Notwithstanding any other provision
of this Agreement, the Members (or any Person required or authorized by law to
wind up the Company's affairs) may suspend, reduce or otherwise restrict
Distributions of Available Cash and Liquidation Proceeds when the Members deem
such action is in the best interests of the Company.
4.8 No Priority. Except as may be otherwise expressly provided herein,
no Member shall have priority over any other Member as to Company income, gain,
loss, credits and deductions or distributions.
4.9 Tax Withholding. Notwithstanding any other provision of this
Agreement, the Members are authorized to take any action they determine to be
necessary or appropriate to cause the Company to comply with any withholding
requirements established under any federal, state or local tax law, including,
without limitation, withholding on any Distribution to any Member. For the
purposes of this Article IV, any amount withheld on any Distribution and paid
over to the appropriate governmental body shall be treated as if such amount had
in fact been distributed to the Member.
4.10 Reserves. The Members through their Representatives shall have the
right to establish, maintain and expend Reserves to provide for working capital,
for future maintenance, repair or replacement of Property, for debt service, and
future investments, and for such other purposes as the Members deem necessary or
advisable.
4.11 Setoff. All Distributions to a Member shall be subject to setoff
by the Company for any past due obligations of such Member (or its predecessor
in interest) to the Company.
<PAGE>
ARTICLE V
MANAGEMENT AND OPERATIONS
5.1 Management. The business and affairs of the Company shall be
managed by the Members in the manner provided in this Article V.
(a) Management Committee. The Members shall meet and transact
business through a Management Committee. During the Initial Period, the
Management Committee shall be composed of three Representatives of each
Member. Following the Initial Period, the Management Committee shall be
composed of two Representatives of each Member. Each Member shall act
through its Representatives, who shall be empowered to attend
Management Committee meetings and cast such Member's vote. Each
Representative of a Member shall be a director, officer or employee of
such Member. A Member may appoint or substitute its Representatives
orally or in writing. Each Representative shall serve at the pleasure
of the Member appointing such Representative, and each Member may
designate a successor Representative at any time. Each Member may rely
on the other Members' Representatives with respect to the authority of
such Representatives to act for their respective Members.
Representatives shall serve without compensation unless otherwise
determined by the Members.
(b) Meetings. The Management Committee shall meet at least
quarterly and shall hold an annual meeting following the end of each
fiscal year. Any Member may call a special meeting of the Management
Committee. The Chairman or Secretary of the Management Committee shall,
not later than five days after preliminary financial results for a
fiscal quarter become available, call a regular quarterly meeting of
the Management Committee, and shall, not later than five days after
preliminary financial results for a fiscal year become available, call
the annual Management Committee meeting. The initial Management
Committee meeting shall be held at 3315 North Oak Trafficway, Kansas
City, Missouri, and thereafter the Management Committee meetings shall
be held alternately at 5500 Cenex Drive, Inver Grove Heights,
Minnesota, and 3315 North Oak Trafficway, Kansas City, Missouri, or at
such other place as shall be designated by the Person calling the
meeting and stated in the notice of the meeting or a duly executed
waiver of notice thereof. Representatives may participate in a
Management Committee meeting by means of video or audio conferencing or
similar communications equipment whereby all Representatives
participating in the meeting can hear each other.
(c) Election of Chairman and Secretary. At the first meeting
of the Management Committee following the Effective Date, and
thereafter at each annual meeting of the Management Committee, the
Members through their Representatives shall elect, from among
themselves, a Chairman and a Secretary of the Management Committee,
each to serve until a successor is elected or until removed by the
Members. Notwithstanding the foregoing, (i) the Chairman of the
Management Committee shall alternate on an annual basis between a
Representative of CHS and a Representative of Farmland and (ii) no
Co-President or President shall be eligible to serve as the Chairman
<PAGE>
of the Management Committee. The Chairman and Secretary of the
Management Committee shall serve without compensation unless otherwise
determined by the Members.
(d) Notice of Meeting. Notice of each meeting of the
Management Committee, stating the place, day and hour of the meeting,
and, in the case of a special meeting, the purpose or purposes of the
meeting, shall be given to each member of the Management Committee at
least ten days before the day on which the meeting is to be held.
(e) Waiver of Notice. Whenever any notice is required to be
given to a Member or to a member of the Management Committee under the
provisions of this Agreement, a waiver thereof in writing signed by at
least one of such Member's Representatives or other authorized officer,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance of a Representative
at any meeting of the Management Committee shall constitute waiver of
notice of such meeting by the Member he represents, except where a
Representative attends a meeting for the express purpose of stating his
Member's objection to the transaction of any business because the
meeting is not lawfully called or convened.
(f) Quorum. A quorum for Management Committee meetings shall
consist of at least one Representative of each of the Members.
(g) Voting. Each Member shall have one vote, which may be cast
by all or one of the Representatives of such Member. All Management
Committee decisions and all actions of the Members shall require the
unanimous affirmative vote of the Members.
(h) Action Without a Meeting. Any action that is required to
or may be taken at a meeting of the Management Committee may be taken
without a meeting if consents in writing, setting forth the action so
taken, are signed by at least one Representative or authorized officer
of each Member. Such consents shall have the same force and effect as a
unanimous affirmative vote at a meeting duly held.
5.2 Co-Presidents/President
(a) The day-to-day business and affairs of the Company shall
be managed by two Co-Presidents during the Initial Period and one
President thereafter, as set forth in Sections 5.2(b) and 5.2(c). The
Co-Presidents (during the Initial Period) and the President
(thereafter) shall have the authority and duties ordinarily imposed
upon the chief executive officer of a corporation or as otherwise
determined by the Management Committee from time to time. The
Co-Presidents (during the Initial Period) and the President
(thereafter) shall take all actions required to implement the Business
Plan and the decisions of the Management Committee and to conduct the
day-to-day management of the
<PAGE>
business and affairs of the Company. The Co-Presidents (during the
Initial Period) and the President (thereafter) shall serve at the
direction of the Management Committee in all respects. The Management
Committee shall determine the compensation and benefits of the
Co-Presidents (during the Initial Period) and the President
(thereafter).
(b) During the Initial Period, there shall be two
Co-Presidents. Each Member shall appoint one Co-President to be
selected from the Representatives appointed by such Member. Each
Co-President shall serve at the pleasure of the Member appointing such
Co-President, and each Member may designate a successor Co-President at
any time during the Initial Period. A Member may appoint or substitute
its Co-President by giving written notice to the other Member. The two
Co-Presidents shall manage the day-to-day business and affairs of the
Company jointly. In the event of a disagreement regarding the manner in
which their responsibilities should be carried out, the Co-Presidents
shall make a good faith effort to resolve such disagreement. If the
Co-Presidents, acting reasonably and in good faith, are unable to
achieve a mutually acceptable resolution to the disagreement, then the
Management Committee shall attempt to resolve the disagreement at its
next meeting. If the Management Committee is able to resolve the
matter, it shall direct the Co-Presidents accordingly. In the event
that the Management Committee is unable to resolve the matter, then the
Chairman of the Management Committee shall make the final decision with
respect to the item in question and shall direct the Co-Presidents
accordingly.
(c) Following the Initial Period, the Members shall elect a
single President on an annual basis, who shall serve until his
successor is elected or until removed by the Members. The President
shall not be eligible to serve as a Representative. In the event that
the Members fail to elect a President in any year, the then current
President shall continue to serve as President until that date that is
three years from the date such President was last elected by the
Members as President, unless such President is removed or a successor
is elected prior to such date.
5.3 Officers and Employees
(a) The Co-Presidents or President may appoint other officers
of the Company to serve in such capacities and with such titles as such
Co-Presidents or President deem necessary or appropriate.
(b) In accordance with the Business Plan, the Co-Presidents or
President shall determine the staffing requirements of the Company and
shall cause the Company to lease or hire (as provided in this Section
5.3) such employees as required for the conduct of the Company's
operations. During the period commencing on the Effective Date and
ending on December 31, 1998, the Company shall not hire its own
employees, but shall meet its staffing
<PAGE>
requirements with Dedicated Employees leased by the Members. Each
Member shall enter into a Personnel Lease Agreement with the Company
and shall lease to the Company such Dedicated Employees as are
designated by the Co-Presidents or President, in accordance with the
terms and conditions of such Personnel Lease Agreement. Following
December 31, 1998, unless otherwise determined by the Members: (i) the
Company shall hire its own workforce; (ii) the leasing of Dedicated
Employees by the Members shall cease; and (iii) those Dedicated
Employees who continue to be required in the Company's Business shall
be hired as employees of the Company.
5.4 Agency. The Company shall serve as the exclusive agent for the
Members for (i) the marketing, sales and distribution of Energy Products to
Customers, (ii) the invoicing and collection of receivables arising from the
sale of Energy Products to Customers and (iii) the purchasing of Energy
Products, in accordance with the terms and conditions of the Agency Agreements
attached hereto as Exhibit D.
5.5 Agency Fee. Each Member shall pay an Agency Fee to the Company, all
in accordance with the terms and conditions of the Agency Agreements attached
hereto as Exhibit D.
5.6 Sales Split
(a) Each sale of an Energy Product made by the Company as an
agent for the Members shall be deemed to be made in part by CHS and in
part by Farmland, in accordance with the applicable Sales Split for the
Product Line of such Energy Product. For example, if the Company sells
100 gallons of Branded Fuel to a Customer as an agent for the Members
and the Sales Split with respect to Branded Fuel at the time of the
sale is 62%CHS/38% Farmland, then 62 gallons of Branded Fuel will be
sold to the Customer by CHS and 38 gallons of Branded Fuel will be sold
to the Customer by Farmland. The Company shall act as agent for CHS
with respect to its portion of the sale and as agent for Farmland with
respect to its portion of the sale.
(b) The Sales Split for Tender Sale Fuel shall always be equal
to the Refined Fuel Sales Split.
(c) The Sales Split for each Regular Product Line will be
based upon the relative sales volume of each Member with respect to
such Regular Product Line. Specifically, the Sales Split for a given
Regular Product Line shall be "X% CHS/Y% Farmland," where X is equal to
the CHS Base Line Volume for such Regular Product Line divided by the
Total Base Line Volume for such Regular Product Line, multiplied by
100, and Y is equal to the Farmland Base Line Volume for such Regular
Product Line divided by the Total Base Line Volume for such Regular
Product Line, multiplied by 100; provided, however, that X and Y shall
be rounded to the nearest whole percentage.
<PAGE>
(d) The initial CHS Base Line Volume, Farmland Base Line
Volume and resulting Total Base Line Volume and Sales Split with
respect to each Regular Product Line shall be as set forth in Schedule
5.6(d) hereto.
(e) On or before August 31 of each calendar year, commencing
August 31, 1999, the Management Committee will determine, with respect
to each Regular Product Line, the CHS Base Line Volume, Farmland Base
Line Volume and the resulting Total Base Line Volume and Sales Split
that will apply during the fiscal year immediately following the then
current fiscal year in accordance with the provisions of this Section
5.6. The CHS Base Line Volume, Farmland Base Line Volume and resulting
Total Base Line Volume and Sales Split with respect to each Regular
Product Line that are applicable to the then current fiscal year will
remain unchanged and will be applicable during the following fiscal
year unless (1) there was an Investment Change by a Member during the
one-year period ending on June 30 of the then current calendar year
(the "Sales Year") that affected the sales volume of such Regular
Product Line during the Sales Year or (2) disregarding the effect on
sales volume of any Investment Change by a Member during the Sales
Year, the sales volume for such Regular Product Line for the Sales Year
is greater than the Total Base Line Volume with respect to such Regular
Product Line, in which case the following adjustments shall be made to
the then current CHS Base Line Volume, Farmland Base Line Volume, Total
Base Line Volume and Sales Split for such Regular Product Line to
establish the new CHS Base Line Volume, Farmland Base Line Volume,
Total Base Line Volume and Sales Split for such Regular Product Line:
(i) If there are any unit sales volume increases or
decreases with respect to such Regular Product Line that are
due to an Investment Change by a Member during the Sales Year,
then the number of units of the applicable Energy Product that
would have been attributable to such Investment Change during
the Sales Year if such Investment Change had been made on the
first day of the Sales Year (which shall be equal to the
number of units of the applicable Energy Product attributable
to the Investment Change during the Sales Year divided by the
number of days in the Sales Year following the date of the
Investment Change, multiplied by 365) shall be added to, or in
the case of a decrease in volume, subtracted from, that
Member's Base Line Volume (either the CHS Base Line Volume or
the Farmland Base Line Volume, as applicable) with respect to
such Regular Product Line;
(ii) If, disregarding the effect on unit sales volume
of any Investment Change by a Member during the Sales Year,
the sales volume for such Regular Product Line for the Sales
Year is greater than the Total Base Line Volume with respect
to such Regular Product Line, then the number of units of
increased volume for such Regular Product Line (for
<PAGE>
purposes of this Section 5.6(e)(ii), the "Increased Volume
Units"), which is equal to the difference between the number
of units of the applicable Energy Product sold during the
Sales Year and the Total Base Line Value for such Regular
Product Line, shall be allocated between the Members such that
50% of the Increased Volume Units shall be added to the CHS
Base Line Volume and 50% of the Increased Volume Units shall
be added to the Farmland Base Line Volume, irrespective of the
source of the increased volume; and
(iii) After the adjustments to the CHS Base Line
Volume and Farmland Base Line Volume set forth in Sections
5.6(e)(i) and 5.6(e)(ii) have been made, the resulting Total
Base Line Volume shall be calculated as provided in the
definition of Total Base Line Volume in Section 1.2 and the
resulting Sales Split shall be calculated as provided in
Section 5.6(c).
5.7 Exchange Agreements. The Members shall exchange Energy Products
with each other and purchase Energy Products from each other in accordance with
the terms and conditions of the Exchange Agreements attached hereto as Exhibit
E. The Members agree that a sale of Energy Products by one Member to the other
Member pursuant to any Exchange Agreement shall not be considered a sale for
purposes of determining patronage sales to the other Member, and each Member
hereby waives any and all rights under the bylaws or other organizational
documents of the other Member to receive any patronage dividends or
distributions from the other Member as a result of any purchases of Energy
Products made pursuant to any Exchange Agreement.
5.8 Management Services. Each Member shall provide services to the
Company and the Company shall provide services to each Member in accordance with
the terms and conditions of the Management Services Agreements attached hereto
as Exhibit B. The Company will manage the lubricant plants owned by the Members
and the corporation known as Cenex-Farmland, Inc., which is a joint venture
between the Members, pursuant to such Management Services Agreements.
5.9 Lease of Office Space. Each Member shall lease office space to the
Company for the conduct of the Company's administrative operations in accordance
with the terms and conditions of the Office Lease Agreements attached hereto as
Exhibit F.
5.10 Contracts with Members or their Affiliates. Except for the
transactions contemplated by the Operative Agreements, which are hereby approved
by the Members, and except as provided in Section 3.6, any contract or
transaction between the Company and one of its Members or any of a Member's
Affiliates is permissible only if such contract or transaction, and the Member's
interest therein, are fully disclosed to and the terms of such contract or
transaction are approved by the disinterested Member.
<PAGE>
5.11 Other Business Ventures. Subject to the provisions of Section
5.12, any Member may engage in or possess an interest in other business ventures
of every nature and description, independently or with others, and neither the
Company nor the other Members shall have any right by virtue of this Agreement
in or to such other business ventures or to the income or profits derived
therefrom. The Members and Representatives shall not be required to devote all
of their time or business efforts to the affairs of the Company, but shall
devote so much of their time and attention to the Company as is reasonably
necessary and advisable to manage the affairs of the Company in a prudent
manner.
5.12 Competition. Notwithstanding the provisions of Section 5.11, each
Member covenants that it will not, directly or through any Affiliate, own or
engage in any business within the United States of America, Canada or Mexico
which is in competition with the Company's Business. Each Member acknowledges
that the foregoing restrictions are reasonable in scope and duration and are
necessary to protect the Company's Business and the investment of each Member in
the Company. If any Member, directly or through an Affiliate, violates any of
its respective covenants in this Section 5.12, the Company, upon the approval of
the non-violating Member, shall be permitted to obtain specific, injunctive or
other equitable relief against such violation from a court of competent
jurisdiction, without the necessity of posting bond or proving lack of an
adequate remedy at law. Such remedy shall be cumulative and not exclusive of any
other remedy available to the Company at law or in equity. Each Member shall be
released from its respective covenants in this Section 5.12 upon dissolution or
termination of the Company.
5.13 Confidentiality. The Company and each Member, in the course of
their activities pursuant to this Agreement and the Operative Agreements, shall
have access to, and shall have disclosed to them, proprietary and other
confidential information concerning their respective business affairs relating
to the sale of the Energy Products subject to this Agreement. This proprietary
and confidential information constitutes valuable business assets of each of
them, any of which, if used, applied or disclosed, will cause substantial and
irreparable damage to the business and asset value of each, respectively.
Accordingly, none of the Company or the Members shall, at any time, use, apply
or disclose any of such confidential and proprietary information without the
prior written consent of each of the others. The Company shall not obtain, and
the Members shall not exchange, confidential or proprietary information
concerning the activities of the Members that are outside the scope of the
Company's Business. Each of the Company and the Members shall, in addition to
any other available rights and remedies, be entitled to enjoin and restrain any
of the others from violating or continuing to violate the preceding obligations.
The obligations referred to in this Section 5.13 shall survive the dissolution
of the Company.
5.14 Truck Transportation. It is the intent of the Members that the
Company shall not be responsible for providing truck transportation with respect
to Energy Products. It is acknowledged that each of the Members operates its own
truck
<PAGE>
transportation business, and the Company shall not be required to use the
transportation services of the Members when it arranges truck transportation for
Customers.
5.15 Claims Arising from the Sale of Energy Products. Except to the
extent of a breach by a Member of a representation, warranty or agreement
contained in this Agreement or any of the Operative Agreements, it is understood
and agreed that the liability and costs associated with a claim arising from the
sale of Energy Products by the Company on behalf of the Members as contemplated
herein and in the Operative Agreements, shall be shared based on the portion of
the Energy Products sold by each Member giving rise to such claim. Further, the
Members and the Company agree to cooperate in the defense of any such claim to
most efficiently administer and defend such claim, including entering into
appropriate joint defense agreements.
5.16 Execution of Documents Filed with Secretary of State of Delaware.
Each Member shall be authorized to execute and file with the Secretary of State
of Delaware any document permitted or required by the Act. Such documents shall
be executed and filed only after the Management Committee has approved or
consented to such action.
5.17 Liability and Indemnification
(a) Limitation of Liability. No Person shall be liable to the
Company or the Members for any loss, damage, liability or expense
suffered by the Company or its Members on account of any action taken
or omitted to be taken by such Person as a Member, Representative,
Co-President, President or other officer, or by such Person while
serving at the request of the Company as a director, officer or in any
other comparable position of any Other Enterprise, if such Person
discharges such Person's duties in good faith and in a manner such
Person reasonably believes to be in or not opposed to the best interest
of the Company. The liability of a Member, Representative,
Co-President, President or officer hereunder shall be limited only for
those actions taken or omitted to be taken by such Person in connection
with the management of the business and affairs of the Company. The
provisions of this Section 5.17 are not intended to limit the liability
of any Member in any other connection, including but not limited to any
obligations of such Member undertaken in this Agreement.
(b) Right to Indemnification. The Company shall indemnify each
Person who has been or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative or appellate
(regardless of whether such action, suit or proceeding is by or in the
right of the Company or by third parties) by reason of the fact that
such Person is or was a Member, Representative, Co-President, President
or other officer, or employee of the Company, or is or was serving at
the request of the Company as a director, officer or in any other
comparable position of any Other Enterprise, against all liabilities
and expenses, including, without limitation, judgments, amounts paid in
settlement, attorneys' fees, ERISA excise taxes or penalties, fines and
other expenses, actually and reasonably
<PAGE>
incurred by such Person in connection with such action, suit or
proceeding (including, without limitation, the investigation, defense,
settlement or appeal of such action, suit or proceeding); provided,
however, that the Company shall not be required to indemnify or advance
expenses to any Person from or on account of such Person's conduct that
was finally adjudged to have been knowingly fraudulent, deliberately
dishonest or to constitute willful misconduct or recklessness; provided
further, that the Company shall not be required to indemnify or advance
expenses to any Person in connection with an action, suit or proceeding
initiated by such Person unless the initiation of such action, suit or
proceeding was authorized in advance by the unanimous approval of the
Members. A Member, Representative, Co-President, President or other
officer or employee shall be indemnified hereunder only for those
actions taken or omitted to be taken by such Person in connection with
the discharge of such Person's obligations for the management of the
business and affairs of the Company. The provisions of this Section
5.17 are not intended to extend indemnification to any Member for any
obligations of such Member undertaken in this Agreement.
(c) Enforcement of Indemnification. If the Company refuses to
indemnify any Person who may be entitled to be indemnified or to have
expenses advanced under this Section 5.17, such Person shall have the
right to maintain an action in any court of competent jurisdiction
against the Company to determine whether or not such Person is entitled
to such indemnification or advancement of expenses hereunder. If such
court action is successful and the Person is determined to be entitled
to such indemnification or advancement of expenses, such Person shall
be reimbursed by the Company for all fees and expenses (including
attorneys' fees) actually and reasonably incurred in connection with
any such action (including, without limitation, the investigation,
defense, settlement or appeal of such action).
(d) Advancement of Expenses. Expenses (including attorneys'
fees) reasonably incurred in defending an action, suit or proceeding,
whether civil, criminal, administrative, investigative or appellate,
shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Person to repay such amount if it shall ultimately be
determined that such Person is not entitled to indemnification by the
Company. In no event shall any advance be made in instances where the
Members or independent legal counsel reasonably determine that such
Person would not be entitled to indemnification hereunder.
(e) Non-Exclusivity. The indemnification and advancement of
expenses provided by this Section 5.17 shall not be exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under any statute or any agreement, Member
vote, policy of insurance or otherwise, both as to action in their
official capacity and as to action in another capacity while holding
their respective offices, and shall not limit in any way any right or
obligation that the Company may have to make additional
indemnifications with respect to the same or different Persons or
classes of Persons. The indemnification and advancement of expenses
<PAGE>
provided by, or granted pursuant to, this Section 5.17 shall continue
as to a Person who has ceased to be a Member, Representative,
Co-President or President or other officer or employee, and as to a
Person who has ceased serving at the request of the Company as a
director, officer or in any other comparable position of any Other
Enterprise and shall inure to the benefit of the heirs, executors and
administrators of such Person.
(f) Indemnification of Representatives by Members.
Notwithstanding the provisions of this Section 5.17, each Member shall
indemnify its Representatives against liability to the extent and in
the manner as provided by each Member's governing documents A
Representative's right to indemnification shall be satisfied first by
the Member appointing such Representative, and thereafter by the
Company only to the extent such obligation is not fully satisfied after
the indemnification by such Member is taken into account.
(g) Insurance. If approved by the Management Committee, the
Company may purchase and maintain insurance on behalf of any Person who
is or was a Member, Representative, Co-President, President or other
officer or employee, or is or was serving at the request of the Company
as a director, officer or in any other comparable position of any Other
Enterprise, against any liability asserted against such Person and
incurred by such Person in any such capacity, or arising out of such
Person's status as such, whether or not the Company would have the
power, or the obligation, to indemnify such Person against such
liability under the provisions of this Section 5.17.
(h) Amendment and Vesting of Rights. Notwithstanding any other
provision of this Agreement, the terms and provisions of this Section
5.17 shall not be amended or repealed and the rights to indemnification
and advancement of expenses created hereunder shall not be changed,
altered or terminated except by unanimous vote of the Members. The
rights granted or created hereby shall be vested in each Person
entitled to indemnification hereunder as a bargained-for, contractual
condition of such Person's serving or having served as a Member,
Representative, Co-President, President or other officer or employee or
serving at the request of the Company as a director, officer or in any
other comparable position of any Other Enterprise and, while this
Section 5.17 may be amended or repealed, no such amendment or repeal
shall release, terminate or adversely affect the rights of such Person
under this Section 5.17 with respect to any act taken by such Person or
the failure by such Person to take any act prior to such amendment or
repeal, whether the claim arising from such action or failure to act is
asserted before or after such amendment.
(i) Definitions. For purposes of Section 5.17, references to:
(i) The "Company" shall include, in addition to the
resulting or surviving limited liability company, any
constituent limited liability company (including any
constituent of a constituent) absorbed in a consolidation or
merger so that any Person who is or was serving as a member or
manager of such constituent limited liability company, or is
or was serving at the request of such constituent limited
liability company
<PAGE>
as a director or officer or in any other comparable position
of any Other Enterprise shall stand in the same position under
the provisions of this Section 5.17 with respect to the
resulting or surviving limited liability company as such
Person would if such Person had served the resulting or
surviving limited liability company in the same capacity.
(ii) "Other Enterprises" or "Other Enterprise" shall
include, without limitation, any other limited liability
company, corporation, cooperative association, partnership,
joint venture, trust, employee benefit plan or other entity.
(iii) "fines" shall include any excise taxes assessed
against a Person with respect to an employee benefit plan.
(iv) "defense" shall include investigations of any
threatened, pending or completed action, suit or proceeding as
well as appeals thereof and shall also include any defensive
assertion of a cross-claim or counterclaim.
(v) "serving at the request of the Company" shall
include any service as a director, officer or in any other
comparable position that imposes duties on, or involves
services by, a Person with respect to an employee benefit
plan, its participants or beneficiaries.
(vi) a Person who acted in good faith and in a manner
such Person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted "in the best interest of the
Company" as referred to in this Section 5.17.
(j) Severability. If any provision of this Section 5.17 or the
application of any such provision to any Person or circumstance is held
invalid, illegal or unenforceable for any reason whatsoever, the
remaining provisions of this Section 5.17 and the application of such
provision to other Persons or circumstances shall not be affected
thereby and, to the fullest extent possible, the court finding such
provision invalid, illegal or unenforceable shall modify and construe
the provision so as to render it valid and enforceable as against all
Persons and to give the maximum possible protection to Persons subject
to indemnification hereby within the bounds of validity, legality and
enforceability. Without limiting the generality of the foregoing, if
any Member, Representative, Co-President, President or other officer or
employee or any Person who is or was serving at the request of the
Company as a director, officer or in any other comparable position of
any Other Enterprise, is entitled under any provision of this Section
5.17 to indemnification by the Company for some or a portion of the
judgments, amounts paid in settlement, attorneys' fees, ERISA excise
taxes or penalties, fines or other expenses actually and reasonably
incurred by any such Person in connection with any threatened, pending
or completed action, suit or proceeding (including, without limitation,
the investigation, defense, settlement or appeal of such action, suit
or proceeding), whether civil, criminal, administrative, investigative
or appellate, but not,
<PAGE>
however, for all of the total amount thereof, the Company shall
nevertheless indemnify such Person for the portion thereof to which
such Person is entitled.
ARTICLE VI
ACCOUNTING AND BANK ACCOUNTS
6.1 Fiscal Year. The fiscal year and taxable year of the Company shall
end on August 31 of each year, unless a different year is required by the Code
or adopted by the Members.
6.2 Books and Records. At all times during the existence of the
Company, the Company shall cause to be maintained full and accurate books of
account, which shall reflect all Company transactions and be appropriate and
adequate for the Company's Business. The books and records of the Company shall
be maintained at such place or places as the Members shall determine. Each
Member or its Representatives shall have the right during ordinary business
hours and upon reasonable notice to inspect and copy (at such Member's own
expense) all books and records of the Company. The Members may cause the Company
to retain a firm of certified public accountants of recognized standing to audit
the financial statements of the Company.
6.3 Financial Reports
(a) Within 30 days after the end of each month there shall be
prepared and delivered to each Member a balance sheet and related
financial statements for the month then ended.
(b) Within 75 days after the end of each fiscal year, there
shall be prepared and delivered to each Member all information with
respect to the Company necessary for the preparation of the Members'
federal and state income tax returns.
(c) Within 90 days after the end of each fiscal year, there
shall be prepared and delivered to each Member:
(i) a balance sheet as of the end of such year and
related financial statements for the year then ended; and
(ii) other pertinent information regarding the
Company.
6.4 Tax Returns and Elections; Tax Matters Member. The Company shall
cause to be prepared and timely filed all federal, state and local income tax
returns and other returns or statements required of the Company by applicable
law. The Company shall claim all deductions and make such elections for federal
or state income tax purposes that the Members reasonably believe will produce
the most favorable tax results for the Members. CHS is hereby designated as the
Company's "Tax Matters Member," as contemplated under the Code, and in such
capacity is hereby authorized and
<PAGE>
empowered to act for and represent the Company and each of the Members before
the Internal Revenue Service in any audit or examination of any Company tax
return and before any court selected by the Members for judicial review of any
adjustment assessed by the Internal Revenue Service. CHS hereby accepts such
designation. CHS shall provide Farmland with written notice of any federal
income tax audit and shall keep Farmland informed of all material developments
involved in such proceedings. CHS shall consult with Farmland with respect to
any proposed consent or adjustment, and shall not agree to any proposed consent
or adjustment to the Company's income, gain, loss or deductions without the
consent of Farmland, which consent shall not be unreasonably withheld. Without
limiting the general applicability of this Section 6.4, CHS shall not be liable,
responsible or accountable in damages or otherwise to the Company or Farmland
with respect to any action taken by CHS in its capacity as the Tax Matters
Member, provided CHS acted in a manner it believed to be in the best interests
of the Company and its Members. All reasonable out-of-pocket expenses incurred
by CHS in its capacity as the Tax Matters Member shall be considered expenses of
the Company for which CHS shall be entitled to full reimbursement. Nothing in
this Section 6.4 shall limit the ability of the Members to take any action in
their individual capacity relating to those tax audit matters that are left to
the determination of an individual partner under Code Section 6222 through Code
Section 6232.
6.5 Section 754 Election. In the event there occurs a distribution of
Company assets that satisfies the provisions of Section 734 of the Code, upon
the determination of the Members, the Company shall elect, pursuant to Section
754 of the Code, to adjust the basis of the Property to the extent allowed by
Section 734 and shall cause such adjustments to be made and maintained. Any
additional accounting expenses incurred by the Company in connection with making
or maintaining any such basis adjustment shall be reimbursed to the Company from
time to time by the distributee who benefits from the making and maintenance of
such basis adjustment.
6.6 Bank Accounts. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Management
Committee and in the Company's name. Withdrawals therefrom shall be made only by
such persons as are authorized by the Management Committee.
ARTICLE VII
TRANSFERS OF INTERESTS
7.1 Prohibition on Transfer. Except as expressly provided in this
Agreement, no Member may Transfer all or any part of its Interest. Any purported
Transfer of all or part of an Interest in violation of the terms of this
Agreement shall be null and void and of no effect. Effective as of the date of
any attempted Transfer of all or part of an Interest in violation of this
Agreement and continuing for a two-year period thereafter, a Member that
attempts to Transfer all or part of its Interest in violation of this Agreement
shall no longer have the right to vote as a Member, give its approval or
<PAGE>
consent as Member, name Representatives to the Management Committee or
participate in the management of the business and affairs of the Company, and
the vote, consent or approval of the Non-Defaulting Member shall be sufficient
for taking all action required or permitted to be taken by the Members under
this Agreement.
7.2 Involuntary Transfers. In the event of an involuntary Transfer of
the Interest of a Member (the "Transferor") upon the Bankruptcy of such Member
or other involuntary transfer by such Member, any assignee of such Interest who
does not become a Substitute Member as provided in Section 7.3 (a "Transferee")
shall not be a Member and shall not have any right to vote as a Member, give its
consent or approval as a Member, name Representatives to the Management
Committee or participate in the management of the business and affairs of the
Company. In addition, unless and until admitted as a Substitute Member, a
Transferee shall not be entitled to exercise any other rights of a Member in the
Company, including the right to grant approvals or give consents with respect to
the transferred Interest, the right to require any information or accounting of
the Company's Business, or the right to inspect the Company's books and records.
The Transferee shall, however, be entitled to receive Distributions and
allocations of the Company, as provided in Article IV of this Agreement,
attributable to the Interest that is the subject of the Transfer to such
Transferee. A Transferor shall cease to be a Member upon Transfer of its
Interest.
7.3 Substitute Member. A "Substitute Member" is a Transferee admitted
to the Company as a Member and entitled to all rights and bound by all
obligations of the Member for which it is substituted. A Transferee shall have
the right to become a Substitute Member only upon the occurrence of all of the
following:
(a) The Transferee executes an instrument acceptable to the
Non-Transferring Member adopting and agreeing to abide by the terms and
provisions of this Agreement;
(b) The Transferor or Transferee has paid all reasonable
expenses of the Company in connection with the admission of the
Transferee as a Substitute Member; and
(c) The Non-Transferring Member, in its sole and absolute
discretion, shall have consented in writing to such Transferee becoming
a Substitute Member.
Upon satisfaction of all of the foregoing conditions, the
Members shall cause this Agreement to be duly amended to reflect the
admission of the Transferee as a Substitute Member.
7.4 Binding on Transferee. The provisions of this Article VII shall be
binding upon any Transferee of a transferring Member's or Transferee's Interest.
<PAGE>
ARTICL VIII
DISPUTE RESOLUTION
8.1 General Management Issues. In the event that a General Management
Issue shall arise during the term of this Agreement, the Co-Presidents or
President of the Company (as applicable) shall resolve the disagreement and make
the final decision with respect to the item in question. The decision of the
Co-Presidents or President shall be binding on the Members (except to the extent
such decision may be modified pursuant to the provisions of this Section 8.1).
Any Member may appeal, in accordance with the procedure established in this
Section 8.1, any decision made by the Co-Presidents or President pursuant to
this Section 8.1 involving a Material Item. A Member may commence such an appeal
by giving written notice to the other Member, at which time the matter that is
the subject of the appeal shall be submitted to the Management Committee for
review. The Management Committee shall review the matter at its next meeting and
may modify the decision of the Co-Presidents or President to the extent the
Management Committee deems advisable. If the Management Committee fails to
resolve the matter to the satisfaction of the appealing Member, the matter shall
be submitted to the Chief Executive Officers of the Members, who shall promptly
review the matter and may modify the decision of the Co-Presidents or President
to the extent such Chief Executive Officers may agree is advisable. If the Chief
Executive Officers of the Members fail to resolve the matter to the satisfaction
of the appealing Member, the appealing Member shall continue to be bound by the
decision of the Co-Presidents or President.
8.2 Business Issues and Legal Issues
(a) Management Escalation. In the event that a Business Issue
or a Legal Issue shall arise during the term of this Agreement, the
Management Committee shall first make a good faith effort to promptly
resolve such dispute. If the Management Committee is unable to reach
agreement with respect to such dispute within 60 days, then the dispute
shall be submitted to the Chief Executive Officers of the Members, who
shall meet within 30 days to attempt in good faith to resolve the
dispute. If the Chief Executive Officers have not resolved the dispute
within 60 days of the submission of the dispute to the Chief Executive
Officers, then the dispute shall be resolved in accordance with the
provisions of Sections 8.2(b) or 8.2(c), as applicable.
(b) Business Issues. In the event that the Members are unable
to reach agreement with respect to a Business Issue during the term of
this Agreement, the previous agreement with respect to such Business
Issue shall remain in effect until the earlier of the Business Issue
Expiration Date or the date an agreement is reached by the Members with
respect to such Business Issue. If the Members are unable to reach
agreement with respect to such Business Issue prior to the date that is
one year prior to the Business Issue Expiration Date, then each Member
shall have the right to cause the Company to be dissolved by giving
notice to the
<PAGE>
other Member, upon which the Company shall be dissolved on that date
that is six months after the date of such notice. If no Member
exercises the right to dissolve the Company pursuant to the preceding
sentence prior to that date that is six months' prior to the Business
Issue Expiration Date, then the Company shall be dissolved upon the
Business Issue Expiration Date.
(c) Legal Issues. In the event that the Members are unable to
resolve a Legal Issue pursuant to the provisions of Section 8.2(a)
hereof, such dispute shall be submitted to non-binding mediation
administered by the American Arbitration Association in accordance with
its Commercial Mediation Rules. If the Member initiating the mediation
is CHS, the mediation shall take place in Kansas City, Missouri, and if
the Member initiating the mediation is Farmland, the mediation shall
take place in Minneapolis, Minnesota. The Members shall share the
expenses of the mediation on an equal basis. If such dispute is not
resolved by non-binding mediation, the dispute shall be resolved by
binding arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules (as
modified hereby). If the Member initiating the arbitration proceeding
is CHS, the arbitration shall be conducted in Kansas City, Missouri,
and if the Member initiating the arbitration proceeding is Farmland,
the arbitration shall be conducted in Minneapolis, Minnesota. Any award
rendered in the arbitration proceeding shall be final and binding upon
the Members and a judgment thereon may be entered in any court having
competent jurisdiction. The Member initiating the arbitration shall
request, and the American Arbitration Association shall: (i) appoint as
the arbitrator a single retired trial judge in the state where the
arbitration takes place who is familiar with the business conducted by
the Company; (ii) direct the arbitrator to follow substantive rules of
law and the Federal Rules of Evidence; (iii) allow the parties to
conduct discovery pursuant to the rules then in effect under the
Federal Rules of Civil Procedure (excluding confidential records of CHS
or Farmland that are not relevant to the issues being arbitrated) for a
period not to exceed 60 days; (iv) require the testimony to be
transcribed; and (v) require the award to be accompanied by findings of
fact and a statement of reasons for the decision. If a Member is
determined to be liable in any dispute that is determined and/or
settled by arbitration pursuant to this Section 8.2(c), then all costs
and expenses, including reasonable attorney's fees and expert's fees,
of all parties incurred with respect to such dispute shall be borne by
the Member determined to be liable in respect of such dispute;
provided, however, that if complete liability is not assessed against
only one Member, the Members shall share the expenses in proportion to
their respective amounts of liability so determined. In the event that
no Member is determined to be liable in a dispute that is determined
and/or settled by arbitration pursuant to this Section 8.2(c), then the
expenses of arbitration shall be shared equally by the parties unless
otherwise decided by the arbitrator(s). The Members agree to continue
performing their respective obligations under this Agreement while the
dispute is being resolved, except to the extent such obligations are
clearly the subject of the dispute. Notwithstanding any provision
<PAGE>
of this Section 8.2(c), any Member may seek injunctive relief from any
judicial or administrative authority of competent jurisdiction to
enjoin the other Member from breaching any provision of this Agreement
or any Operative Agreement pending resolution of a dispute by mediation
or arbitration pursuant to this Section 8.2(c).
ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 Events Causing Dissolution. The Company shall be dissolved upon the
first to occur of the following events:
(a) The unanimous agreement of the Members to dissolve.
(b) Upon the entry of a decree of dissolution with respect to
the Company by a court of competent jurisdiction.
(c) Upon the voluntary termination of the Company by a Member
in accordance with the provisions of this Section 9.1(c). At any time
after September 1, 2000, a Member may effect a voluntary termination of
the Company by (i) giving notice to the other Member of its intent to
terminate the Company under this Section 9.1(c) and (ii) making a cash
payment to the other Member in an amount equal to the greater of (A)
$5,000,000 or (B) twenty-five percent (25%) of the aggregate of the
other Member's Volume Adjusted Patronage Income (as defined below) for
the two fiscal years ending immediately preceding the date of such
notice (for purposes of this Section 9.1(c), the "Applicable Fiscal
Years"). The Company shall be dissolved pursuant to this Section 9.1(c)
on the date specified in such notice, which date shall be between six
and nine months after the date of such notice. The amount payable by
the terminating Member hereunder shall be paid on the date of
dissolution. For purposes of this Section 9.1(c), a Member's "Volume
Adjusted Patronage Income" for the Applicable Fiscal Years means (1)
for the Member with the greater aggregate patronage sales revenues from
Refined Fuels in the Applicable Fiscal Years (for purposes of this
Section 9.1(c), "Member A"), that Member's aggregate patronage income
from the sale of Refined Fuels for the Applicable Fiscal Years and (2)
for the other Member (for purposes of this Section 9.1(c), "Member B"),
that Member's total patronage income from the sale of Refined Fuels for
the Applicable Fiscal Years multiplied by a fraction, the numerator of
which is the aggregate patronage sales revenues from Refined Fuels of
Member A in the Applicable Fiscal Years and the denominator of which is
the aggregate patronage sales revenues from Refined Fuels of Member B
in the Applicable Fiscal Years. For purposes hereof, patronage sales
revenues and patronage income shall be determined from the books and
records of the Member in accordance with the methods used by such
Member in determining such amounts for patronage dividend allocations
and distributions, and patronage income shall be the amount of such
Member's patronage sourced income attributable to business done with or
for its members and patrons and shall be computed
<PAGE>
without regard to taxes based on income. By way of illustration of the
foregoing, if Member A had aggregate patronage income of $40 million
and aggregate patronage sales revenues of $2.0 billion from Refined
Fuels in the Applicable Fiscal Years, and Member B had $20 million in
aggregate patronage income and $1.5 billion in aggregate patronage
sales revenues from Refined Fuels in such years, then Member A's Volume
Adjusted Patronage Income would be $40 million, and Member B's Volume
Adjusted Patronage Income would be $26.67 million (I.E., $20 million
times ($2.0 billion divided by $1.5 billion)). Member B could terminate
by making a cash payment of $10 million to Member A (I.E., 25% of $40
million). Member A could terminate by making a cash payment of $6.67
million to Member B (I.E., 25% of $26.67 million).
(d) Upon notice given by a Member to the other Member within
60 days after a Change in Control of the other Member; provided,
however, that the Company shall be dissolved pursuant to this Section
9.1(d) on the date specified in such notice, which date shall be
between six and nine months after the date of such notice.
(e) Upon notice given by a Member to the other Member pursuant
to this Section 9.1(e) following an event giving rise to a right to
dissolve the Company pursuant to this Section 9.1(e); provided,
however, that the Company shall be dissolved pursuant to this Section
9.1(e) on the date specified in such notice, which date shall be
between six and nine months after the date of such notice. A Member may
elect to dissolve the Company (by giving notice thereof as hereinafter
provided) in the event that the other Member experiences a material
non-operating loss (for purposes of this Section 9.1(e), a "Material
Loss") and such other Member accounts for the Material Loss in a manner
which will have a material negative impact on the patronage income of
such Member from Energy Products in any fiscal year subsequent to the
fiscal year with respect to which the Material Loss is recorded for
financial accounting purposes. This provision shall not apply to the
application of article and/or bylaw provisions that require or result
in charges against patronage income of all allocation units made on a
non-discriminatory basis and made for purposes of contributing to a
capital reserve. The right of a Member to dissolve the Company
hereunder may be exercised by giving notice to the other Member at any
time after such Member becomes aware of the event giving rise to such
right to dissolve, but in any event shall be exercised within 60 days
after the other Member notifies such Member that an event to which this
Section 9.1(e) applies has occurred.
(f) Upon notice given by a Member to the other Member in the
event that the other Member materially breaches this Agreement or any
Operative Agreement and fails to cure such breach within 60 days after
receiving notice of such breach.
(g) As provided in Section 8.2(b).
To the extent permitted by law, the foregoing are the only events that
may cause a dissolution of the Company, notwithstanding the provisions of
Section 18-801 of the Act.
<PAGE>
9.2 Effect of Dissolution. Except as otherwise provided in this
Agreement, upon the dissolution of the Company, the surviving Members shall take
such actions as may be required pursuant to the Act and shall proceed to wind
up, liquidate and terminate the business and affairs of the Company. In
connection with the winding up of the Company, the Members shall have the
authority to liquidate and reduce to cash (to the extent necessary or
appropriate) the assets of the Company as promptly as is consistent with
obtaining Fair Value therefor, to apply and distribute the proceeds of such
liquidation and any remaining assets in accordance with the provisions of
Section 9.4 hereof, and to do any and all acts and things authorized by, and in
accordance with, the Act and other applicable laws for the purpose of winding up
and liquidation.
9.3 Plan of Liquidation. Commencing upon the earlier of (i) the giving
of notice by a Member of its intent to cause a dissolution of the Company
pursuant to Section 8.2(b), 9.1(c), 9.1(d) or 9.1(e), (ii) in the event of a
dissolution of the Company upon the expiration of an agreement with respect to a
Business Issue pursuant to Section 8.2(b), that date that is six months' prior
to the expiration of such agreement, or (iii) the dissolution of the Company,
the Members shall use their best efforts to agree upon a plan of liquidation
that includes a reasonable allocation between the Members of all of the
Company's vendor contracts, employees and other assets and commitments. Upon the
dissolution of the Company, the Members shall wind up and liquidate the Company
pursuant to any such plan of liquidation.
9.4 Application of Proceeds. Upon dissolution and liquidation of the
Company, the assets of the Company shall be applied and distributed in the order
of priority set forth in Section 4.2.
9.5 Continuing Obligations. If any Member is required to assume or pay
any debt, expense, obligation or liability of the Company following dissolution
or termination, each of the other Members shall contribute its respective pro
rata share of such debt, expense, obligation or liability until the same is
discharged.
ARTICLE X
MISCELLANEOUS
10.1 Title to Assets. Title to the Property and all other assets
acquired by the Company shall be held in the name of the Company. No Member
shall individually have any ownership interest or rights in the Property or any
other assets of the Company, except indirectly by virtue of such Member's
ownership of an Interest. No Member shall have any right to seek or obtain a
partition of the Property or other assets of the Company, nor shall a Member
have the right to any specific assets of the Company upon the liquidation of or
any distribution from the Company.
<PAGE>
10.2 Nature of Interest in the Company. An Interest shall be personal
property for all purposes.
10.3 Notices. Any notice, demand, request or other communication
required or permitted to be given pursuant to this Agreement or the Act to the
Company, any Member or any other Person (a "Notice") shall be sufficient if in
writing and if hand-delivered or sent by certified mail return receipt
requested, commercial overnight delivery service, or facsimile transmission
followed by hard copy within not less than three Business Days, to the Company
at 3315 North Oak Trafficway, Kansas City, Missouri 64116 and at 5500 Cenex
Drive, Inver Grove Heights, Minnesota 55077, or to a Member at its office
address or facsimile number as appearing on the records of the Company. All
Notices that are mailed shall be deemed given as of the date shown on the return
receipt. All Notices that are hand-delivered shall be deemed given upon
delivery. All Notices sent by commercial overnight delivery shall be deemed
given upon receipt. All notices sent by facsimile transmission shall be deemed
given upon electronic confirmation of delivery if delivered no later than 4:30
p.m. Central Time on a Business Day or, if not delivered by 4:30 p.m. Central
Time on a Business Day, on the next Business Day following the date of such
delivery.
10.4 Waiver of Default. No consent or waiver, express or implied, by
the Company or a Member with respect to any breach or default by the other
Member shall be deemed a consent or waiver with respect to any other breach or
default by such Member or the other Member of the same provision or of any other
provision of this Agreement. Failure on the part of the Company or any Member to
complain of any act or failure to act of another Member or to declare such other
Member in default shall not constitute a waiver by the Company or the Member of
any rights hereunder.
10.5 No Third Party Rights. None of the provisions in this Agreement
shall be for the benefit of or enforceable by any third parties, including, but
not limited to creditors of the Company; however, the Company may enforce any
right granted to the Company under the Act, the Certificate or this Agreement.
10.6 Entire Agreement. Together with the Certificate, the Operative
Agreements and the Confidentiality Agreement between Farmland and Cenex, Inc.
(now known as Cenex Harvest States Cooperatives) dated August 13, 1997, this
Agreement constitutes the entire agreement between the Members, in such
capacity, relative to the formation, operation and continuation of the Company.
10.7 Amendments to this Agreement
(a) This Agreement shall not be modified or amended except by
written instrument executed by all the Members.
(b) Notwithstanding the provisions of Sections 5.1(a) and
10.7(a), this Agreement shall be amended in order to reflect the
occurrence of any of the following
<PAGE>
events, provided all the conditions, if any, contained in the relevant
Sections of this Agreement with respect to such event have been
satisfied:
(i) An adjustment in the Percentage Interests of the
Members upon a Defaulting Member's Default.
(ii) The readjustment of the Percentage Interests as
a result of the cure of a Defaulting Member's Default.
(iii) The modification of this Agreement to comply
with the relevant tax laws pursuant to Sections 3.4 or 4.5(j)
hereof.
10.8 Severability. If any provision of this Agreement is held illegal,
invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby,
and the remainder of this Agreement shall continue in full force and effect.
10.9 Binding Agreement. Subject to the restrictions on the disposition
of Interests herein contained, the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.10 Headings. Article and Section headings in this Agreement are for
convenience of reference only and shall have no effect in the interpretation of
this Agreement.
10.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original and all of which, taken together, shall
constitute a single instrument.
10.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
conflicts of laws principles.
<PAGE>
IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date set forth above.
FARMLAND INDUSTRIES, INC.
By: /s/ Robert W. Honse
--------------------------------------------
Robert W. Honse
Executive Vice President & Chief Operating
Officer, Ag Input Businesses
CENEX HARVEST STATES COOPERATIVES
By: /s/ Noel K. Estenson
--------------------------------------------
Name: Noel K. Estenson
Title: Chief Executive Officer
EXHIBIT 10.21
ADDENDUM TO
LIMITED LIABILITY COMPANY AGREEMENT
This Addendum is entered into as of 8:00 a.m., C.D.T., on July 23,
1998, by Cenex Harvest States Cooperatives ("CHS"), a Minnesota cooperative
corporation, and Farmland Industries, Inc. ("Farmland"), a Kansas cooperative
corporation. CHS and Farmland are collectively referred to in this Addendum as
the "Members".
RECITALS
A. CHS and Farmland are Members of Country Energy, LLC, a Delaware
limited liability company (the "Company"), pursuant to a Limited Liability
Agreement dated June 29, 1998 (the "LLC Agreement"). All capitalized terms not
defined herein shall have the meanings assigned to such terms in the LLC
Agreement.
B. The Members desire to amend the provisions of Sections 2.6 and
2.10(a) of Article II of the LLC Agreement.
In consideration of the foregoing and the mutual covenants and promises
contained herein, the Members agree as follows:
1. Sections 2.6 and 2.10(a) of Article II of the LLC Agreement are
hereby amended in their entirety to read as follows:
2.6 Agreement to Finalize Certain Operative Documents. The
Members recognize that certain Exhibits (and certain Schedules attached
to such Exhibits), which consist of certain Operative Agreements, have
not been agreed upon as of the date hereof. The Members agree to
negotiate and work together in good faith to finalize such Operative
Agreements in accordance with the understandings of the Members as of
the date hereof. When the Members and the Company reach agreement with
respect to the terms of all of the Operative Agreements, the Members
and the Company shall execute such agreements and attach such
agreements as Exhibits to this Agreement.
2.10 Business Plan.
(a) The Members agree to work together in good faith
to adopt a Business Plan as soon as possible covering the
three fiscal years commencing on September 1, 1998 (the
"Initial Business Plan").
2. In all other respects, the LLC Agreement, as amended hereby, is
confirmed by the Members.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CENEX HARVEST STATES COOPERATIVES FARMLAND INDUSTRIES, INC.
By: /s/ Noel K. Estenson By: /s/ Robert W. Honse
---------------------------------- ---------------------------------
Name: Noel K. Estenson Name: Robert W. Honse
Title: Chief Executive Officer Title: Executive Vice President
EXHIBIT 10.22
EXECUTION COPY
================================================================================
CENEX HARVEST STATES COOPERATIVES
$225,000,000
6.81% SERIES A SENIOR NOTES DUE JUNE 19, 2013
--------------
NOTE AGREEMENT
--------------
DATED AS OF JUNE 19, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES............................................1
2. PURCHASE AND SALE OF NOTES.................................................1
3. CONDITIONS OF CLOSING......................................................2
3A. OPINION OF PURCHASERS' SPECIAL COUNSEL............................2
3B. OPINION OF COMPANY'S COUNSEL......................................2
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT........................2
3D. PURCHASE PERMITTED BY APPLICABLE LAWS.............................2
3E. MATERIAL ADVERSE CHANGE...........................................2
3F. FEES AND EXPENSES.................................................2
3G. PRIVATE PLACEMENT NUMBER..........................................3
3H. PROCEEDINGS.......................................................3
3I. SALE OF NOTES TO OTHER PURCHASERS.................................3
4. PREPAYMENTS................................................................3
4A. REQUIRED PREPAYMENTS..............................................3
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.................3
4C. NOTICE OF OPTIONAL PREPAYMENT.....................................3
4D. PARTIAL PAYMENTS PRO RATA.........................................4
4E. RETIREMENT OF NOTES...............................................4
5. AFFIRMATIVE COVENANTS......................................................4
5A. FINANCIAL STATEMENTS..............................................4
5B. INFORMATION REQUIRED BY RULE 144A.................................6
5C. INSPECTION OF PROPERTY............................................6
5D. COVENANT TO SECURE NOTE EQUALLY...................................6
5E. OFFER TO PREPAY NOTES IN THE EVENT OF A CHANGE IN CONTROL.........6
5F. COMPLIANCE WITH LAW...............................................8
5G. INSURANCE.........................................................8
5H. MAINTENANCE OF PROPERTIES.........................................8
5I. PAYMENT OF TAXES..................................................8
5J. CORPORATE EXISTENCE, ETC..........................................9
5K. LINES OF BUSINESS.................................................9
5L. AGREEMENT ASSUMING LIABILITY ON NOTES.............................9
i
<PAGE>
6. NEGATIVE COVENANTS.........................................................9
6A. CONSOLIDATED NET WORTH............................................9
6B. FUNDED DEBT.......................................................9
6C. PRIORITY DEBT....................................................10
6D. LIENS............................................................10
6E. MERGER AND CONSOLIDATION.........................................12
6F. SALE OF ASSETS...................................................12
6G. TRANSACTIONS WITH AFFILIATES.....................................13
6H. SUBSIDIARY DIVIDEND RESTRICTIONS.................................13
6I. SUBSIDIARY PREFERRED STOCK.......................................14
6J. ISSUANCE OF STOCK BY SUBSIDIARIES................................14
7. EVENTS OF DEFAULT.........................................................14
7A. ACCELERATION.....................................................14
7B. RESCISSION OF ACCELERATION.......................................17
7C. NOTICE OF ACCELERATION OR RESCISSION.............................17
7D. OTHER REMEDIES...................................................17
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.................................17
8A(1). ORGANIZATION.....................................................17
8A(2). POWER AND AUTHORITY..............................................18
8B. FINANCIAL STATEMENTS.............................................18
8C. ACTIONS PENDING..................................................18
8D. OUTSTANDING DEBT.................................................19
8E. TITLE TO PROPERTIES..............................................19
8F. TAXES............................................................19
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS.........................19
8H. OFFERING OF NOTES................................................20
8I. USE OF PROCEEDS..................................................20
8J. ERISA............................................................20
8K. GOVERNMENTAL CONSENT.............................................21
8L. COMPLIANCE WITH ENVIRONMENTAL AND OTHER LAWS.....................21
8M. REGULATORY STATUS................................................21
8N. PERMITS AND OTHER OPERATING RIGHTS...............................21
8O. YEAR 2000 COMPLIANCE.............................................22
8P. DISCLOSURE.......................................................22
9. REPRESENTATIONS OF EACH PURCHASER.........................................22
9A. NATURE OF PURCHASE...............................................22
9B. SOURCE OF FUNDS..................................................23
ii
<PAGE>
10. DEFINITIONS...............................................................24
10A. YIELD-MAINTENANCE TERMS..........................................24
10B. OTHER TERMS......................................................25
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS..................30
11. MISCELLANEOUS.............................................................31
11A. NOTE PAYMENTS....................................................31
11B. EXPENSES.........................................................31
11C. CONSENT TO AMENDMENTS............................................32
11C(1). REQUIRED CONSENT.................................................32
11C(2). SOLICITATION OF HOLDERS OF NOTES.................................32
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES...32
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS............................33
11F. ADDITIONAL SERIES OF NOTES.......................................33
11F(1). PROVISION FOR ADDITIONAL SERIES OF NOTES.........................33
11F(2). CONDITIONS TO ADDITIONAL SERIES OF NOTES.........................34
11G. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.....34
11H. SUCCESSORS AND ASSIGNS...........................................34
11I. INDEPENDENCE OF COVENANTS........................................34
11J. NOTICES..........................................................34
11K. PAYMENTS DUE ON NON-BUSINESS DAYS................................35
11L. SATISFACTION REQUIREMENT.........................................35
11M. GOVERNING LAW....................................................35
11N. SEVERABILITY.....................................................35
11O. DESCRIPTIVE HEADINGS.............................................35
11P. COUNTERPARTS.....................................................35
11Q. SEVERALTY OF OBLIGATIONS.........................................35
iii
<PAGE>
PURCHASER SCHEDULE
SCHEDULE 6B -- EXISTING FUNDED DEBT
SCHEDULE 6D -- EXISTING LIENS
SCHEDULE 8G -- LIST OF AGREEMENTS RESTRICTING DEBT
SCHEDULE 8I -- USE OF PROCEEDS
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF DISBURSEMENT DIRECTION LETTER
EXHIBIT C -- FORM OF OPINION OF COMPANY'S COUNSEL
iv
<PAGE>
CENEX HARVEST STATES COOPERATIVES
5500 CENEX DRIVE
INVER GROVE HEIGHTS, MN 55077
As of June 19, 1998
To Each of the Purchasers Named in the
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
The undersigned, Cenex Harvest States Cooperatives, a nonstock
agricultural cooperative corporation organized under the laws of the State of
Minnesota (herein called the "COMPANY") formerly known as Harvest States
Cooperatives, and the surviving entity resulting from the merger of Cenex, Inc.,
an agricultural cooperative corporation organized under the laws of the State of
Minnesota ("CENEX"), into the Company, hereby agrees with the purchasers named
in the Purchaser Schedule attached hereto (herein called the "PURCHASERS") as
set forth below. Unless the context requires otherwise, each reference herein to
the "Company", when applicable to a time prior to such merger, shall include
both Cenex and the Company, and each reference herein to a "Subsidiary" of the
Company, when applicable to a time prior to such merger, shall include a
Subsidiary of Cenex or the Company. Reference is made to paragraph 10 hereof for
definitions of capitalized terms used herein and not otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes in the aggregate principal amount of
$225,000,000, to be dated the date of issue thereof, to mature June 19, 2013, to
bear interest on the unpaid balance thereof from the date thereof until the
principal thereof shall have become due and payable at the rate of 6.81% per
annum and on overdue payments at the rate specified therein, and to be
substantially in the form of Exhibit A attached hereto. The term "NOTES" as used
herein shall include each such senior promissory note delivered pursuant to any
provision of this Agreement and each such senior promissory note delivered in
substitution or exchange for any other Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
each Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser agrees to purchase from the Company the aggregate principal amount of
Notes set forth opposite such Purchaser's name in the Purchaser Schedule
attached hereto at 100% of such aggregate principal amount. The Company will
deliver to each Purchaser, at the offices of Schiff Hardin & Waite at 7200 Sears
Tower, Chicago, Illinois 60606, one or more Notes registered in such Purchaser's
name (or in the name of its nominee(s), if any, specified on the Purchaser
<PAGE>
Schedule for such Purchaser), evidencing the aggregate principal amount of Notes
to be purchased by such Purchaser and in the denomination or denominations
specified with respect to such Purchaser in the Purchaser Schedule against
payment of the purchase price thereof by transfer of immediately available funds
on the date of closing, which shall be June 19, 1998 (herein called the
"CLOSING" or the "DATE OF closing"), for credit to the account or accounts as
shall be specified in a letter on the Company's letterhead, in substantially the
form of Exhibit B attached hereto, from the Company to the Purchasers delivered
prior to the date of closing.
3. CONDITIONS OF CLOSING. Each Purchaser's obligation to purchase and
pay for the Notes to be purchased by such Purchaser hereunder is subject to the
satisfaction, on or before the date of closing, of the following conditions:
3A. OPINION OF PURCHASERS'SPECIAL COUNSEL. Such Purchaser shall have
received from Schiff Hardin & Waite, who are acting as special counsel for the
Purchasers in connection with this transaction, a favorable opinion satisfactory
to such Purchaser as to such matters incident to the matters herein contemplated
as it may reasonably request.
3B. OPINION OF COMPANY'S COUNSEL. Such Purchaser shall have received
from Debra Thornton, the General Counsel of the Company, a favorable opinion in
the form of Exhibit C attached hereto, and the Company, by its execution hereof,
hereby requests and authorizes such counsel to render such opinion.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 shall be true on and as of the date of
closing; there shall exist on the date of closing no Event of Default or
Default; and the Company shall have delivered to such Purchaser an Officer's
Certificate, dated the date of closing, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by such Purchaser on the date of closing on the
terms and conditions herein provided (including the use of the proceeds of such
Notes by the Company) shall not violate any applicable law or governmental
regulation (including, without limitation, section 5 of the Securities Act or
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and shall not subject such Purchaser to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation, and such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this condition.
3E. MATERIAL ADVERSE CHANGE. No material adverse change in the
business, condition (financial or otherwise), operations or prospects of the
Company and its Subsidiaries, taken as a whole, since May 31, 1997 shall have
occurred or be threatened, as determined by such Purchaser in its sole judgment.
2
<PAGE>
3F. FEES AND EXPENSES. Without limiting the provisions of paragraph 11B
hereof, the Company shall have paid the reasonable fees, charges and
disbursements of special counsel to the Purchasers referred to in paragraph 3A
hereof.
3G. PRIVATE PLACEMENT NUMBER. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
3H. PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to such Purchaser,
and such Purchaser shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably request.
3I. SALE OF NOTES TO OTHER PURCHASERS. The Company shall have sold to
the other Purchasers the Notes to be purchased by them at the closing and shall
have received payment in full therefor.
4. PREPAYMENTS. The Notes shall be subject to prepayment with respect
to the required prepayments specified in paragraph 4A and the optional
prepayments permitted by paragraph 4B.
4A. REQUIRED PREPAYMENTS. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without premium, the sum of
$37,500,000 on June 19 in each of the years 2008 to 2012, inclusive, and such
principal amounts of the Notes, together with interest thereon to the prepayment
dates, shall become due on such prepayment dates. The remaining outstanding
principal amount of the Notes, together with any accrued and unpaid interest
thereon, shall become due on the maturity date of the Notes.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
multiples of $5,000,000), at the option of the Company, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each Note. Any partial
prepayment of the Notes pursuant to this paragraph 4B shall be applied in
satisfaction of required payments of principal thereof in inverse order of their
scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to paragraph 4B
not less than 10 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be
3
<PAGE>
prepaid on such date and stating that such prepayment is to be made pursuant to
paragraph 4B. Notice of prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together with interest thereon to
the prepayment date and together with the Yield-Maintenance Amount, if any, with
respect thereto, shall become due and payable on such prepayment date. The
Company shall, on or before the day on which it gives written notice of any
prepayment pursuant to paragraph 4B, give telephonic notice of the principal
amount of the Notes to be prepaid and the prepayment date to each Significant
Holder which shall have designated a recipient of such notices in the Purchaser
Schedule attached hereto or by notice in writing to the Company.
4D. PARTIAL PAYMENTS PRO RATA. Upon any partial prepayment of the Notes
pursuant to paragraph 4A or 4B, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding (including, for the purpose of
this paragraph 4D only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates
(including pursuant to paragraph 4E or 5E hereof) other than by prepayment
pursuant to paragraph 4A or 4B) in proportion to the respective outstanding
principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraph 4A or 4B or 5E or upon acceleration of such final maturity pursuant
to paragraph 7A), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company or such Subsidiary or Affiliate
shall have offered to prepay or otherwise retire or purchase or otherwise
acquire, as the case may be, the same proportion of the aggregate principal
amount of Notes held by each other holder of Notes at the time outstanding upon
the same terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision with respect to
such offer, and shall remain open for at least 30 Business Days. If the holders
of more than 5% of the principal amount of the Notes then outstanding accept
such offer, the Company shall promptly notify the remaining holders of such fact
and the expiration date for the acceptance by holders of Notes of such offer
shall be extended by the number of days necessary to give each such remaining
holder at least 15 Business Days from its receipt of such notice to accept such
offer. Any Notes so prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of its Subsidiaries or Affiliates shall not be
deemed to be outstanding for any purpose under this Agreement, except as
provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver to
each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated
4
<PAGE>
statements of income, members' equity and cash flows of the Company and
its Subsidiaries for the period from the beginning of the current
fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
quarterly period, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in form to the Required Holder(s)
and certified by an authorized financial officer of the Company,
subject to changes resulting from year-end adjustments; provided,
however, that the delivery pursuant to clause (iii) below of the
Quarterly Report on Form 10-Q of the Company for such quarterly period
including such financial statements filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this
clause (i);
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidating and consolidated
statements of income and cash flows and a consolidated statement of
members' equity of the Company and its Subsidiaries for such year, and
a consolidating and consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and satisfactory in form to the
Required Holder(s) and, as to the consolidated statements, reported on
by independent public accountants of recognized national standing
selected by the Company whose report shall be without limitation as to
the scope of the audit and satisfactory in substance to the Required
Holder(s) and, as to the consolidating statements, certified by an
authorized financial officer of the Company; provided, however, that
delivery pursuant to clause (iii) below of copies of the Annual Report
on Form 10-K of the Company for such fiscal year including such
financial statements filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, and copies of all registration statements
(without exhibits) and all reports which it files with the Securities
and Exchange Commission (or any governmental body or agency succeeding
to the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company by independent accountants in
connection with any annual, interim or special audit made by them of
the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other information as such
Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance by
the Company and its Subsidiaries with the provisions of paragraphs 6A, 6B, 6C,
6D and 6F and stating that there exists no Event of Default or
5
<PAGE>
Default, or, if any Event of Default or Default exists, specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto. Together with each delivery of financial statements
required by clause (ii) above, the Company will deliver to each Significant
Holder a certificate of such accountants stating that, in making the audit
necessary for their report on such financial statements, they have obtained no
knowledge of any Event of Default or Default arising under paragraph 6A, 6B(iv)
or 6C or under paragraph 6E(ii) or 6F(iv) insofar as such Default or Event of
Default relates to 6E(ii)(c)(y) or 6F(iv)(b)(y) and existing as of the last day
of the Company's fiscal year, or, if they have obtained knowledge of any Event
of Default or Default arising under any such paragraph, specifying the nature
and period of existence thereof. Such accountants, however, shall not be liable
to anyone by reason of their failure to obtain knowledge of any such Event of
Default or Default which would not be disclosed in the course of an audit
conducted in accordance with generally accepted auditing standards. The Company
also covenants that immediately after any Responsible Officer obtains knowledge
of an Event of Default or Default, it will deliver to each Significant Holder an
Officer's Certificate specifying the nature and period of existence thereof and
what action the Company proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act. For the purpose of this paragraph 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense (if no Default or Event of Default then exists) or at the
expense of the Company (if a Default or an Event of Default then exists), to
visit and inspect any of the properties of the Company and its Subsidiaries, to
examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Company and its independent public accountants; provided,
however, that the Company shall have the option to have a representative present
at any meeting between its independent public accountants and such Significant
Holder, all at such reasonable times and as often as such Significant Holder may
reasonably request.
5D. COVENANT TO SECURE NOTE EQUALLY. The Company covenants that if it
or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6D (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), it will
make or cause to be made effective provision
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whereby the Notes will be secured by such Lien equally and ratably with any and
all other Debt thereby secured so long as any such other Debt shall be so
secured.
5E. OFFER TO PREPAY NOTES IN THE EVENT OF A CHANGE IN CONTROL.
5E(1) NOTICE OF IMPENDING CHANGE IN CONTROL. The Company will
not take any action that consummates or finalizes a Change in Control
unless at least 30 days prior to such action it shall have given to
each holder of the Notes written notice of such impending Change in
Control.
5E(2) NOTICE OF OCCURRENCE OF CHANGE IN CONTROL. The Company
will, within five Business Days after any Responsible Officer has
knowledge of the occurrence of any Change in Control, give written
notice of such Change in Control to each holder of the Notes. If a
Change in Control has occurred, such notice shall contain and
constitute an offer to prepay the Notes as described in paragraph 5E(4)
and shall be accompanied by the certificate described in paragraph
5E(7).
5E(3) NOTICE OF ACCEPTANCE OF OFFER UNDER PARAGRAPH 5E(2). If
the Company shall at any time receive an acceptance to an offer to
prepay Notes under paragraph 5E(2) .from some, but not all of, the
holders of the Notes, then the Company will, within two Business Days
after the receipt of such acceptance, give written notice of such
acceptance to each other holder of the Notes.
5E(4) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by paragraph 5E(2) shall be an offer to prepay, in
accordance with and subject to this paragraph 5E, all, but not less
than all, of the Notes held by each holder (in this case only, "holder"
in respect of any Note registered in the name of a nominee for a
disclosed beneficial owner shall mean such beneficial owner) on a date
specified in such offer (the "PROPOSED PREPAYMENT DATE"). Such Proposed
Prepayment Date shall be not less than 30 days and not more than 60
days after the date of such offer (if the Proposed Prepayment Date
shall not be specified in such offer, the Proposed Prepayment Date
shall be the 30th day after the date of such offer). Notwithstanding
the foregoing, if the Company shall be required to give a notice of
acceptance under paragraph 5E(3) hereof with respect to any offer to
prepay Notes under paragraph 5E(2), then the Proposed Prepayment Date
for such offer shall be the later of (i) the date specified in the
immediately preceding sentences, or (ii) the 10th Business Day after
the date the first such notice of acceptance with respect to such offer
was given by the Company under paragraph 5E(3).
5E(5) REJECTION; ACCEPTANCE. A holder of Notes may accept the
offer to prepay made pursuant to this paragraph 5E by causing a notice
of such acceptance to be delivered to the Company prior to the Proposed
Prepayment Date. A failure by a holder of Notes to
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so respond to an offer to prepay made pursuant to this paragraph 5E
shall be deemed to constitute a rejection of such offer by such holder.
5E(6) PREPAYMENT. Prepayment of the Notes to be prepaid
pursuant to this paragraph 5E shall be at 100% of the principal amount
of such Notes, together with interest on such Notes accrued to the date
of prepayment. The prepayment shall be made on the Proposed Prepayment
Date.
5E(7) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this paragraph 5E shall be accompanied by a certificate,
executed by a Responsible Officer of the Company and dated the date of
such offer, specifying (i) the Proposed Prepayment Date, (ii) that such
offer is made pursuant to this paragraph 5E, (iii) the principal amount
of each Note offered to be prepaid, (iv) the interest that would be due
on each Note offered to be prepaid, accrued to the Proposed Prepayment
Date, (v) that the conditions of this paragraph 5E have been fulfilled,
and (vi) in reasonable detail, the nature and date of the Change in
Control.
5F. COMPLIANCE WITH LAW. The Company covenants that it will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject (unless such
failure to comply is subject to a good faith contest), including, without
limitation, environmental laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business, condition (financial or otherwise) or operations
of the Company and its Subsidiaries, taken as a whole.
5G. INSURANCE. The Company covenants that it will, and will cause each
of its Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated; provided,
however, the Company may, to the extent permitted by law, provide for
appropriate self-insurance with respect to workers' compensation.
5H. MAINTENANCE OF PROPERTIES. The Company covenants that it will, and
will cause each of its Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective Properties in good repair, working order
and condition (other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted in all material respects at
all times, provided that this paragraph shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
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Properties if such discontinuance is desirable in the conduct of its business
and such discontinuance would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
5I. PAYMENT OF TAXES. The Company covenants that it will, and will
cause each of its Subsidiaries to, file all income tax or similar tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes, assessments,
governmental charges or levies payable by any of them, and to pay and discharge
all amounts payable for work, labor and materials, in each case to the extent
such taxes, assessments, charges, levies and amounts payable have become due and
payable and before they have become delinquent, provided that neither the
Company nor any Subsidiary need pay any such tax, assessment, charge, levy or
amount payable if (i) the amount, applicability or validity thereof is being
actively contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with generally accepted
accounting principles on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes, assessments, charges, levies and amounts payable
in the aggregate would not reasonably be expected to have a materially adverse
effect on the business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
5J. CORPORATE EXISTENCE, ETC. Subject to paragraph 6E, the Company will
at all times preserve and keep in full force and effect its corporate existence
and will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries. The Company will at all times preserve
and keep in full force and effect all certificates of convenience and necessity,
rights and franchises, licenses, permits, operating rights and other
authorization from federal, state, foreign, regional, municipal and other local
regulatory bodies or administrative agencies or governmental bodies having
jurisdiction over the Company and its Subsidiaries or any of their respective
Properties as are necessary for the ownership, operation and maintenance of its
respective businesses and Properties, unless the termination of or failure to
preserve and keep in full force and effect such corporate existence, right,
certificate or franchise, license, permit, operating right or other
authorization would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
5K. LINES OF BUSINESS. The Company shall not engage in any material
respects in any business activity or operations other than operations or
activities (i) in the agriculture industry, (ii) in the food industry, or (iii)
which are not substantially different from or related to its present business
activities or operations.
5L. AGREEMENT ASSUMING LIABILITY ON NOTES. The Company covenants that,
if at any time any Person should become liable (as co-obligor, endorser,
guaranty or surety) on any other material obligation of the Company, the
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Company will, at the same time, cause such Person to deliver to the holder of
the Notes an agreement pursuant to which such Person becomes similarly liable on
the Notes; provided this paragraph 5L shall not apply to any Person becoming
liable solely as an endorser of a check, or as a signatory to a letter of credit
for trade liabilities of the Company incurred, in the ordinary course of
business.
6. NEGATIVE COVENANTS
6A. CONSOLIDATED NET WORTH. The Company covenants that it will not
permit Consolidated Net Worth at any time to be less than $750,000,000.
6B. FUNDED DEBT. The Company covenants that it will not, and will not
permit any of its Subsidiaries to, directly or indirectly create, issue, incur
or assume any Funded Debt, except:
(i) Funded Debt of any Subsidiary owing to the Company or to
another Wholly-Owned Subsidiary;
(ii) the Funded Debt represented by the Notes;
(iii) Funded Debt existing on the date of this Agreement and
described on Schedule 6B hereto, and any extension, renewal or
refunding thereof (but without increase in the principal amount
outstanding at the time of such extension, renewal or refunding); and
(iv) Funded Debt of the Company and its Subsidiaries created,
issued, incurred or assumed after the date of closing, in addition to
Funded Debt permitted under clauses (i), (ii) and (iii) of this
paragraph 6B, provided that, on the date of the creation, issuance,
incurrence or assumption of such Funded Debt, and after giving effect
thereto and to the application of the proceeds therefrom, the ratio of
(a) the aggregate outstanding principal amount of all Funded Debt of
the Company and its Subsidiaries (other than Funded Debt of any
Subsidiary owing to the Company or to another Wholly-Owned Subsidiary)
to (b) Consolidated Cash Flow for the four fiscal quarters ending with
the fiscal quarter most recently ended prior to such date (if such date
is not the last day of a fiscal quarter) or ending with the fiscal
quarter ended on such date (if such date is the last day of a fiscal
quarter) does not exceed 3.0 to 1.0;
provided that, in each case, after giving effect to the creation, issuance,
incurrence or assumption of such Funded Debt, the Company is in compliance with
paragraph 6C.
6C. PRIORITY DEBT. The Company covenants that it will not, and will not
permit any of its Subsidiaries to, directly or indirectly create, issue, incur
or assume any Priority Debt if after giving effect thereto the aggregate
outstanding principal amount of all Priority
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Debt would exceed 15% of Consolidated Tangible Net Worth at the time of such
creation, issuance, incurrence or assumption.
6D. LIENS. The Company covenants that it will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
suffer to be created, incurred or assumed or to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any Property of the
Company or any of its Subsidiaries, whether now owned or held or hereinafter
acquired (unless (1) provision is made for the equal and ratable securing of the
Notes in accordance with paragraph 5D, and (2) the obligees of the obligations
secured by such Liens shall have entered into an intercreditor agreement with
the holders of the Notes in form and substance satisfactory to the holders of
the Notes), except:
(i) Liens for taxes, assessments or other governmental charges
or levies securing obligations not overdue, or if overdue, being
actively contested in good faith by appropriate proceedings that will
prevent the forfeiture or sale of any Property, provided that adequate
reserves are established in accordance with generally accepted
accounting principles on the books of the Company or a Subsidiary of
the Company;
(ii) attachment, judgment and other similar Liens arising in
connection with court proceedings, provided the execution or other
enforcement of such Lien(s) is effectively stayed and the claims
secured thereby are being actively contested in good faith in such
manner that the Property subject to such Lien(s) is not subject to
forfeiture or sale, and further provided that adequate reserves are
established in accordance with generally accepted accounting principles
on the books of the Company or a Subsidiary of the Company;
(iii) Liens incidental to the normal conduct of the business
of the Company or a Subsidiary of the Company or to the ownership by
the Company or a Subsidiary of the Company of its Property which were
not incurred in connection with the borrowing of money or the obtaining
of credit or advances and which do not in the aggregate materially
detract from the value of the Property of the Company or any Subsidiary
of the Company for the purpose of such business or materially impair
the use thereof in the operation of the business of the Company or any
Subsidiary of the Company;
(iv) Liens existing as of the date of this Agreement and set
forth on Schedule 6D hereto;
(v) any Lien renewing, extending or refunding any Lien
permitted by clause (iv) of this paragraph 6D, provided that (a) the
principal amount of the Debt secured by such Lien immediately prior to
such extension, renewal or refunding is not increased or the maturity
thereof reduced, (b) such Lien is not extended to any other Property,
and (c) immediately after such extension, renewal or refunding no
Default or Event of Default would exist;
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(vi) Liens on Property of the Company or any of its
Subsidiaries securing Debt owing to the Company or to any of its
Wholly-Owned Subsidiaries;
(vii) any Lien created to secure all or any part of the
purchase price or cost of construction, or to secure Debt incurred or
assumed to pay all or a part of the purchase price or cost of
construction, of any Property acquired or constructed by the Company or
a Subsidiary of the Company after the date of closing, provided that
(a) any such Lien shall extend solely to the item or items of such
Property so acquired or constructed or rights relating solely to such
item or items or Property, (b) the principal amount of the Debt secured
by any such Lien shall at no time exceed an amount equal to 100% of the
fair market value of the Property acquired or constructed at the time
of such acquisition or construction, and (c) such Lien shall be created
contemporaneously with, or within 180 days after, the acquisition or
completion of construction of such Property;
(viii) any Lien existing on Property acquired by the Company
or any Subsidiary of the Company at the time such Property is so
acquired (whether or not the Debt secured thereby is assumed by the
Company or such Subsidiary) or any Lien existing on Property of a
Person immediately prior to the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company,
provided that (a) no such Lien shall have been created or assumed in
contemplation of such acquisition of Property or such consolidation or
merger, (b) such Lien shall extend only to the Property acquired or the
Property of such Person merged into or consolidated with the Company or
Subsidiary which was subject to such Lien as of the time of such
consolidation or merger, and (c) the principal amount of the Debt
secured by any such Lien shall at no time exceed an amount equal to
100% of the fair market value of the Property subject thereto at the
time of the acquisition thereof or at the time of such merger or
consolidation; and
(ix) other Liens not otherwise permitted under clause (i)
through (viii) of this paragraph 6D securing Debt, provided that the
creation, issuance, incurrence or assumption of such Debt is permitted
under paragraphs 6B and 6C hereof.
6E. MERGER AND CONSOLIDATION. The Company covenants that it will not,
and will not permit any of its Subsidiaries to, merge or consolidate with any
other Person, except that
(i) any Subsidiary of the Company may merge into the Company
or any Wholly-Owned Subsidiary, provided that the Company or such
Wholly-Owned Subsidiary is the surviving corporation, and
(ii) the Company may merge or consolidate with any other
Person provided that (a) the successor formed by such consolidation or
the survivor of such merger (the "SURVIVING CORPORATION") is a solvent
corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia, (b) if the
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Company is not the Surviving Corporation, the Surviving Corporation
shall have executed and delivered to each holder of the Notes its
written assumption of the due and punctual performance and payment of
each covenant and condition in this Agreement and the Notes, which
assumption shall be in form and substance approved in writing by the
Required Holders, and the Company shall have caused to be delivered to
each holder of Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their
terms and comply with the terms hereof, and (c) immediately after
giving effect to such merger or consolidation, (x) no Default or Event
of Default shall exist and (y) the Surviving Corporation is able to
incur at least $1.00 of additional Funded Debt under the provisions of
paragraph 6B(iv) and at least $1.00 of additional Priority Debt under
the provisions of paragraph 6C hereof.
6F. SALE OF ASSETS. The Company covenants that it will not, and will
not permit any of its Subsidiaries to, sell, transfer, convey, lease or
otherwise dispose of (a "TRANSFER") any Property (including capital stock of or
other ownership interests in any Subsidiary of the Company), except that:
(i) the Company or any Subsidiary of the Company may Transfer
any of its inventory, fixtures or equipment in the ordinary course of
business;
(ii) any Subsidiary may Transfer any of its Property to the
Company or a Wholly-Owned Subsidiary; and
(iii) the Company or any Subsidiary of the Company may lease
its assets to any joint venture entity, of which the Company or any
Subsidiary of the Company holds an ownership interest and shares in the
earnings; provided that the terms of any such lease and the division of
the joint venture's earnings, when viewed as a whole, can be reasonably
expected to generate the same or greater book earnings and cash flow
for the Company or Subsidiary of the Company as would be generated
absent such lease;
(iv) the Company or any Subsidiary of the Company may Transfer
any of its Properties at the fair market value thereof provided that
(a) either (1) the aggregate amount of the Disposition Value of all
Property Transferred pursuant to this clause (iv) on or after the date
of closing does not exceed an amount equal to 25% of Consolidated Total
Assets as of the end of the fiscal year of the Company most recently
ended prior to the date of such Transfer, or (2) concurrently with the
making of such Transfer the Net Proceeds Amount for such Transfer is
(A) applied to the acquisition by the Company or the Subsidiary making
such Transfer of other Property of a nature similar to, and of at least
an equivalent value of, the Property Transferred, or is committed to be
applied to such acquisition within one year of the date of such
Transfer, or (B) applied to the payment of the outstanding principal of
all of the Funded Debt of the Company (excluding any Funded Debt owed
to any Subsidiary or
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Affiliate of the Company and excluding any Funded Debt in respect of
any revolving credit or similar credit facility providing the Company
with the right to obtain loans or other extensions of credit from time
to time, except to the extent that, in connection with such payment of
such Funded Debt, the availability of loans or other extensions of
credit under such credit facility is permanently reduced by an amount
not less than the amount of such proceeds applied to the payment of
such Funded Debt) pro rata in proportion to the respective outstanding
principal amounts thereof, and (b) immediately after giving effect to
such Transfer (x) no Default or Event of Default shall exist and (y)
the Company is able to incur at least $1.00 of additional Funded Debt
under the provisions of paragraph 6B(iv) hereof and at least $1.00 of
additional Priority Debt under the provisions of paragraph 6C hereof.
6G. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Subsidiary of the Company to, enter into directly or indirectly any
transaction (including, without limitation, the purchase, lease, sale or
exchange of Properties of any kind or the rendering of any service) with any
Affiliate, except pursuant to the reasonable requirements of the Company's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
6H. SUBSIDIARY DIVIDEND RESTRICTIONS. The Company covenants that it
will not, and will not permit any Subsidiary of the Company to, enter into, or
be otherwise subject to, any contract or agreement (including its certificate of
incorporation) which limits the amount of, or otherwise imposes restrictions on
the payment of, dividends by any Subsidiary of the Company.
6I. SUBSIDIARY PREFERRED STOCK. The Company covenants that it will not,
and will not permit any Subsidiary of the Company to, issue or permit to be
outstanding any class of capital stock which has priority over any other class
of capital stock of such Subsidiary as to dividends or in liquidation.
6J. ISSUANCE OF STOCK BY SUBSIDIARIES. The Company covenants that it
will not permit any Subsidiary of the Company to issue, sell or otherwise
dispose of any shares of any class of its stock (either directly or indirectly
by the issuance of rights or options for, or securities convertible into, such
shares) except to the Company or another Subsidiary of the Company.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
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(i) the Company defaults in the payment of any principal of or
Yield-Maintenance Amount payable with respect to any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 5 Business Days after the date due; or
(iii) the Company or any Subsidiary of the Company defaults
(whether as primary obligor or as guarantor or other surety) in any
payment of principal of or interest on any other obligation for money
borrowed (or any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any obligation
issued or assumed as full or partial payment for property whether or
not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or the Company or
any Subsidiary of the Company fails to perform or observe any other
agreement, term or condition contained in any agreement under which any
such obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and the effect of
such failure or other event is to cause, or a holder or holders of such
obligation (or a trustee on behalf of such holder or holders) causes,
such obligation to become due (or to be repurchased by the Company or
any Subsidiary of the Company) prior to any stated maturity, provided
that the aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or other event
causing acceleration (or resale to the Company or any Subsidiary) shall
occur and be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company herein
or by the Company or any of its officers in any writing furnished in
connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made or deemed to have been
made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 5E or paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
(vii) the Company or any Subsidiary of the Company makes an
assignment for the benefit of creditors or is generally not paying its
debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary of the Company is entered under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called the "BANKRUPTCY
LAW"), of any jurisdiction; or
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(ix) the Company or any Subsidiary of the Company petitions or
applies to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian, liquidator or
similar official of the Company or any Subsidiary of the Company, or of
any substantial part of the assets of the Company or any Subsidiary of
the Company, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Subsidiary) relating to the
Company or any Subsidiary of the Company under the Bankruptcy Law of
any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary of the
Company and the Company or such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition in
any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary of the Company
decreeing a split-up of the Company or such Subsidiary which requires
the divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary of the Company whose assets
represent a substantial part, of the consolidated assets of the Company
and its Subsidiaries (determined in accordance with generally accepted
accounting principles) or which requires the divestiture of assets, or
stock of a Subsidiary of the Company, which shall have contributed a
substantial part of the consolidated net income of the Company and its
Subsidiaries (determined in accordance with generally accepted
accounting principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed and
in effect for more than 60 days; or
(xiii) a final judgment in an amount in excess of $5,000,000
is rendered against the Company or any Subsidiary of the Company and,
within 45 days after entry thereof, such judgment is not discharged or
execution thereof stayed pending appeal, or within 45 days after the
expiration of any such stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity as
an employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $10,000,000 unless paid within 60 days;
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then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, the holder of any Note (other than the Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable at par together with interest accrued thereon,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company, (b) if such event is an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, all of the Notes at the time outstanding shall automatically become
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and (c) if such event is not an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to the
Company, the Required Holder(s) may at its or their option, by notice in writing
to the Company, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if any, with
respect to each Note, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of Yield-Maintenance Amount by the Company in the event the Notes are prepaid or
are accelerated as a result of an Event of Default is intended to provide
compensation for the deprivation of such right under such circumstances.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes shall have been declared immediately due and payable pursuant to paragraph
7A, the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
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7D. OTHER REMEDIESD. If any Event of Default or Default shall occur and
be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows:
8A(1). ORGANIZATION. The merger of Cenex into the Company has been
consummated in accordance with the terms of the Transaction Agreement and has
become effective under the laws of the State of Minnesota. The Company is a
nonstock agricultural cooperative corporation duly organized and existing in
good standing under the laws of the State of Minnesota and each Subsidiary of
the Company is duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated. The Company and each of its
Subsidiaries have duly qualified or been duly licensed, and are authorized to do
business and are in good standing, in each jurisdiction in which the ownership
of their respective properties or the nature of their respective businesses
makes such qualification or licensing necessary and in which the failure to be
so qualified or licensed would be reasonably likely to have a material adverse
effect on the business condition (financial or otherwise) or operations of the
Company and its Subsidiaries, taken as a whole.
8A(2). POWER AND AUTHORITY. The Company and each Subsidiary of the
Company has all requisite corporate power to own and operate its respective
properties and to conduct its business as currently conducted and as currently
proposed to be conducted. The Company has all requisite corporate power to
execute, deliver and perform its obligations under this Agreement and the Notes.
The execution, delivery and performance of this Agreement and the Notes has been
duly authorized by all requisite corporate action, and this Agreement and the
Notes have been duly executed and delivered by authorized officers of the
Company and are valid obligations of the Company, legally binding upon and
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
8B. FINANCIAL STATEMENTS. The Company has furnished each Purchaser with
the following financial statements, identified by a principal financial officer
of the Company: (i) consolidated balance sheets of the Company and its
Subsidiaries as at May 31 in
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each of the years 1991 to 1997, inclusive, and consolidated statements of
earnings and cash flows of the Company and its Subsidiaries for each such year,
all reported on by Deloitte & Touche, LLP; (ii) consolidated balance sheets of
Cenex and its Subsidiaries as at September 30 in each of the years 1993 to 1997,
inclusive, and consolidated statements of operations and cash flows of Cenex and
its Subsidiaries for each such year, all reported on by Coopers & Lybrand,
L.L.P.; (iii) a consolidated balance sheet of the Company and its Subsidiaries
as at February 28 in each of the years 1997 and 1998 and consolidated statements
of earnings and cash flows for the 9-month period ended on each such date,
prepared by the Company; and (iv) a consolidated balance sheet of Cenex and its
Subsidiaries as of February 28 in each of the years 1997 and 1998 and
consolidated statements of operations for the 5-month period ending on each such
date, prepared by Cenex. Such financial statements (including any related
schedules and/or notes) are true and correct in all material respects (subject,
as to interim statements, to changes resulting from audits and year-end
adjustments), have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods involved and
show all liabilities, direct and contingent, of Cenex and its Subsidiaries and
the Company and its Subsidiaries, respectively, required to be shown in
accordance with such principles. The balance sheets fairly present the condition
of Cenex and its Subsidiaries and the Company and its Subsidiaries each as at
the dates thereof, and the statements of earnings or operations and cash flows
fairly present the results of the operations of Cenex and its Subsidiaries and
the Company and its Subsidiaries and their cash flows for the periods indicated.
There has been no material adverse change in the business, condition (financial
or otherwise) or operations of the Company and its Subsidiaries taken as a whole
since May 31, 1997.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which, individually or in the aggregate, could reasonably
be expected to result in any material adverse change in the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as permitted by paragraph 6B. There exists no
default under the provisions of any instrument evidencing such Debt or of any
agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its Subsidiaries
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
balance sheets as at May 31, 1997 and September 30, 1997 referred to in
paragraph 8B (other than properties and assets disposed of in the ordinary
course of business), except for defects in title not reasonably expected to
result in a material adverse effect, subject to no Lien of any kind except Liens
permitted by paragraph 6D. All leases necessary in any material respect for the
conduct of the respective businesses of the Company and its Subsidiaries are
valid and subsisting and are in full force and effect.
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8F. TAXES. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being actively
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles. The Company is a cooperative association taxed under the provisions
of "subchapter T" of the Code and the Company does not presently intend to alter
its status as a subchapter T cooperative association for federal income tax
purposes.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, or financial condition. Neither the
execution nor delivery of this Agreement, the Notes nor the Related Agreements,
nor the offering, issuance and sale of the Notes, nor the consummation of the
merger pursuant to the Transaction Agreement or the transactions under the other
Related Agreements, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes conflicted or will conflict with, or resulted
or will result in a breach of the terms, conditions or provisions of, or
constituted or will constitute a default under, or resulted or will result in
any violation of, or resulted or will result in the creation of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to, the charter or by-laws of the Company or any of its Subsidiaries,
any award of any arbitrator or any agreement (including any agreement with
stockholders), instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any of its Subsidiaries is subject. Neither
the Company nor any of its Subsidiaries is a party to, or otherwise subject to
any provision contained in, any instrument evidencing Debt of the Company or
such Subsidiary, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Debt of the Company of the type to be
evidenced by the Notes except as set forth in the agreements listed in Schedule
8G attached hereto.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would subject the issuance or sale of the Notes to the provisions of
section 5 of the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. Neither the Company nor any Subsidiary of the
Company owns or has any present intention of acquiring any "margin stock" as
defined in Regulation U (12 CFR Part 221) of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). The proceeds of sale of
the Notes will be used to pay the indebtedness of the Company listed on Schedule
8I hereto. None of such proceeds will be used, directly or indirectly,
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for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any margin stock or for the purpose of maintaining, reducing or
retiring any Debt which was originally incurred to purchase or carry any stock
that is currently a margin stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of such Regulation U.
Neither the Company nor any agent acting on its behalf has taken or will take
any action which might cause this Agreement or the Notes to violate Regulation
T, Regulation U or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan (other than a
Multiemployer Plan) by the Company, any Subsidiary of the Company or any ERISA
Affiliate which is or would be materially adverse to the business, condition
(financial or otherwise) or operations of the Company and its Subsidiaries taken
as a whole. Neither the Company, any Subsidiary of the Company nor any ERISA
Affiliate has incurred or presently expects to incur any withdrawal liability
under Title IV of ERISA with respect to any Multiemployer Plan which is or would
be materially adverse to the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole. The execution
and delivery of this Agreement and the issuance and sale of the Notes will be
exempt from, or will not involve any transaction which is subject to, the
prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence is made in reliance
upon and subject to the accuracy of each Purchaser's representation in paragraph
9B.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes, the merger pursuant to the Transaction Agreement or the transactions
contemplated by the other Related Agreements is such as to require any
authorization, consent, approval, exemption or other action by or notice to or
filing with any court or administrative or governmental body (other than (i)
filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, relating to the merger pursuant to the Transaction Agreement, which
filing has been made and for which the waiting period under said Act has
expired, and (ii) routine filings after the date of closing with the Securities
and Exchange Commission and/or state Blue Sky authorities) in connection with
the execution and delivery of this Agreement or the Related Agreements, the
offering, issuance, sale or delivery of the Notes, the consummation of the
merger pursuant to the Transaction Agreement or the transactions contemplated by
the other Related Agreements or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
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8L. COMPLIANCE WITH ENVIRONMENTAL AND OTHER LAWS. The Company and its
Subsidiaries and all of their respective properties and facilities have complied
at all times and in all respects with all federal, state, local and regional
statutes, laws, ordinances and judicial or administrative orders, judgments,
rulings and regulations, including, without limitation, those relating to
protection of the environment except, in any such case, where failure to comply,
individually or in the aggregate, would not reasonably be expected to result in
a material adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
8M. REGULATORY STATUS. The Company is not (i) an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, (ii) a "holding company" or a
"public utility company" or a "subsidiary company" or an "affiliate" of a
"holding company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended, or (iii) a "public utility" within the meaning of the
Federal Power Act, as amended.
8N. PERMITS AND OTHER OPERATING RIGHTS. The Company and each Subsidiary
of the Company has all such valid and sufficient certificates of convenience and
necessity, franchises, licenses, permits, operating rights and other
authorizations from federal, state, foreign, regional, municipal and other local
regulatory bodies or administrative agencies or other governmental bodies having
jurisdiction over the Company or any Subsidiary of the Company or any of its
Properties, as are necessary for the ownership, operation and maintenance of its
businesses and Properties, as presently conducted and as proposed to be
conducted while the Notes are outstanding, subject to exceptions and
deficiencies which, individually or in the aggregate, would not reasonably be
expected to materially adversely affect the business and operations of the
Company, any Subsidiary of the Company or any material part thereof, and such
certificates of convenience and necessity, franchises, licenses, permits,
operating rights and other authorizations from federal, state, foreign,
regional, municipal and other local regulatory bodies or administrative agencies
or other governmental bodies having jurisdiction over the Company, any
Subsidiary of the Company or any of its Properties are free from restrictions or
conditions which, individually or in the aggregate, would reasonably be expected
to be materially adverse to the business or operations of the Company and its
Subsidiaries and neither the Company nor any Subsidiary of the Company is in
violation of any restriction or condition thereof in any material respect.
8O. YEAR 2000 COMPLIANCE. The Company and its Subsidiaries have begun
to conduct an analysis of, and have begun to develop a compliance program with
respect to, the effect of Year 2000 upon the key software, tradeware,
telecommunications, physical plant and automated processes of the Company and
its Subsidiaries and upon the key customers and suppliers of the Company and its
Subsidiaries. The Company anticipates that such compliance program will be
completed on a timely basis and that the impact of Year 2000 on the Company, its
Subsidiaries and the key customers and suppliers of the Company and its
Subsidiaries should not be such as to materially adversely affect the business,
financial condition or operation of the business and its Subsidiaries, taken as
a whole.
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8P. DISCLOSURE. Neither this Agreement nor any other document,
certificate or written statement furnished to any Purchaser by or on behalf of
the Company in connection herewith, including, without limitation, the
Memorandum, taken as a whole, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact or facts peculiar
to the Company or any of its Subsidiaries which materially adversely affects or
in the future may (so far as the Company can now reasonably foresee),
individually or in the aggregate, reasonably be expected to materially adversely
affect the business, property or assets, or financial condition of the Company
and its Subsidiaries and which has not been set forth in this Agreement or in
the other documents, certificates and statements furnished to each Purchaser by
or on behalf of the Company prior to the date hereof in connection with the
transactions contemplated hereby. The financial projections delivered to the
Purchasers are made in good faith and based on reasonable assumptions. The
copies of the Related Agreements and all documents and instruments delivered
thereunder, including the evidence that the merger of Cenex into the Company has
been consummated in accordance with the Transaction Agreement, delivered by the
Company to the special counsel for the Purchasers are true and complete copies
of the Related Agreements and such documents and instruments delivered
thereunder are now in full force and effect. The Company has received the
proceeds of the initial advances under the Senior Revolving Credit Agreement and
the proceeds of the term loan under the Senior Term Loan Agreement.
9. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser represents as
follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes to be
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control. Such Purchaser will not sell or otherwise transfer the Notes to be
purchased by it hereunder in violation of the Securities Act.
9B. SOURCE OF FUNDS. At least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:
(a) The Source being used by such Purchaser to pay the
purchase price of the Notes being purchased by such Purchaser hereunder
constitutes assets: (i) allocated to the "insurance company general
account" of such Purchaser (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction Class
Exemption "TCE" 95-60), and as of the date of the purchase of the Notes
such Purchaser satisfies all of the applicable requirements for relief
under Section I and IV of PTCE 95-60, (ii) allocated to a separate
account maintained by such Purchaser in which no employee benefit plan,
other than employee benefit plans identified on a list which has been
furnished by such Purchaser to the Company, participates to the extent
of 10% or more, or (iii) of an
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investment fund, the assets of which do not include assets of any
employee benefit plan within the meaning of ERISA; or
(b) The Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) The Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) The Source is a governmental plan; or
(e) The Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) The Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms defined
in the introductory sentence and in paragraphs 1 through 9, inclusive, shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified with respect thereto below:
10A. YIELD-MAINTENANCE TERMS.
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"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City are required or
authorized to be closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4B or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the same periodic basis on which interest on the
Notes is payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Dow Jones Markets, Inc. services
(Telerate) (or such other display as may replace Page 678 on the Dow Jones
Markets, Inc. services (Telerate)) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
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"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to paragraph 4B or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.
10B. OTHER TERMS.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, the
Company, except a Subsidiary of the Company. A Person shall be deemed to control
a corporation or other entity if such Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such corporation or entity, whether through the ownership of voting securities,
by contract or otherwise.
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"CAPITALIZED LEASE" shall mean any lease the obligations under
which constitute Capitalized Lease Obligations.
"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles, would be
required to be capitalized on the books of the Company or any Subsidiary of the
Company, taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.
"CENEX" shall have the meaning given in the first paragraph of
this Agreement.
"CHANGE OF CONTROL" shall mean any Person or Persons acting in
concert, together with the Affiliates thereof, directly or indirectly
controlling or owning (beneficially or otherwise) in the aggregate more than 50%
of the aggregate voting power of the issued and outstanding Voting Interests of
the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONSOLIDATED CASH FLOW" for any period shall mean the sum of
(i) earnings before income taxes of the Company and its Subsidiaries for such
period, determined on a consolidated basis in accordance with generally accepted
accounting principles, plus (ii) the amounts that have been deducted in the
determination of such earnings before income taxes for such period for (a)
interest expense, (b) depreciation, and (c) amortization, minus (iii) the
amounts that have been
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included in the determination of such earnings before income taxes for such
period for (a) one-time gains, (b) extraordinary income, (c) non-cash patronage
income, and (d) non-cash equity earnings in joint ventures.
"CONSOLIDATED NET WORTH" as of any date shall mean members'
equity of the Company and its Subsidiaries as of such date, determined on a
consolidated basis in accordance with generally accepted accounting principles.
"CONSOLIDATED TANGIBLE NET WORTH" as of any date shall mean
Consolidated Net Worth as of such date, less any goodwill or other intangible
assets but, adding back in the minority interests in Subsidiaries of the
Company.
"CONSOLIDATED TOTAL ASSETS" as of any date shall mean the
total assets of the Company and its Subsidiaries as of such date, determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"DEBT" shall mean, with respect to any Person (i) all
obligations of such Person for borrowed money (including all obligations for
borrowed money secured by any Lien with respect to any Property owned by such
Person whether or not such Person has assumed or otherwise become liable for
such obligations), (ii) all obligations of such Person for the deferred purchase
price of property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
such property), (iii) all Capital Lease Obligations of such Person and (iv) all
Guarantees of such Person with respect to liabilities of the type described in
clause (i), (ii) or (iii) of any other Person, provided that (a) Debt of a
Subsidiary of the Company shall exclude such obligations and Guarantees of such
Subsidiary if owed or guaranteed by a Subsidiary to the Company or a
Wholly-Owned Subsidiary of the Company, (b) Debt of the Company shall exclude
such obligations and Guarantees if owed or guaranteed by the Company to a
Wholly-Owned Subsidiary of the Company and (c) Debt of the Company shall exclude
any unfunded obligations which may exist now and in the future in the Company's
pension plans.
"DISPOSITION VALUE" shall mean, with respect to the Transfer
of any Property:
(i) in the case of Property that does not constitute capital
stock of or other ownership interests in any Subsidiary of the Company,
the book value thereof, valued at the time of such Transfer in good
faith by the board of directors of the Company, and
(ii) in the case of Property that constitutes capital stock of
or other ownership interests in any Subsidiary of the Company, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such capital stock or other ownership interests
as is equal to the percentage that the book value that such capital
stock or other ownership interests represents of the book value of all
of the outstanding capital stock of or other ownership interests in
such Subsidiary (assuming, in making such calculations, that all
27
<PAGE>
securities convertible into such capital stock or other ownership
interests are so converted and giving full effect to all transactions
that would occur or be required in connection with such conversion),
determined at the time of such Transfer in good faith by the board of
directors of the Company.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within the meaning
of section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FUNDED DEBT" shall mean, with respect to any Person, all Debt
which would, in accordance with generally accepted accounting principles, be
required to be classified as a long term liability on the books of such Person,
and shall include, without limitation (i) any Debt which by its terms or by the
terms of any instrument or agreement relating thereto matures, or which is
otherwise payable or unpaid, more than one year from the date of creation
thereof, (ii) any Debt outstanding under a revolving credit or similar agreement
providing for borrowings (and renewals and extensions thereof) which would, in
accordance with generally accepted accounting principles, be required to be
classified as a long term liability of such Person, (iii) any Capital Lease
Obligation of such Person, and (iv) any Guarantee of such Person with respect to
Funded Debt of another Person. Notwithstanding anything to the contrary
contained herein, any Debt outstanding under a revolving credit or similar
agreement providing for borrowings where no amount of such Debt is outstanding
for a period of 30 consecutive days during each 12 month period (and which has
not been refinanced with other Debt which does not constitute Funded Debt) will
not be deemed to constitute Funded Debt.
"GUARANTEE" shall mean, with respect to any Person, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any Debt, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of
28
<PAGE>
such obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain the solvency or any balance
sheet or other financial condition of the obligor of such obligation, or to make
payment for any products, materials or supplies or for any transportation or
services regardless of the non-delivery or non-furnishing thereof, in any such
case if the purpose or intent of such agreement is to provide assurance that
such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any Guarantee shall be
equal to the outstanding principal amount of the obligation guaranteed or such
lesser amount to which the maximum exposure of the guarantor shall have been
specifically limited.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction), any interest or title of any lessor under a Capital Lease, or
any other type of preferential arrangement for the purpose, or having the
effect, of protecting a creditor against loss or securing the payment or
performance of an obligation.
"MEMORANDUM" shall mean the Company's "Confidential Direct
Placement Memorandum", dated April, 1998, relating to the Notes, provided by or
on behalf of the Company to the Purchasers.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" shall mean, with respect to any Transfer
of any Property by any Person, an amount equal to the difference of (i) the
aggregate amount of the consideration (valued at the fair market value of such
consideration at the time of the consummation of such Transfer) received by such
Person in respect of such Transfer, minus (ii) all ordinary and reasonable
out-of-pocket costs and expenses actually incurred by such Person in connection
with such Transfer.
"NOTES" shall have the meaning given in paragraph 1 hereof.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, a limited liability company, an
unincorporated organization and a government or any department or agency
thereof.
"PLAN" shall mean any "employee pension benefit plan" (as such
term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate.
29
<PAGE>
"PRIORITY DEBT" shall mean (i) all Debt of the Company or any
Subsidiary of the Company secured by a Lien (other than Debt secured only by
Liens permitted under clauses (i) through (viii) of paragraph 6D hereof), and
(ii) all Funded Debt of the Subsidiaries of the Company.
"PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
"QPAM EXEMPTION" shall mean Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"RELATED AGREEMENTS" shall mean the Senior Revolving Credit
Agreement, the Senior Term Loan Agreement and the Transaction Agreement.
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
the Company or any other officer of the Company involved principally in its
financial administration or its controllership function.
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least a majority of the aggregate principal amount of the Notes from time to
time outstanding.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SENIOR REVOLVING CREDIT AGREEMENT" shall mean the Credit
Agreement (Revolving Loan), dated as of June 1, 1998, among the Company, CoBank,
ACB, St. Paul Bank for Cooperatives and the other lenders parties thereto,
providing for a $600,000,000 unsecured revolving credit facility to the Company.
"SENIOR TERM LOAN AGREEMENT" shall mean the Credit Agreement
(Term Loan), dated as of June 1, 1998, among the Company, CoBank, ACB, St. Paul
Bank for Cooperatives and the other lenders parties thereto, providing for a
$200,000,000 unsecured term loan due 2009 to the Company.
"SIGNIFICANT HOLDER" shall mean (i) each Purchaser and its
affiliates, so long as such Purchaser or its affiliates shall hold (or be
committed under this Agreement to purchase) any Note, (ii) any other holder of
at least 1% of the aggregate principal amount of the Notes from time to time
outstanding, or (iii) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"SUBSIDIARY" shall mean with respect to any Person any other
Person greater than 50% of the total combined voting power of all classes of
Voting Interests of which shall, at the time as of which any determination is
being made, be owned by such first Person either directly or through other
Subsidiaries of such first Person.
30
<PAGE>
"TRANSACTION AGREEMENT" shall mean the Transaction Agreement,
dated January 29, 1998, between Cenex and the Company providing for the merger
of Cenex into the Company.
"TRANSFER" shall have the meaning given in paragraph 6F
hereof.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.
"VOTING INTERESTS" shall mean (a) with respect to any stock
corporation, any shares of stock of such corporation whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
corporation or persons performing similar functions (irrespective of whether at
the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency), and (b) with respect to
the Company or any other entity, membership or other ownership interests in the
Company or such other entity whose holders are entitled under ordinary
circumstances to vote for the election of the directors of the Company or such
other entity or persons performing similar functions (irrespective of whether at
the time membership or other ownership interests of any other class or classes
shall have or might have voting power by reasoning of the happening of any
contingency).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary of the
Company all of the outstanding capital stock or other ownership interests of
every class of which is owned by the Company or another Wholly-Owned Subsidiary.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references in
this Agreement to "generally accepted accounting principles" shall be deemed to
refer to generally accepted accounting principles in effect in the United States
at the time of application thereof. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, applied on a basis consistent with the
most recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to such
Purchaser's account or accounts as specified in the
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<PAGE>
Purchaser Schedule attached hereto, or such other account or accounts in the
United States as such Purchaser may designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the place of payment.
Each Purchaser agrees that, before disposing of any Note, such Purchaser will
make a notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest thereon has
been paid. The Company agrees to afford the benefits of this paragraph 11A to
any Transferee which shall have made the same agreement as each Purchaser has
made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each Purchaser and
any Transferee harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with such transactions, including (i) all
document production and duplication charges and the fees and expenses of any
special counsel engaged by such Purchaser or such Transferee in connection with
this Agreement, the transactions contemplated hereby and any subsequent proposed
modification of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or such proposed consent granted, and
(ii) the costs and expenses, including attorneys' fees, incurred by such
Purchaser or such Transferee in enforcing (or determining whether or how to
enforce) any rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated hereby or by
reason of such Purchaser's or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any bankruptcy case
and (iii) all costs and expenses, including without limitation reasonable
attorneys' fees, of obtaining a Private Placement Number from the CUSIP Service
Bureau of Standard and Poor's Ratings Group with respect to the Notes. The
obligations of the Company under this paragraph 11B shall survive the transfer
of any Note or portion thereof or interest therein by any Purchaser or any
Transferee and the payment of any Note.
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<PAGE>
11C. CONSENT TO AMENDMENTS.
11C(1). REQUIRED CONSENT. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) except
that, without the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the maturity of
any Note, or change the principal of, or the rate or time of payment of interest
on or any Yield-Maintenance Amount payable with respect to any Note, or affect
the time, amount or allocation of any prepayments, or change the proportion of
the principal amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the time or
thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein and
in the Notes, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11C(2). SOLICITATION OF HOLDERS OF NOTES.
(a) The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this paragraph 11C to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant inducement to the entering into by any
holder of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $100,000, except as may be necessary to reflect any principal amount
not evenly divisible by $100,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers
33
<PAGE>
of Notes. Upon surrender for registration of transfer of any Note at the
principal office of the Company, the Company shall, at its expense, execute and
deliver one or more new Notes of like tenor and of a like aggregate principal
amount, registered in the name of such transferee or transferees. At the option
of the holder of any Note, such Note may be exchanged for other Notes of like
tenor and of any authorized denominations, of a like aggregate principal amount,
upon surrender of the Note to be exchanged at the principal office of the
Company. Whenever any Notes are so surrendered for exchange, the Company shall,
at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of such Note and, in the case
of any such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, interest on and any Yield-Maintenance Amount
payable with respect to such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue, and the Company shall not be affected by
notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in such Note to any Person on
such terms and conditions as may be determined by such holder in its sole and
absolute discretion, provided that any such participation shall be in a
principal amount of at least $100,000.
11F. ADDITIONAL SERIES OF NOTES.
11F(1). PROVISION FOR ADDITIONAL SERIES OF NOTES. The Company may, from
time to time, issue and sell additional series of its unsecured promissory notes
(each additional series being designated by the next succeeding letter of the
alphabet following designation of the immediately preceding series) to one or
more additional purchasers (which may include one of the Purchasers if such
Purchaser shall in its sole discretion consent thereto) and may, in connection
with the documentation of such additional series, incorporate by reference all
of or certain of the provisions of this Agreement; provided, however, that such
incorporation by reference shall not dilute or otherwise affect the relative
priority or other rights of the holders of the Notes hereunder or any subsequent
series of notes, including, without limitation, the percentages of the Notes
required to approve an amendment to this Agreement or to effect a waiver
pursuant to paragraph 11C hereof or the percentages of the Notes required to
accelerate the maturity of the Notes or to rescind such an acceleration of the
maturity of the Notes
34
<PAGE>
pursuant to paragraphs 7A or 7B hereof. This paragraph 11F does not in any
manner obligate any Purchaser or the holders of the Notes to purchase or agree
to purchase additional series of the Company's unsecured promissory notes now or
at any time in the future. FOR ALL PURPOSES OF THIS AGREEMENT, ANY ADDITIONAL
SERIES OF THE COMPANY'S UNSECURED PROMISSORY NOTES WHICH MAY HEREAFTER BE ISSUED
SHALL NOT CONSTITUTE "NOTES" AS USED HEREIN.
11F(2). CONDITIONS TO ADDITIONAL SERIES OF NOTES. The Company may (but
shall not be required to) at any time, or from time to time, offer to any holder
of the Notes an opportunity to purchase additional promissory notes. No holder
of the Notes shall have any obligation to make any such additional purchase, and
may reject such offers at its sole discretion.
11G. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
11H. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11I. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance with the limitations of, another covenant
shall not avoid (i) the occurrence of a Default or Event of Default if such
action is taken or such condition exists or (ii) in any way prejudice an attempt
by the holder of any Note to prohibit through equitable action or otherwise the
taking of any action by the Company or any Subsidiary which would result in a
Default or Event of Default.
11J. NOTICES. All written communications provided for hereunder shall
be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) and (i) if to any Purchaser, addressed to such Purchaser at the
address specified for such communications in the Purchaser Schedule attached
hereto, or at such other address as such Purchaser shall have specified to the
Company in writing, (ii) if to any other holder of any Note, addressed to such
other holder at such address as such other holder shall have specified to the
Company in writing or, if any such other
35
<PAGE>
holder shall not have so specified an address to the Company, then addressed to
such other holder in care of the last holder of such Note which shall have so
specified an address to the Company, and (iii) if to the Company, addressed to
it at 5500 Cenex Drive, Inver Grove Heights, MN 55077, Attention: Vice
President-Finance with a copy to the attention of the General Counsel, or at
such other address as the Company shall have specified to the holder of each
Note in writing; provided, however, that any such communication to the Company
may also, at the option of the holder of any Note, be delivered by any other
means either to the Company at its address specified above or to any officer of
the Company.
11K. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
Yield-Maintenance Amount or interest on any Note that is due on a date other
than a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
11L. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser or to the Required Holder(s), the
determination of such satisfaction shall be made by such Purchaser or the
Required Holder(s), as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
11M. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF ILLINOIS.
11N. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11O. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11P. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
11Q. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers are
to be several sales, and the obligations of the Purchasers under this Agreement
are
36
<PAGE>
several obligations. Except as provided in paragraph 3I, no failure by any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and no
Purchaser shall be responsible for the obligations of, or any action taken or
omitted by, any other Purchaser hereunder.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterparts of this letter and return the same to
the Company, whereupon this letter shall become a binding agreement among the
Company and the Purchasers.
Very truly yours,
CENEX HARVEST STATES COOPERATIVES
By: /s/ T. F. Baker
----------------------------------------
Title: Executive Vice President -
Finance & Administration
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ P. Scott von Fischer
--------------------------------
Vice President
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ John Lirich
--------------------------------
Title: Vice President
-------------------------
PIONEER MUTUAL LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ John Lirich
--------------------------------
Title: Vice President
-------------------------
MUTUAL TRUST LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ John Lirich
--------------------------------
Title: Vice President
-------------------------
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ John Lirich
--------------------------------
Title: Vice President
-------------------------
<PAGE>
THE CATHOLIC AID ASSOCIATION
By: Advantus Capital Management, Inc.
By: /s/ Steven M. Lande
---------------------------------
Title: Vice President
--------------------------
NATIONAL TRAVELERS LIFE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ Steven M. Lande
---------------------------------
Title: Vice President
--------------------------
UNITY MUTUAL LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ Steven M. Lande
---------------------------------
Title: Vice President
--------------------------
THE BALTIMORE LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ Steven M. Lande
---------------------------------
Title: Vice President
--------------------------
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Michael L. Klofas
---------------------------------
Title: Managing Director
--------------------------
<PAGE>
THE GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA
By: /s/ Thomas M. Dauwhue
---------------------------------
Title: Vice President
--------------------------
<PAGE>
UNITED OF OMAHA LIFE INSURANCE COMPANY
By: /s/ Edwin H. Garrison Jr.
---------------------------------
Title: First Vice President
--------------------------
MUTUAL OF OMAHA INSURANCE COMPANY
By: /s/ Edwin H. Garrison Jr.
---------------------------------
Title: First Vice President
--------------------------
COMPANION LIFE INSURANCE COMPANY
By: /s/ Edwin H. Garrison Jr.
---------------------------------
Title: First Vice President
--------------------------
By: /s/ Jeffry F. Sailer
---------------------------------
Title: Assistant Treasurer
--------------------------
<PAGE>
KNIGHTS OF COLUMBUS
By: /s/ Robert J. Lane
----------------------------------
Title: Assistant Supreme Secretary
---------------------------
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
By: Stein, Roe and Farnham Incorporated,
as agent
By: /s/ Richard A. Hegwood
----------------------------------
Title: Senior Vice President
-----------------------
<PAGE>
MODERN WOODMEN OF AMERICA
By: /s/ G. E. Stoefen
----------------------------------
Title: Director, Treasurer &
Investment Manager
---------------------------
<PAGE>
TMG LIFE INSURANCE COMPANY
By: /s/ Constance L. Keller
-----------------------------------
Title: Director, Private Placements
----------------------------
The Mutual Group (U.S.), Inc.
By: /s/ Michael J. Steppe
----------------------------------
Title: Senior Vice President
-----------------------
<PAGE>
PROVIDENT MUTUAL LIFE INSURANCE COMPANY
By: /s/ J. Kath
-----------------------------------
Title: Vice President
----------------------------
PROVIDENTMUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
By: /s/ J. Kath
-----------------------------------
Title: Vice President
----------------------------
<PAGE>
AMERITAS LIFE INSURANCE CORP.
By: Ameritas Investment Advisors, Inc., as Agent
/s/ Patrick J. Henry
By: ---------------------------------
Patrick J. Henry
Vice President - Fixed Income Securities
<PAGE>
INDIANAPOLIS LIFE INSURANCE COMPANY
By: /s/ Kent A. Deeter
-----------------------------------
Title: Portfolio Manager
----------------------------
<PAGE>
THE SECURITY MUTUAL LIFE INSURANCE
COMPANY OF LINCOLN, NEBRASKA
By: /s/ Kevin W. Hammond
-----------------------------------
Title: Vice President
Chief Investment Officer
----------------------------
<PAGE>
WOODMEN ACCIDENT AND LIFE COMPANY
By: /s/ Al M. McCray
-----------------------------------
Title: Senior Director, Securities
Investment and Assistant
Treasurer
----------------------------
<PAGE>
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $92,000,000 $80,000,000
$12,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 890-0304-391 (in the case of
payments on account of the Note
originally issued in the principal
amount of $80,000,000)
Account No. 890-0304-944 (in the case of
payments on account of the Note
originally issued in the principal
amount of $12,000,000)
The Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, Security No.
!INV5998!" (in case of payments on account of
the Note originally issued in the principal
amount of $80,000,000) or Security No.
"!INV5999!" (in case of payments on account of
the Note originally issued in the principal
amount of $12,000,000), and the due date and
application (as among principal, interest and
Yield-Maintenance Amount) of the payment being
made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company
of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102-4077
<PAGE>
Attention: Manager, Investment
Operations Group
Telephone: (973) 802-5260
Telecopier: (973) 802-8055
(3) Address for all other communications and
notices:
The Prudential Insurance Company
of America
c/o Prudential Capital Group
Two Prudential Plaza, Suite 5600
Chicago, Illinois 60601
Attention: Managing Director
Telephone: (312) 540-0931
Telecopier: (312) 540-4222
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structuring and Pricing
Telephone: (973) 802-7398
Telecopier: (973) 802-9425
(5) Tax Identification No.: 22-1211670
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY $22,000,000 $22,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
U.S. Bank Trust N.A.
Minneapolis, Minnesota
ABA #091000022
BNF The Minnesota Mutual Life Insurance
Company
Account No. 1801-10-00600-4
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
The Minnesota Mutual Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Advantus Capital Management, Inc.
Telecopier: (612) 223-5959
(3) Tax Identification No.: 41-0417830
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
PIONEER MUTUAL LIFE INSURANCE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
The Bank of New York
ABA #021-000-018
For credit to:
Pioneer Mutual Life Insurance Company/
NCT &Co. Fargo
Account No. 270576
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Pioneer Mutual Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 45-0220640
(4) Notes to be registered in nominee name, if any:
Polly & Co.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
MUTUAL TRUST LIFE INSURANCE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
The Northern Chgo/Trust
ABA #071-000-152
For credit to: Account No.: 5186041000
For further credit to:
Mutual Trust Life Insurance Company
Account No.: 26-00621
Attention: Income Collections
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Mutual Trust Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 36-1516780
(4) Notes to be registered in nominee name, if any:
ELL & Co.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
GUARANTEE RESERVE LIFE INSURANCE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Mercantile National Bank of Indiana
Hammond, IN
ABA #071-912-813
For credit to:
Guarantee Reserve Life Insurance Company
Attention: Trust Department, Geneva DeVine
Account No. 287000
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Guarantee Reserve Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 35-0815760
(4) Notes to be registered in nominee name, if any:
Gant & Co.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
CATHOLIC AID ASSOCIATION (THE) $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
U.S. Bank, N.A.
Minneapolis, MN
ABA #091-000-022
For credit to:
U.S. Bank Trust, N.A.
Account Number: 180121167365, TSU: 050
For further credit to:
Catholic Aid Association (The)
Account Number: 12614950
Attn: Doug O'Ryan (612) 244-5958
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Catholic Aid Association (The)
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 41-0182070
(4) Notes to be registered in nominee name, if any:
Var & Co.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
NATIONAL TRAVELERS LIFE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
U.S. Bank, N.A.
Minneapolis, MN
ABA #091-000-022
For credit to:
U.S. Bank Trust, N.A.
Account No.: 180121167365, TSU: 47300050
For further credit to:
National Travelers Life Company
Account No.: 12609110
Attn: Doug O'Ryan (612) 244-5958
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
National Travelers Life Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 42-0432940
(4) Notes to be registered in nominee name, if any:
Var & Co.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
UNITY MUTUAL LIFE INSURANCE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Chase NYC
ABA #021-000-021
For credit to:
Chase Rochester
DDA# 0000400044
Attention: Ms. Roni Norkus (716) 258-7784
For further credit to:
Unity Mutual Life Insurance Company -
MIMLIC - 611002310
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Unity Mutual Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 15-0475585
(4) Notes to be registered in nominee name, if any:
Trulin & Co
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
THE BALTIMORE LIFE INSURANCE COMPANY $ 2,000,000 $ 2,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
NationsBank
Baltimore, MD
ABA #052-001-633
For credit to:
The Baltimore Life Insurance Company
Account Number 200-060-084-1
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Baltimore Life Insurance Company (The)
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attention: Client Administrator
(3) Tax Identification No.: 52-0236900
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY $25,000,000 $17,500,000
$5,000,000
$2,500,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
(a) In the case of payments on account of
the Note originally issued in the
principal amount of $17,500,000
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long Term Pool
Account No. 4067-3488
(b) In the case of payments on account of
the Note originally issued in the
principal amount of $5,000,000
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, NY 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
(c) In the case of payments on account of
the Note originally issued in the
principal amount of $2,500,000
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, NY 10081
ABA No. 021000021
For Segment 47 - Guaranteed Investment
Contract
Account No. 910-2-742781
In each case with telephone advice of payment
to the Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (413) 744-3878
<PAGE>
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection
Department F 381
(3) Address for all other communications and notices:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Investment Division
Thomas Li, Managing Director
(4) Recipient of telephonic prepayment notices:
Securities Custody and Collection Department
Telephone: (413) 744-3878
(5) Tax Identification No.: 04-1590850
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
THE GUARDIAN LIFE INSURANCE COMPANY
OF AMERICA $20,000,000 $20,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
The Chase Manhattan Bank
FED ABA #021000021
CHASE/NYC/CTR/BNF
A/C 900-9-000200
Reference to A/C #G05978 The Guardian
Each such wire transfer shall set forth the
name of the Company, "6.81% Senior Notes due
June 19, 2013, PPN 15131# A A 4", and the
due date and application (as among
principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Guardian Life Insurance Company
of America
Attn: Investment Accounting M-IA
201 Park Avenue South
New York, NY 10003
Telecopier: (212) 677-9023
(3) Address for all other communications and
notices:
The Guardian Life Insurance Company
of America
201 Park Avenue South
New York, NY 10003
Attention: Raymond J. Henry
Investment Department 7B
Telecopier: (212) 777-6715
(4) Tax Identification No.: 13-6022143
(5) Notes to be registered in nominee name, if any:
<PAGE>
CUDD & CO.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
UNITED OF OMAHA LIFE INSURANCE COMPANY $ 7,000,000 $ 7,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
For credit to:
United of Omaha Life Insurance Company
Account # 900-9000200
a/c: G07097
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments,
corporate actions and reorganization
notifications:
The Chase Manhattan Bank
4 New York Plaza - 13th Floor
New York, NY 10004
Attention.: Income Processing - J. Pipperato
a/c: G07097
(3) Address for all other communications and
notices:
4 - Investment Loan Administration
United of Omaha Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175-1011
(4) Tax Identification No.: 47-0322111
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
MUTUAL OF OMAHA INSURANCE COMPANY $ 3,000,000 $ 3,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Chase Manhattan Bank
ABA #021000021
Private Income Processing
For credit to:
Mutual of Omaha Insurance Company
Account #900-9000200
a/c G07096
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments,
corporate actions and reorganization
notifications:
The Chase Manhattan Bank
4 New York Plaza - 13th Floor
New York, NY 10004
Attn: Income Processing - J. Pipperato
a/c: G07096
(3) Address for all other communications and
notices:
4 - Investment Loan Administration
Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175-1011
(4) Tax Identification No.: 47-0246511
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
COMPANION LIFE INSURANCE COMPANY $ 2,000,000 $ 2,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Companion Life Insurance Company
c/o The Bank of New York
ABA #021000018
Acct. #111566 Income Collection
Attention: P & I Department
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
Companion Life Insurance Company
Attention: Investment Securities Accounting
Mutual of Omaha Plaza
Omaha, Nebraska 68175
with duplicate notice to:
Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, New York 10580-1493
(3) Address for all other communications and
notices:
Companion Life Insurance Company
Attention: Investment Division
Mutual of Omaha Plaza
Omaha, Nebraska 68175
<PAGE>
with duplicate notice to:
Companion Life Insurance Company
Attention: Financial Division
401 Theodore Fremd Avenue
Rye, New York 10580-1493
(4) Tax Identification No.: 13-6062916
(5) Notes to be registered in nominee name, if any:
HARE & CO.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
KNIGHTS OF COLUMBUS $10,000,000 $10,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Bank of New York (ABA #021-000-018)
One Wall Street
New York, New York 10286
For credit to:
Knights of Columbus General Account
Account #8900300825
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
Knights of Columbus
P.O. Box 2016
New Haven, Connecticut 06521-2016
Attention: Accounting Department
(3) Address for all other communications and
notices:
Knights of Columbus
One Columbus Plaza
New Haven, Connecticut 06510-3326
Attention: Investment Department
Telecopier: (203) 772-0037
(4) Tax Identification No.: 06-0416470
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
KEYPORT LIFE INSURANCE COMPANY $10,000,000 $10,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Federal Reserve Bank of Boston
011001234/BOS SAFE DEP
DDA 125261
Attention: MBS Income CC: 1253
For: Keyport #KEYF0005002
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
written confirmation of each such payment,
and all other communications and notices:
Keyport Life Insurance Company
c/o Stein Roe & Farnham Incorporated
1 South Wacker Drive
Chicago, Illinois 60606
Attention: Private Placements
(3) Tax Identification No.: 05-0302931
(4) Notes to be registered in nominee name, if any:
BOST & CO.
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
MODERN WOODMEN OF AMERICA $ 7,000,000 $ 7,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60675
ABA No. 071-000-152
Account Name: Modern Woodmen of America
Account No. 84352
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
Modern Woodmen of America
Attn.: Investment Accounting Department
1701 First Avenue
Rock Island, IL 61201
(3) Address for all other communications and
notices:
Modern Woodmen of America
Attn.: Investment Department
1701 First Avenue
Rock Island, IL 61201
(4) Tax Identification No.: 36-1493430
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
TMG LIFE INSURANCE COMPANY $ 5,000,000 $ 5,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
Norwest Bank Minnesota, N.A.
ABA# 091000019
BNF A/C: 0840245
BNF: Trust Clearing Account
REF: ATTN: Income Collections
TRUST ACCOUNT: 13075700
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
TMG Life Insurance Company
c/o The Mutual Group (U.S.), Inc.
401 North Executive Drive, Suite 300
Brookfield, WI 53008-0503
Attention: Tamie Greenwood
Telephone: (414) 641-4027
Telecopier: (414) 641-4055
(3) Address for all other communications and
notices:
TMG Life Insurance Company
c/o The Mutual Group (U.S.), Inc.
401 North Executive Drive, Suite 300
Brookfield, WI 53008-0503
Telephone: (414) 641-4027
Telecopier: (414) 641-4055
(4) Tax Identification No.: 45-0208990
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
PROVIDENT MUTUAL LIFE INSURANCE COMPANY $ 4,000,000 $ 4,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
PNC Bank
Broad and Chestnut Streets
Philadelphia, PA 19101
ABA# 031-000-053
for credit to
Provident Mutual Life Insurance Company
Account # 85-4084-2176
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Provident Mutual Life Insurance Company
1205 Westlakes Drive
Berwyn, PA 19312-2405
Attention: Treasurer
(3) Tax Identification No.: 23-099-045-0
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY
OF AMERICA $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
PNC Bank
Broad and Chestnut Streets
Philadelphia, PA 19101
ABA# 031-000-053
for credit to
Providentmutual Life and Annuity
Company of America
Account # 85-5075-4911
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and all other communications and notices:
Providentmutual Life and Annuity Company
of America
1205 Westlakes Drive
Berwyn, PA 19312-2405
Attention: Treasurer
(3) Tax Identification No.: 23-161-908-2
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
AMERITAS LIFE INSURANCE CORP. $ 3,000,000 $ 3,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
U.S. Bank
ABA# 104-000-029
Ameritas Life Insurance Corp.
Acct# 1-494-0070-0188
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and written confirmations of wire transfers:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Attention: James Mikus
Telecopier: (402) 467-6970
(3) Address for all other communications and notices:
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, NE 68510-2234
Attention: James Mikus
(4) Tax Identification No.: 47-0098400
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
INDIANAPOLIS LIFE INSURANCE COMPANY $ 3,000,000 $ 3,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
The Bank of New York
New York, New York 10286
BNF: I0C 566
ABA #021000018
For credit to:
Indianapolis Life Insurance Company
Account #177862
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments:
Indianapolis Life Insurance Company/#177862
c/o The Bank of New York
Attn: P&I Department
P.O. Box 19266
Newark, New Jersey 07195
(3) Address for all other communications and
notices:
Indianapolis Life Insurance Company
2960 N. Meridian Street
Indianapolis, Indiana 46208
Attention: Securities Department
Fax: (317) 927-3363
(4) Tax Identification No.: 35-0413330
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
THE SECURITY MUTUAL LIFE INSURANCE
COMPANY OF LINCOLN, NEBRASKA $ 2,000,000 $ 2,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds at the opening of
business on the due date, for credit to:
National Bank of Commerce
13th and O Street
Lincoln, NE
ABA No. 1040-00045
Account of: Security Mutual Life
Account of: 40-797-624
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments
and written confirmation of such wire
transfers:
The Security Mutual Life Insurance
Company of Lincoln, Nebraska
200 Centennial Mall North
Lincoln, NE 68508
Attention: Investment Division
Fax: (402-434-9599)
Phone: (402-434-9500)
(3) Address for all other communications and
notices:
The Security Mutual Insurance
Company of Lincoln, Nebraska
200 Centennial Mall North
Lincoln, NE 68508
(4) Tax Identification No.: 47-0293990
<PAGE>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- -----------
WOODMEN ACCIDENT AND LIFE COMPANY $ 1,000,000 $ 1,000,000
(1) All payments on account of Notes held by such
Purchaser shall be made by wire transfer of
immediately available funds for credit to:
US Bank
13 and M Streets
Lincoln, Nebraska 68508
ABA #1040 000 29
for credit to
Woodmen Accident and Life Company's
General Fund
Account No. 1-494-0092-9092
Each such wire transfer shall set forth the
name of the Company, a reference to "6.81%
Senior Notes due June 19, 2013, PPN 15131#
A A 4", and the due date and application (as
among principal, interest and Yield-Maintenance
Amount) of the payment being made.
(2) Address for all notices relating to payments,
including written conformation of each such
payment, and all other communications and
notices:
Woodmen Accident and Life Company
P.O. Box 82288
Lincoln, Nebraska 68501
Attention: Securities Division
PROVIDED, HOWEVER, all notices and
communication delivered by overnight courier
shall be addressed as follows:
Woodmen Accident and Life Company
1526 K Street
Lincoln, Nebraska 68508
Attention: Securities Division
(4) Tax Identification No.: 47-0339220
<PAGE>
EXHIBIT A
[FORM OF NOTE]
CENEX HARVEST STATES COOPERATIVES
6.81% SERIES A SENIOR NOTE DUE JUNE 19, 2013
No. _____ [Date]
$________ PPN 15131# A A 4
FOR VALUE RECEIVED, the undersigned, CENEX HARVEST STATES COOPERATIVES,
a nonstock agricultural cooperative corporation organized under the laws of the
State of Minnesota (herein called the "Company"), hereby promises to pay to
___________________________________, or registered assigns, the principal sum of
_________________________ DOLLARS on June 19, 2013, with interest (computed on
the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at
the rate of 6.81% per annum from the date hereof, payable semiannually on the
19th day of June and December in each year, commencing with the June 19 or
December 19 next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Yield-Maintenance Amount (as defined in the Note
Agreement referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 8.81% or (ii) 2.0% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made at the main office of The Bank
of New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of a series of Series A Senior Notes (herein called
the "Notes") issued pursuant to a Note Agreement, dated as of June 19, 1998
(herein called the "Agreement"), among the Company and the original purchasers
of the Notes named in the Purchaser Schedule attached thereto and is entitled to
the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing,
A-1
<PAGE>
a new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Company shall not be affected by any notice to the contrary.
The Company agrees to make required prepayments of principal on the
dates and in the amounts specified in the Agreement. This Note is also subject
to optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner and with the effect provided in the
Agreement.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
CENEX HARVEST STATES COOPERATIVES
By:
-------------------------------
Title:
-----------------------
A-2
EXHIBIT 10.23
CREDIT AGREEMENT
(REVOLVING LOAN)
BY AND BETWEEN
COBANK, ACB,
AS CO-SYNDICATION AGENT, ADMINISTRATIVE AGENT AND BID AGENT
AND AS A SYNDICATION PARTY,
ST. PAUL BANK FOR COOPERATIVES
AS CO-SYNDICATION AGENT AND AS A SYNDICATION PARTY,
NATIONSBANK, N.A.,
AS DOCUMENTATION AGENT AND AS A SYNDICATION PARTY,
CREDIT AGRICOLE INDOSUEZ, BANQUE NATIONALE DE PARIS,
CHICAGO BRANCH, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, DEUTSCHE GENOSSENSCHAFTSBANK, AND COOPERATIEVE
CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH,
AS CO-MANAGERS AND AS SYNDICATION PARTIES,
THE BANK OF TOKYO-MITSUBISHI, LTD., CARIPLO-CASSA DI
RISPARMIO DELLE PROVINCIE LOMBARDE SPA,
NORWEST BANK MINNESOTA, N.A., SUNTRUST BANK, ATLANTA, AND
U.S. BANK NATIONAL ASSOCIATION,
AS SYNDICATION PARTIES,
AND
CENEX HARVEST STATES COOPERATIVES
DATED AS OF JUNE 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINED TERMS......................................................1
1.1 Additional Costs .....................................................1
1.2 Adjusted Consolidated Funded Debt ....................................1
1.3 Administrative Agent .................................................1
1.4 Administrative Agent Office ..........................................1
1.5 Advance ..............................................................1
1.6 Advance Date .........................................................1
1.7 Advance Payment ......................................................1
1.8 Affected Loans .......................................................2
1.9 Aggregate 5-Year Commitment ..........................................2
1.10 Aggregate LC Commitment .............................................2
1.11 Aggregate 364-Day Commitment ........................................2
1.12 Amortization ........................................................2
1.13 Annual Operating Budget .............................................2
1.14 Applicable Lending Office ...........................................2
1.15 Authorized Officer ..................................................2
1.16 Bank Debt ...........................................................2
1.17 Banking Day .........................................................2
1.18 Bank Equity Interests ...............................................2
1.19 Base Rate ...........................................................2
1.20 Base Rate Loans .....................................................3
1.21 Bid .................................................................3
1.22 Bid Agent ...........................................................3
i
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1.23 Bid Maturity Date ...................................................3
1.24 Bid Request .........................................................3
1.25 Bid Results Notice ..................................................3
1.26 Bid Rate ............................................................3
1.27 Bid Selection Notice ................................................3
1.28 Borrower's Account ..................................................3
1.29 Borrower Benefit Plan ...............................................3
1.30 Borrowing Notice ....................................................3
1.31 Capital Leases ......................................................3
1.32 Change in Law .......................................................3
1.33 Closing Date ........................................................3
1.34 Code ................................................................3
1.35 Committed 5-Year Advances ...........................................4
1.36 Committed LC Request ................................................4
1.37 Committed Letters of Credit .........................................4
1.38 Committed Letter of Credit Fee ......................................4
1.39 Committed 364-Day Advances ..........................................4
1.40 Compliance Certificate ..............................................4
1.41 Consolidated Cash Flow ..............................................4
1.42 Consolidated Current Assets .........................................4
1.43 Consolidated Current Liabilities ....................................4
1.44 Consolidated Funded Debt ............................................4
1.45 Consolidated Interest Expense .......................................4
1.46 Consolidated Members' and Patrons' Equity ...........................5
ii
<PAGE>
1.47 Consolidated Subsidiary .............................................5
1.48 Contributing Syndication Parties ....................................5
1.49 Debt ................................................................5
1.50 Default Interest Rate ...............................................5
1.51 Delinquency Interest ................................................5
1.52 Delinquent Amount ...................................................5
1.53 Delinquent Syndication Party ........................................5
1.54 Depreciation ........................................................5
1.55 Environmental Laws ..................................................5
1.56 Environmental Regulations ...........................................5
1.57 ERISA ...............................................................5
1.58 ERISA Affiliate .....................................................6
1.59 Event of Default ....................................................6
1.60 Event of Syndication Default ........................................6
1.61 Existing Credit Agreement ...........................................6
1.62 Existing Letters of Credit ..........................................6
1.64 Fiscal Quarter ......................................................6
1.65 Fiscal Year .........................................................6
1.66 5-Year Availability Period ..........................................6
1.67 5-Year Bid Advance ..................................................6
1.68 5-Year Bid Loan .....................................................6
1.69 5-Year Borrowing Notice .............................................7
1.70 5-Year Facility .....................................................7
1.71 5-Year Facility Fee .................................................7
iii
<PAGE>
1.72 5-Year Funding Notice ...............................................7
1.72 5-Year Funding Notice ...............................................7
1.73 5-Year Margin .......................................................7
1.74 5-Year Maturity Date ................................................7
1.75 5-Year Pro Rata Advance .............................................7
1.76 Funded Debt .........................................................7
1.77 Funding Losses ......................................................7
1.78 Funding Loss Notice .................................................7
1.79 Funding Share .......................................................7
1.80 GAAP ................................................................7
1.81 Good Faith Contest ..................................................8
1.82 Governmental Authority ..............................................8
1.83 Hazardous Substances ................................................8
1.84 Indemnified Agency Parties ..........................................8
1.85 Indemnified Parties .................................................8
1.86 Individual Commitment ...............................................8
1.87 Individual 5-Year Commitment ........................................8
1.88 Individual 364-Day Commitment .......................................8
1.89 Individual 5-Year Lending Capacity ..................................8
1.90 Individual 364-Day Lending Capacity .................................8
1.91 Individual Outstanding 5-Year Obligations ...........................9
1.92 Individual Outstanding 364-Day Obligations ..........................9
1.93 Individual 5-Year Pro Rata Share ....................................9
1.94 Individual 364-Day Pro Rata Share ...................................9
iv
<PAGE>
1.95 Investment ..........................................................9
1.96 Issuing Syndication Party ..........................................10
1.98 Letters of Credit ..................................................10
1.99 Letter of Credit Bank ..............................................10
1.100 LIBO Rate .........................................................10
1.101 LIBO Rate Loan ....................................................10
1.102 LIBO Rate Period ..................................................10
1.103 LIBO Request ......................................................10
1.104 Licensing Laws ....................................................10
1.105 Lien ..............................................................10
1.106 Loans .............................................................11
1.107 Blank .............................................................11
1.108 Loan Documents ....................................................11
1.109 Material Adverse Effect ...........................................11
1.110 Material Agreements ...............................................11
1.111 Merger ............................................................11
1.112 Multiemployer Plan ................................................11
1.113 Negotiated LC Request .............................................11
1.114 Negotiated Letter of Credit .......................................11
1.115 Note or Notes .....................................................11
1.117 Operating Lease ...................................................11
1.118 Organization Documents ............................................11
1.119 Overnight Advance .................................................11
1.120 Overnight Advance Request .........................................11
v
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1.122 Overnight Funding Commitment ......................................11
1.123 Overnight Lenders .................................................12
1.125 Overnight Maturity Date ...........................................12
1.126 Overnight Rate ....................................................12
1.127 Payment Account ...................................................12
1.128 Payment Distribution ..............................................12
1.129 PBGC ..............................................................12
1.130 Permitted Encumbrance .............................................12
1.131 Person ............................................................12
1.132 Plan ..............................................................12
1.133 Potential Default .................................................12
1.134 Predecessor Companies .............................................12
1.135 Prohibited Transaction ............................................12
1.139 Regulatory Change .................................................12
1.140 Reportable Event ..................................................12
1.141 Requested 5-Year Advance ..........................................12
1.142 Requested 364-Day Advance .........................................12
1.143 Required Lenders ..................................................13
1.144 Required License ..................................................13
1.145 Restricted Subsidiary .............................................13
1.146 Subsidiary ........................................................13
1.147 Successor Agent ...................................................13
1.148 Super Majority Lenders ............................................13
1.149 Syndication Acquisition Agreement .................................13
vi
<PAGE>
1.150 Syndication Interest ..............................................13
1.151 Syndication Parties ...............................................13
1.152 Syndication Party Advance Date ....................................13
1.153 Term Loan Credit Agreement ........................................13
1.154 364-Day Availability Period .......................................14
1.155 364-Day Bid Advance ...............................................14
1.156 364-Day Bid Loan ..................................................14
1.157 364-Day Borrowing Notice ..........................................14
1.158 364-Day Facility ..................................................14
1.159 364-Day Facility Fee ..............................................14
1.160 364-Day Facility Note(s) ..........................................14
1.161 364-Day Funding Notice ............................................14
1.162 364-Day Margin ....................................................14
1.163 364-Day Maturity Date .............................................14
1.164 364-Day Pro Rata Advance ..........................................14
1.165 Transfer ..........................................................14
1.166 Wire Instructions .................................................14
ARTICLE 2. 364-DAY FACILITY..................................................14
2.1 364-Day Facility Loan ...............................................14
2.1.1 Individual Syndication Party 364 Day Commitment .............14
2.1.2 Individual Syndication Party 364-Day Pro Rata Share .........15
2.2 Aggregate 364-Day Commitment ........................................15
2.3 364-Day Borrowing Notice; Funding Notice ............................15
2.4 364-Day Facility Promissory Notes ...................................15
vii
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2.5 Syndication Party Records ...........................................15
2.6 Use of Proceeds .....................................................16
2.7 Syndication Party Funding Failure ...................................16
2.8 Reduction of Aggregate 364-Day Commitment ...........................16
ARTICLE 3. 5-YEAR FACILITY...................................................16
3.1 5-Year Facility Loan ................................................16
3.1.1 Individual Syndication Party 5-Year Commitment ..............17
3.1.2 Individual Syndication Party 5-Year Pro Rata Share ..........17
3.2 Aggregate 5-Year Commitment .........................................17
3.3 5-Year Borrowing Notice .............................................17
3.4 5-Year Facility Promissory Notes ....................................17
3.5 Syndication Party Records ...........................................18
3.6 Use of Proceeds .....................................................18
3.7 Syndication Party Funding Failure ...................................18
3.8 Reduction of Aggregate 5-Year Commitment ............................18
ARTICLE 4. BID RATE FACILITY.................................................19
4.1 364-Day Facility Bid Rate Loans .....................................19
4.1.2 Individual 364-Day Commitment ...............................19
4.1.3 Aggregate 364-Day Commitment ................................19
4.1.4 Amounts .....................................................19
4.2 5-Year Facility Bid Rate Loans ......................................19
4.2.2 Individual 5-Year Commitment ................................19
4.2.3 Aggregate 5-Year Commitment .................................19
4.2.4 Amounts .....................................................19
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4.3 Bid Request .........................................................20
4.4 Bid Procedure .......................................................20
4.5 Bid Acceptance Procedure ............................................20
4.6 Bid Loan Funding ....................................................21
4.7 Overnight Advances ..................................................21
4.8 Syndication Party Funding Failure ...................................21
4.9 Overnight Lender Funding Failure ....................................22
4.10 Failure to Implement Bid Process ...................................22
ARTICLE 5. LETTER OF CREDIT FACILITY.........................................22
5.1 Letter of Credit Request ............................................22
5.1.1 Request for Committed Letter of Credit ......................22
5.1.2 Request for Negotiated Letter of Credit .....................22
5.1.3 Notification of the Administrative Agent ....................23
5.2 Committed Letters of Credit .........................................23
5.2.1 Available Amount ............................................23
5.2.2 Availability ................................................23
5.2.3 Fees ........................................................23
5.2.4 Treatment of Draws ..........................................24
5.3 Negotiated Letters of Credit ........................................24
5.3.1 Limits on Available Amount ..................................24
5.3.2 Availability ................................................24
5.3.3 Fees ........................................................24
5.3.4 Treatment of Draws ..........................................24
5.4 Notice of Issuance of Negotiated Letters of Credit ..................25
ix
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5.5 Existing Letters of Credit ..........................................25
ARTICLE 6. INTEREST AND FEES.................................................25
6.1 Interest ............................................................25
6.1.1 Base Rate Option ............................................25
6.1.2 LIBO Rate Option ............................................25
6.2 Additional Provisions for LIBO Rate Loans ...........................25
6.2.1 Inapplicability or Unavailability of LIBO Rate ..............25
6.2.2 Change in Law; LIBO Rate Loan Unlawful ......................26
6.3 Default Interest Rate ...............................................26
6.4 Interest Calculation ................................................26
6.5 Fees ................................................................26
6.5.3 364-Day Facility Fee ........................................26
6.5.4 5-Year Facility Fee .........................................27
6.6 364-Day Margin; 5-Year Margin .......................................27
ARTICLE 7.PAYMENTS; FUNDING LOSSES............................................27
7.1 Principal Payments ..................................................27
7.2 Interest Payments ...................................................27
7.3 Application of Principal Payments ...................................28
7.4 Manner of Payment ...................................................28
7.5 Voluntary Prepayments ...............................................28
7.6 Distribution of Principal and Interest Payments .....................29
7.6.1 Principal and Interest Payments on 364-Day
Pro Rata Advances ...........................................29
7.6.2 Principal Interest Payments on 5-Year
Pro Rata Rate Advances ......................................29
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7.6.3 Principal and Interest Payments on Bid Rate Advance .........29
7.6.4 Principal and Interest Payments on Overnight Advances .......29
ARTICLE 8. BANK EQUITY INTERESTS.............................................29
ARTICLE 9. SECURITY..........................................................29
ARTICLE 10. REPRESENTATIONS AND WARRANTIES...................................29
10.1 Organization, Good Standing, Etc. ..................................30
10.2 Corporate Authority, Due Authorization; Consents ...................30
10.3 Litigation .........................................................30
10.4 No Violations ......................................................30
10.5 Binding Agreement ..................................................30
10.6 Compliance with Laws ...............................................31
10.7 Principal Place of Business ........................................31
10.8 Payment of Taxes ...................................................31
10.9 Licenses and Approvals .............................................31
10.10 Employee Benefit Plans ............................................31
10.11 Equity Investments ................................................31
10.12 Title to Real and Personal Property ...............................32
10.13 Financial Statements ..............................................32
10.14 Environmental Compliance ..........................................32
10.15 Fiscal Year .......................................................33
10.16 Material Agreements ...............................................33
10.17 Regulations U and X ...............................................33
10.18 Trademarks, Tradenames, etc. ......................................33
10.19 No Default on Outstanding Judgments or Orders .....................33
xi
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10.20 No Default in Other Agreements ....................................33
10.21 Labor Disputes and Acts of God ....................................33
10.22 Governmental Regulation ...........................................33
10.23 Disclosure ........................................................34
ARTICLE 11. CONDITIONS TO ADVANCES...........................................34
11.1 Conditions to Closing ..............................................34
11.1.1 Loan Documents .............................................34
11.1.2 Approvals ..................................................34
11.1.3 Organizational Documents ...................................34
11.1.4 Evidence of Insurance ......................................34
11.1.5 Appointment of Agent for Service ...........................34
11.1.6 No Material Change .........................................34
11.1.7 Fees and Expenses ..........................................35
11.1.8 Bank Equity Interest Purchase Obligation ...................35
11.1.9 Opinion of Counsel .........................................35
11.1.10 Further Assurances ........................................35
11.2 Conditions to Advance ..............................................35
11.2.1 Consummation of Merger; Amendment of Articles of
Incorporation ..............................................35
11.2.2 Evidence of Corporate Action ...............................35
11.2.3 Cancellation of Existing Credit Agreements .................35
11.2.4 Default ....................................................36
11.2.5 Representations and Warranties .............................36
11.3 Limitation on LIBO Rate Loans ......................................36
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11.4 Illegality of Loan .................................................36
11.5 Treatment of Affected Loans ........................................37
ARTICLE 12. AFFIRMATIVE COVENANTS............................................37
12.1 Books and Records ..................................................37
12.2 Reports and Notices ................................................37
12.2.1 Annual Financial Statements ................................37
12.2.2 Quarterly Financial Statements .............................37
12.2.3 Notice of Default ..........................................38
12.2.4 ERISA Reports ..............................................38
12.2.5 Notice of Litigation .......................................38
12.2.6 Notice of Material Adverse Effect ..........................38
12.2.7 Notice of Environmental Proceedings ........................38
12.2.8 Regulatory and Other Notices ...............................39
12.2.9 Adverse Action Regarding Required Licenses .................39
12.2.10 Budget ....................................................39
12.2.11 Additional Information ....................................39
12.3 Eligibility ........................................................39
12.4 Maintenance of Existence and Qualification .........................39
12.5 Compliance with Legal Requirements and Agreements ..................39
12.6 Compliance with Environmental Laws .................................40
12.7 Taxes ..............................................................40
12.8 Insurance ..........................................................40
12.9 Maintenance of Properties ..........................................40
12.10 Payment of Liabilities ............................................40
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12.11 Inspection ........................................................41
12.12 Required Licenses; Permits; Etc ...................................41
12.13 ERISA .............................................................41
12.14 Maintenance of Commodity Position .................................41
12.15 Financial Covenants ...............................................41
12.15.1 Working Capital ...........................................41
12.15.2 Consolidated Funded Debt to Consolidated
Cash Flow..................................................41
12.15.3 Adjusted Consolidated Funded Debt to
Consolidated Members' and Patrons' Equity .................42
ARTICLE 13. NEGATIVE COVENANTS...............................................42
13.1 Borrowing ..........................................................42
13.2 No Other Businesses ................................................42
13.3 Liens ..............................................................42
13.4 Sale of Assets .....................................................44
13.5 Liabilities of Others ..............................................44
13.6 Loans ..............................................................45
13.7 Merger; Acquisitions; Business Form; Etc ...........................45
13.8 Investments ........................................................45
13.9 Transactions With Related Parties ..................................46
13.10 Patronage Refunds, etc. ...........................................46
13.11 Change in Fiscal Year .............................................46
ARTICLE 14. INDEMNIFICATION..................................................46
14.1 General; Stamp Taxes; Intangibles Tax ..............................46
14.2 Indemnification Relating to Hazardous Substances ...................47
xiv
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ARTICLE 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...........................48
15.1 Events of Default ..................................................48
15.2 No Advance .........................................................49
15.3 Rights and Remedies ................................................49
ARTICLE 16. AGENCY AGREEMENT.................................................50
16.1 Funding of Syndication Interest ....................................50
16.2 Syndication Parties' Obligations to Remit Funds ....................50
16.3 Notice to Administrative Agent .....................................50
16.4 Syndication Party's Failure to Remit Funds .........................50
16.5 Agency Appointment .................................................51
16.6 Power and Authority of the Administrative Agent ....................52
16.6.1 Advice .....................................................52
16.6.2 Documents ..................................................52
16.6.3 Proceedings ................................................52
16.6.4 Retain Professionals .......................................52
16.6.5 Incidental Powers ..........................................52
16.7 Duties of the Administrative Agent .................................52
16.7.1 Possession of Documents ....................................52
16.7.2 Distribute Payments ........................................52
16.7.3 Loan Administration ........................................52
16.7.4 Determination of Individual Lending Capacity and
Individual Pro Rata Shares .................................53
16.7.5 Action Upon Default ........................................53
16.7.6 Indemnification as Condition to Action .....................53
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16.8 Bid Agent's Appointment, Power, Authority, Duties or Removal .......54
16.9 Consent Required for Certain Actions ...............................54
16.9.1 Unanimous ..................................................54
16.9.2 Required Lenders ...........................................54
16.9.3 Action Without Vote ........................................55
16.10 Distribution of Principal and Interest ............................55
16.11 Distribution of Certain Amounts ...................................55
16.11.1 Funding Losses ............................................55
16.11.1 Funding Losses ............................................56
16.12 Possession of Loan Documents ......................................56
16.13 Collateral Application ............................................56
16.14 Amounts Required to be Returned ...................................56
16.15 Reports and Information to Syndication Parties ....................57
16.16 Standard of Care ..................................................57
16.17 No Trust Relationship .............................................57
16.18 Sharing of Costs and Expenses .....................................58
16.19 Syndication Parties' Indemnification of the Administrative Agent ..58
16.20 Books and Records .................................................58
16.21 Administrative Agent Fee ..........................................59
16.22 The Administrative Agent's Resignation or Removal .................59
16.23 Representations and Warranties of All Parties .....................59
16.24 Representations and Warranties of CoBank ..........................60
16.25 Syndication Parties' Independent Credit Analysis ..................60
16.26 No Joint Venture or Partnership ...................................60
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16.27 Purchase for Own Account; Restrictions on Transfer; Participations 60
16.28 Certain Participants' Voting Rights ...............................61
16.29 Method of Making Payments .........................................61
16.30 Events of Syndication Default/Remedies ............................61
16.30.1 Syndication Party Default .................................61
16.30.2 Remedies ..................................................62
16.31 Withholding Taxes .................................................62
16.32 Amendments Concerning Agency Function .............................62
16.33 Further Assurances ................................................63
ARTICLE 17. MISCELLANEOUS....................................................63
17.1 Costs and Expenses .................................................63
17.2 Service of Process and Consent to Jurisdiction .....................63
17.3 Jury Waiver ........................................................63
17.4 Notices ............................................................64
17.4.1 Borrower ...................................................64
17.4.2 Administrative Agent .......................................64
17.4.3 Bid Agent ..................................................64
17.4.4 Co-Syndication Agent .......................................65
17.4.5 Syndication Parties ........................................65
17.5 Liability of Administrative Agent and Bid Agent ....................65
17.6 Successors and Assigns .............................................65
17.7 Severability .......................................................65
17.8 Entire Agreement ...................................................65
17.9 Applicable Law .....................................................65
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17.10 Captions ..........................................................65
17.11 Complete Agreement; Amendments ....................................65
17.12 Additional Costs of Maintaining Loan ..............................66
17.13 Capital Requirements ..............................................67
17.14 Replacement Notes .................................................67
17.15 Patronage Payments ................................................67
17.16 Mutual Release ....................................................68
17.17 Liberal Construction ..............................................68
17.18 Counterparts ......................................................68
17.19 Confidentiality ...................................................68
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EXHIBITS
Exhibit 1.40 Compliance Certificate
Exhibit 1.62 Existing Letters of Credit
Exhibit 1.138 List of Restricted Subsidiaries
Exhibit 2.3 364-Day Borrowing Notice
Exhibit 2.4 364-Day Facility Note Form
Exhibit 3.3 5-Year Borrowing Notice
Exhibit 3.4 5-Year Facility Note Form
Exhibit 4.3 Bid Request Form (364-Day Facility)
Bid Request Form (5-Year Facility)
Exhibit 4.4 Bid Form (364-Day Facility)
Bid Form (5-Year Facility)
Exhibit 4.5 Bid Selection Notice (364-Day Facility)
Bid Selection Notice (5-Year Facility)
Exhibit 10.3 Litigation
Exhibit 10.8 Payment of Taxes
Exhibit 10.11 Equity Investments
Exhibit 10.14 Environmental Compliance
Exhibit 13.1 Existing Indebtedness
Exhibit 16.27 Syndication Acquisition Agreement
Exhibit 16.29 Wire Instructions
Schedule 1 Syndication Parties and Individual Commitments
Schedule 2 Applicable Margins
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CREDIT AGREEMENT
(REVOLVING LOAN)
Cenex Harvest States Cooperatives
Loan No. S0604 and TR0605
THIS AGREEMENT ("CREDIT AGREEMENT") is entered into as of the 1st day
of June 1998, by and between COBANK, ACB ("COBANK") for its own benefit as a
Syndication Party, as Co-Syndication Agent, and as the Administrative Agent for
the benefit of the present and future Syndication Parties (in that capacity
"ADMINISTRATIVE AGENT"), ST. PAUL BANK FOR COOPERATIVES, as Co-Syndication Agent
("ST. PAUL BANK") and as a Syndication Party, the Syndication Parties identified
on Schedule 1 hereto, and CENEX HARVEST STATES COOPERATIVES (formerly known as
Harvest States Cooperatives), a cooperative corporation formed under the laws of
the State of Minnesota, whose address is 5500 Cenex Drive, Inver Grove Heights,
Minnesota 55077 ("BORROWER").
ARTICLE 1. DEFINED TERMS
As used in this Credit Agreement, the following terms shall have the
meanings set forth below (and such meaning shall be equally applicable to both
the singular and plural form of the terms defined, as the context may require):
1.1 ADDITIONAL COSTS: shall have the meaning set forth in Section
17.12.
1.2 ADJUSTED CONSOLIDATED FUNDED DEBT: All indebtedness for borrowed
money of the Borrower and its Subsidiaries, in each case maturing by its terms
more than one year after, or which is renewable or extendible for a period
ending one year or more after the date of determination, and shall include Debt
of such maturity created or assumed by the Borrower or any Subsidiary either
directly or indirectly, including obligations of such maturity secured by liens
upon property of the Borrower or its Subsidiaries and upon which such entity
customarily pays the interest, and all rental payments under capitalized leases
of such maturity, and the net present value of operating leases as discounted by
a rate which is 1.5% less than the National Prime Rate as stated in the WALL
STREET JOURNAL.
1.3 ADMINISTRATIVE AGENT: shall mean CoBank, ACB.
1.4 ADMINISTRATIVE AGENT OFFICE: shall mean the address set forth at
Subsection 17.4.2, as it may change from time to time by notice to all parties
to this Credit Agreement.
1.5 ADVANCE: an advance of funds under either one of the Facilities.
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1.6 ADVANCE DATE: a day (which shall be a Banking Day) on which an
Advance is made.
1.7 ADVANCE PAYMENT: shall have the meaning set forth in Section 16.1.
1.8 AFFECTED LOANS: shall have the meaning set forth in Section 11.5.
1.9 AGGREGATE 5-YEAR COMMITMENT: shall be $200,000,000.00, subject to
reduction as provided in Section 3.8 hereof.
1.10 AGGREGATE LC COMMITMENT: shall be $75,000,000.00.
1.11 AGGREGATE 364-DAY COMMITMENT: shall be $400,000,000.00, subject to
reduction as provided in Section 2.8 hereof.
1.12 AMORTIZATION: the total amortization of Borrower and its
Consolidated Subsidiaries as measured in accordance with GAAP.
1.13 ANNUAL OPERATING BUDGET: means the annual operating budget for
Borrower and its Subsidiaries in substantially the form of, and containing
substantially the same or similar information as set forth in, the Annual
Operating Budget (Business Plan) for Borrower and its Subsidiaries included in
the Confidential Information Memorandum dated April 1998 delivered to the
Syndication Parties prior to the Closing Date.
1.14 APPLICABLE LENDING OFFICE: means, for each Syndication Party and
for each type of Advance, the lending office of such Syndication Party
designated as such for such type of Advance on its signature page hereof or in
the applicable Syndication Acquisition Agreement or such other office of such
Syndication Party as such Syndication Party may from time to time specify to the
Administrative Agent and Borrower as the office by which its Advances of such
type are to be made and maintained.
1.15 AUTHORIZED OFFICER: shall have the meaning set forth in Subsection
11.2.2.
1.16 BANK DEBT: all amounts owing under the Note, fees, Borrower's
obligations to purchase Bank Equity Interests, Funding Losses and all interest,
expenses, charges and other amounts payable by Borrower pursuant to the Loan
Documents.
1.17 BANKING DAY: any day (a) other than a Saturday or Sunday and other
than a day which is a Federal legal holiday or a legal holiday for banks in the
States of Colorado, Minnesota, or New York, and (b) if such day relates to a
borrowing of, a payment or prepayment of principal of or interest on, a
continuation of or conversion into, or a LIBO Rate Period for, a LIBO Rate Loan,
or a notice by Borrower with respect to any such borrowing, payment, prepayment,
continuation, conversion, or LIBO
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Rate Period, on which dealings in U.S. Dollar deposits are carried out in the
London interbank market.
1.18 BANK EQUITY INTERESTS: shall have the meaning set forth in Article
8 hereof.
1.19 BASE RATE: a rate of interest per annum equal to the "prime rate"
as published from time to time in the Eastern Edition of the WALL STREET JOURNAL
as the average prime lending rate for seventy-five percent (75%) of the United
States' thirty (30) largest commercial banks, or if the WALL STREET JOURNAL
shall cease publication or cease publishing the "prime rate" on a regular basis,
such other regularly published average prime rate applicable to such commercial
banks as is acceptable to the Administrative Agent in its reasonable discretion.
1.20 BASE RATE LOANS: shall have the meaning set forth in Subsection
6.1.1.
1.21 BID: shall have the meaning set forth in Section 4.4.
1.22 BID AGENT: shall mean CoBank, ACB.
1.23 BID MATURITY DATE: shall have the meaning set forth in Section
4.3.
1.24 BID REQUEST: shall have the meaning set forth in Section 4.3.
1.25 BID RESULTS NOTICE: shall have the meaning set forth in Section
4.4.
1.26 BID RATE: shall have the meaning set forth in Section 4.4.
1.27 BID SELECTION NOTICE: shall have the meaning set forth in Section
4.5.
1.28 BORROWER'S ACCOUNT: shall mean Borrower's account #44070 at
Norwest Bank Minnesota, N.A., Minneapolis, Minnesota (ABA #091000019).
1.29 BORROWER BENEFIT PLAN: means (a) any funded "employee welfare
benefit plan," as that term is defined in Section 3(1) of ERISA; (b) any
"multiemployer plans," as defined in Section 3(37) of ERISA; (c) any "employee
pension benefit plan" as defined in Section 3(2) of ERISA; (d) any "employee
benefit plan", as such term is defined in Section 3(3) of ERISA; (e) any
"multiple employer plan" within the meaning of Section 413 of the Code; (f) any
"multiple employer welfare arrangement" within the meaning of Section 3(40) of
ERISA; (g) a "voluntary employees' beneficiary association" within the meaning
of Section 501(a)(9) of the Code; (h) a "welfare benefit fund" within the
meaning of Section 419 of the Code; or (i) any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA for the benefit of retired or former
employees.
1.30 BORROWING NOTICE: shall mean a 364-Day Borrowing Notice or a
5-Year Borrowing Notice, as applicable.
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1.31 CAPITAL LEASES: means any lease of property (whether real,
personal or mixed) by a Person which has been or should be , in accordance with
GAAP, reflected on the balance sheet of such Person as a capital lease.
1.32 CHANGE IN LAW: shall have the meaning set forth in Subsection
6.2.2.
1.33 CLOSING DATE: that date, which must occur on or before June 1,
1998, on which the Administrative Agent, the Bid Agent, the Syndication Parties,
and Borrower have executed all Loan Documents to which they are parties and on
which the conditions set forth in Section 11.1 of this Credit Agreement have
been met.
1.34 CODE: means the Internal Revenue Code of 1986.
1.35 COMMITTED 5-YEAR ADVANCES: the principal amount of all 5-Year
Facility Advances which any Syndication Party is obligated to make as a result
of Borrower having made a 5-Year Borrowing Notice pursuant to Section 3.3
hereof, but which has not been funded.
1.36 COMMITTED LC REQUEST: shall have the meaning set forth in
Subsection 5.1.1.
1.37 COMMITTED LETTER OF CREDIT: shall mean a letter of credit issued
by the Letter of Credit Bank pursuant to the provisions of Sections 5.1 and 5.2
hereof.
1.38 COMMITTED LETTER OF CREDIT FEE: for any Committed Letter of Credit
shall be an amount equal to the 5-Year Margin multiplied by (a) the face amount
of such Committed Letter of Credit and (b) the number of days from, and
including, the date of issuance until the expiry date, divided by 365.
1.39 COMMITTED 364-DAY ADVANCES: the principal amount of all 364-Day
Facility Advances which any Syndication Party is obligated to make as a result
of Borrower having made a 364-Day Borrowing Notice pursuant to Section 2.3
hereof, but which has not been funded.
1.40 COMPLIANCE CERTIFICATE: a certificate of the chief financial
officer of Borrower acceptable to the Administrative Agent and in the form
attached hereto as Exhibit 1.40.
1.41 CONSOLIDATED CASH FLOW: the sum of (i) earnings before income
taxes of the Borrower and its Consolidated Subsidiaries calculated in accordance
with GAAP plus (ii) amounts in determination of consolidated earnings before
income taxes for such period, that have been deducted for (a) Consolidated
Interest Expense for such period, (b) Depreciation and (c) Amortization minus
the sum of (d) one-time gains, (e) extraordinary income, (f) non-cash patronage
income, and (g) non-cash equity earnings in joint ventures.
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1.42 CONSOLIDATED CURRENT ASSETS: the total current assets of Borrower
and its Subsidiaries as measured in accordance with GAAP.
1.43 CONSOLIDATED CURRENT LIABILITIES: the total current liabilities of
Borrower and its Subsidiaries as measured in accordance with GAAP.
1.44 CONSOLIDATED FUNDED DEBT: all indebtedness for borrowed money of
the Borrower and its Subsidiaries, in each case maturing by its terms more than
one year after, or which is renewable or extendible for a period ending one year
or more after, the date of determination, and shall include Debt of such
maturity created or assumed by the Borrower or any Subsidiary either directly or
indirectly, including obligations of such maturity secured by liens upon
property of the Borrower or its Subsidiaries and upon which such entity
customarily pays the interest, and all rental payments under capitalized leases
of such maturity.
1.45 CONSOLIDATED INTEREST EXPENSE: all interest expense of Borrower
and its Consolidated Subsidiaries, as determined in accordance with GAAP.
1.46 CONSOLIDATED MEMBERS' AND PATRONS' EQUITY: the amount of equity
accounts plus (or minus in the case of a deficit) the amount of surplus and
retained earnings accounts of the Borrower and its Consolidated Subsidiaries and
the minority interest in Subsidiaries, provided that the total amount of
intangible assets of the Borrower and its Consolidated Subsidiaries (including,
without limitation, unamortized debt discount and expense, deferred charges and
goodwill) included therein shall not exceed $30,000,000 (and to the extent such
intangible assets exceed $30,000,000.00, they will not be included in the
calculation of Consolidated Members' and Patrons' Equity); all as determined in
accordance with GAAP consistently applied, but excluding therefrom any minority
interests in any Consolidated Subsidiaries without duplication of deduction if
already deducted in determining retained earnings and surplus.
1.47 CONSOLIDATED SUBSIDIARY: any Subsidiary whose accounts are
consolidated with those of Borrower in accordance with GAAP.
1.48 CONTRIBUTING SYNDICATION PARTIES: shall have the meaning set forth
in Section 16.4.
1.49 DEBT: means as to any Person: (a) indebtedness or liability of
such Person for borrowed money, or for the deferred purchase price of property
or services (including trade obligations); (b) obligations of such Person as
lessee under capital leases; (c) obligations of such Person arising under
bankers' or trade acceptance facilities; (d) all obligations secured by a lien
on property owned by such Person, whether or not the obligations have been
assumed; and (e) all obligations of such Person under any agreement providing
for an interest rate swap, cap, cap and floor, contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described in this definition.
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1.50 DEFAULT INTEREST RATE: a rate of interest equal to 200 basis
points in excess of the Base Rate which would otherwise be applicable on the
Loan.
1.51 DELINQUENCY INTEREST: shall have the meaning set forth in Section
16.4.
1.52 DELINQUENT AMOUNT: shall have the meaning set forth in Section
16.4.
1.53 DELINQUENT SYNDICATION PARTY: shall have the meaning set forth in
Section 16.4.
1.54 DEPRECIATION: the total depreciation of Borrower and its
Consolidated Subsidiaries as measured in accordance with GAAP.
1.55 ENVIRONMENTAL LAWS: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended, 42 U.S.C. 9601-9657
("CERCLA") and the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
6901-6987 ("RCRA").
1.56 ENVIRONMENTAL REGULATIONS: as defined in the definition of
Hazardous Substances.
1.57 ERISA: shall have the meaning set forth in Section 10.10.
1.58 ERISA AFFILIATE: means any corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Borrower or is under common control (within the
meaning of Section 414(c) of the Code) with Borrower, provided, however, that
for purposes of provisions herein concerning minimum funding obligations
(imposed under Section 412 of the Code or Section 302 of ERISA), the term "ERISA
Affiliate" shall also include any entity required to be aggregated with Borrower
under Section 414(m) or 414(o) of the Code.
1.59 EVENT OF DEFAULT: shall have the meaning set forth in Section
15.1.
1.60 EVENT OF SYNDICATION DEFAULT: shall have the meaning set forth in
Subsection 16.30.1.
1.61 EXISTING CREDIT AGREEMENTS: shall mean (a) the Revolving Credit
Agreement dated as of November 1, 1996 among Harvest States Cooperatives as
borrower, St. Paul Bank as syndication agent and bank, and CoBank as syndication
agent, administrative agent, bid agent, and bank and the other banks signatory
thereto, as amended by the First Amendment to Revolving Credit Agreement dated
as of October 31, 1997; (b) the Loan Agreement dated as of March 14, 1997 by and
between St. Paul Bank and Cenex, Inc., as amended by the Amendment to Loan
Agreement dated as of September 23, 1997, the Amendment to Loan Agreement dated
as of December 31, 1997, and the Amendment to Loan Agreement dated as of March
18, 1998; (c) the Master Syndicated Loan Agreement dated as of August 28, 1995,
by and between
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CoBank, St. Paul Bank, and Harvest States Cooperatives, as amended and restated
by the Amended and Restated Master Syndicated Loan Agreement dated as of October
28, 1996 by and between CoBank, St. Paul Bank, and Harvest States Cooperatives,
and as the foregoing shall have been supplemented by the First Supplement dated
as of August 28, 1995, by the St. Paul Supplement dated as of October 13, 1995
(by and between St. Paul Bank and Harvest States Cooperatives only), by the
Third Supplement dated as of December 15, 1995, and by the Fourth Supplement
dated as of July 25, 1997; and (d) the promissory notes, security documents, and
other loan documents executed in connection with (a), (b) and (c).
1.62 EXISTING LETTERS OF CREDIT: The Letters of Credit which have been
issued for the benefit of the Predecessor Companies by one or more of the
Syndication Parties and which are outstanding on the Closing Date as listed on
Exhibit 1.62 hereto.
1.63 FISCAL QUARTER: each three (3) month period beginning on the first
day of each of the following months: September, December, March and June.
1.64 FISCAL YEAR: a year commencing on September 1 and ending on August
31.
1.65 5-YEAR AVAILABILITY PERIOD: shall mean the period from the Closing
Date until the Banking Day immediately prior to the 5-Year Maturity Date.
1.66 5-YEAR BID ADVANCE: shall have the meaning set forth in Section
4.2.
1.67 5-YEAR BID LOAN: shall have the meaning set forth in Section 4.2.
1.68 5-YEAR BORROWING NOTICE: shall have the meaning set forth in
Section 3.3.
1.69 5-YEAR FACILITY: shall mean the loan facility made available to
Borrower under Article 3 of this Agreement.
1.70 5-YEAR FACILITY FEE: shall have the meaning set forth in
Subsection 6.5.2.
1.71 5-YEAR FACILITY NOTE: shall have the meaning set forth in Section
3.4.
1.72 5-YEAR FUNDING NOTICE: shall have the meaning set forth in Section
3.3.
1.73 5-YEAR MARGIN: the 5-Year Margin as set forth in Schedule 2
hereto.
1.74 5-YEAR MATURITY DATE: May 31, 2003.
1.75 5-YEAR PRO RATA ADVANCE: shall have the meaning set forth in
Subsection 3.1.2.
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1.76 FUNDED DEBT: means, with respect to any Person, at any time, all
Debt of such Person in each case maturing by its terms more than one year after
the date of creation thereof, or which is renewable or extendible at the option
of such Person for a period ending more than one (1) year after the date of
creation thereof, and shall include Debt of such maturity created or assumed by
such Person either directly or indirectly, including obligations of such
maturity secured by liens upon property of such Person and upon which such
Person customarily pays the interest, and all obligations of such Person under
Capital Leases of such maturity, and the net present value of obligations under
Operating Leases as discounted by a rate which is 1.5% less than the Base Rate
in effect at such time, and all obligations to reimburse the Letter of Credit
Bank or any Syndication Party with respect to all Letters of Credit which
support long-term debt, with expiration dates in excess of one year from the
date of issuance thereof.
1.77 FUNDING LOSSES: shall have the meaning set forth in Section 7.5.
1.78 FUNDING LOSS NOTICE: shall have the meaning set forth in Section
7.5.
1.79 FUNDING SHARE: shall mean the amount of any Advance which each
Syndication Party is required to fund, which shall be determined as follows: (a)
for an Advance under the 364-Day Facility (other than pursuant to a Bid Advance
or an Overnight Advance), the amount of such Advance multiplied by such
Syndication Party's Individual 364-Day Pro Rata Share as of, but without giving
effect to, such Advance; (b) for an Advance under the 5-Year Facility (other
than pursuant to a Bid Advance), the amount of such Advance multiplied by such
Syndication Party's Individual 5-Year Pro Rata Share as of, but without giving
effect to, such Advance; (c) for an Advance under a Bid won by such Syndication
Party, the amount of such Bid; and (d) for an Overnight Advance, the amount
determined as provided in Section 4.7 hereof.
1.80 GAAP: generally accepted accounting principles in the United
States of America, applied consistently, as in effect from time to time.
1.81 GOOD FAITH CONTEST: means the contest of an item if (a) the item
is diligently contested in good faith by appropriate proceedings timely
instituted, (b) either the item is (i) bonded or (ii) adequate reserves are
established with respect to the contested item if and to the extent required in
accordance with GAAP, (c) during the period of such contest, the enforcement of
any contested item is effectively stayed, and (d) the failure to pay or comply
with the contested item could not reasonably be expected to result in a Material
Adverse Effect.
1.82 GOVERNMENTAL AUTHORITY: means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
1.83 HAZARDOUS SUBSTANCES: dangerous, toxic or hazardous pollutants,
contaminants, chemicals, wastes, materials or substances, as defined in or
governed by the provisions of any Environmental Laws or any other federal, state
or local law,
8
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statute, code, ordinance, regulation, requirement or rule relating thereto
("ENVIRONMENTAL REGULATIONS"), and also including urea formaldehyde,
polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear fuel
or waste, and petroleum products, or any other waste, material, substances,
pollutant or contaminant which would subject an owner of property to any
damages, penalties or liabilities under any applicable Environmental
Regulations.
1.84 INDEMNIFIED AGENCY PARTIES: shall have the meaning set forth in
Section 16.19.
1.85 INDEMNIFIED PARTIES: shall have the meaning set forth in Section
14.1.
1.86 INDIVIDUAL COMMITMENT: shall mean with respect to any Syndication
Party, its Individual 5-Year Commitment or its Individual 364-Day Commitment, as
applicable.
1.87 INDIVIDUAL 5-YEAR COMMITMENT: shall mean with respect to any
Syndication Party the amount shown as its Individual 5-Year Commitment on
Schedule 1 hereto, subject to adjustment in the event of the sale of all or a
portion of a Syndication Interest in accordance with Section 16.27 hereof, or a
reduction in the Aggregate 5-Year Commitment in accordance with Section 3.8
hereof.
1.88 INDIVIDUAL 364-DAY COMMITMENT: shall mean with respect to any
Syndication Party the amount shown as its Individual 364-Day Commitment on
Schedule 1 hereto, subject to adjustment in the event of the sale of all or a
portion of a Syndication Interest in accordance with Section 16.27 hereof, or a
reduction in the Aggregate 364-Day Commitment in accordance with Section 2.8
hereof.
1.89 INDIVIDUAL 5-YEAR LENDING CAPACITY: shall mean with respect to any
Syndication Party the amount at any time of its Individual 5-Year Commitment,
less its Individual Outstanding 5-Year Obligations.
1.90 INDIVIDUAL 364-DAY LENDING CAPACITY: shall mean with respect to
any Syndication Party the amount at any time of its Individual 364-Day
Commitment, less its Individual Outstanding 364-Day Obligations.
1.91 INDIVIDUAL OUTSTANDING 5-YEAR OBLIGATIONS: shall mean with respect
to any Syndication Party the total at any time, without duplication, of (a) the
aggregate outstanding principal amount of all 5-Year Advances made by such
Syndication Party, (b) the aggregate outstanding principal amount of all 5-Year
Bid Advances made by such Syndication Party, (c) the undrawn face amount of all
outstanding Negotiated Letters of Credit issued under the 5-Year Facility and as
to which such Syndication Party is the Issuing Syndication Party, (d) such
Syndication Party's 5-Year Pro Rata Share of the undrawn face amount of all
Outstanding Committed Letters of Credit issued under the 5-Year Facility
determined at the time of issuance; and (e) all of such Syndication Party's
Committed 5-Year Advances.
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1.92 INDIVIDUAL OUTSTANDING 364-DAY OBLIGATIONS: shall mean with
respect to any Syndication Party the total at any time, without duplication, of
(a) the aggregate outstanding principal amount of all 364-Day Advances made by
such Syndication Party (including, without duplication, Overnight Advances made
by such Syndication Party in its capacity as an Overnight Lender), (b) the
aggregate outstanding principal amount of all 364-Day Bid Advances made by such
Syndication Party, (c) the undrawn face amount of all outstanding Negotiated
Letters of Credit issued under the 364-Day Facility and as to which such
Syndication Party is the Issuing Syndication Party, (d) such Syndication Party's
364-Day Pro Rata Share of the undrawn face amount of all Outstanding Committed
Letters of Credit issued under the 364-Day Facility determined at the time of
issuance, and (e) all of such Syndication Party's Committed 364-Day Advances.
1.93 INDIVIDUAL 5-YEAR PRO RATA SHARE: shall mean with respect to any
Syndication Party a fraction, expressed as a percentage (rounded to 8 decimal
points), where the numerator is such Syndication Party's Individual 5-Year
Commitment less such Syndication Party's Individual Outstanding 5-Year
Obligations; and the denominator is the Aggregate 5-Year Commitment less the sum
of the Individual Outstanding 5-Year Obligations of all of the Syndication
Parties, determined (a) in the case of LIBO Rate Loans, at 12:00 noon (Central
time) on the Banking Day Borrower delivers a 5-Year Borrowing Notice pursuant to
which Borrower requests such LIBOR Loan, and (b) in all other cases, 12:00 noon
(Central time) on the Banking Day Borrower delivers a 5-Year Borrowing Notice or
requests a Letter of Credit under the 5-Year Facility.
1.94 INDIVIDUAL 364-DAY PRO RATA SHARE: shall mean with respect to any
Syndication Party a fraction, expressed as a percentage (rounded to 8 decimal
points), where the numerator is such Syndication Party's Individual 364-Day
Commitment less such Syndication Party's Individual Outstanding 364-Day
Obligations; and the denominator is the Aggregate 364-Day Commitment less the
sum of the Individual Outstanding 364-Day Obligations of all of the Syndication
Parties, determined (a) in the case of LIBO Rate Loans, at 12:00 noon (Central
time) on the Banking Day Borrower delivers a 364-Day Borrowing Notice pursuant
to which Borrower requests such LIBOR Loan, and (b) in all other cases, 12:00
noon (Central time) on the Banking Day Borrower delivers a 364-Day Borrowing
Notice or a Bid Request or requests a Letter of Credit under the 364-Day
Facility.
1.95 INVESTMENT: means, with respect to any Person, (a) any loan or
advance by such Person to any other Person, (b) the purchase or other
acquisition by such Person of any capital stock, obligations or securities of,
or any capital contribution to, or investment in, or the acquisition by such
Person of all or substantially all of the assets of, or any interest in, any
other Person, (c) any performance or standby letter of credit where (i) that
Person has the reimbursement obligation to the issuer, and (ii) the proceeds of
such letter of credit are to be used for the benefit of any other Person, (d)
the agreement by such Person to make funds available for the benefit of another
Person to either cover cost overruns incurred in connection with the
construction of a project or
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facility, or to fund a debt service reserve account, (e) the agreement by such
Person to assume, guarantee, endorse or otherwise be or become directly or
contingently responsible or liable for the obligations or Debts of any other
Person (other than by endorsement for collection in the ordinary course of
business), (f) an agreement to purchase any obligations, stocks, assets, goods
or services but excluding an agreement to purchase any assets, goods or services
entered into in the ordinary course of business, (g) an agreement to supply or
advance any funds, assets, goods or services, or (h) an agreement to maintain or
cause such Person to maintain a minimum working capital or net worth or
otherwise to assure the creditors of any Person against loss.
1.96 ISSUING SYNDICATION PARTY: shall have the meaning set forth in
Section 5.3.
1.97 LETTERS OF CREDIT: shall mean collectively all Committed Letters
of Credit, and all Negotiated Letters of Credit, outstanding at any time.
1.98 LETTER OF CREDIT BANK: shall mean CoBank, ACB.
1.99 LIBO RATE: the rate for deposits in U.S. dollars with maturities
comparable to the selected LIBO Rate Period that appears on the display
designated as Page "3750" of the Telerate Service (or such other Page as may
replace the 3750 Page of that service or, if the Telerate Service shall cease
displaying such rates, as published by such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying
London Interbank Offered Rates for U.S. Dollar deposits or, if none, the
comparable reference on the Reuters Screen LIBOR Page or such other quotation
service as may be chosen by the Administrative Agent), determined effective as
of 1:00 P.M. (Eastern Standard Time) on the day which is two (2) Banking Days
prior to the first day of each LIBO Rate Period, reserve adjusted basis for
Regulation D on a demonstrated basis, with such rate modified by adding the
364-Day Margin or the 5-Year Margin, depending on whether the LIBO Rate Loan is
being made under the 364-Day Facility or the 5-Year Facility respectively.
1.100 LIBO RATE LOAN: shall have the meaning set forth in Subsection
6.1.2.
1.101 LIBO RATE PERIOD: shall have the meaning set forth in Subsection
6.1.2.
1.102 LIBO REQUEST: shall have the meaning set forth in Subsection
6.1.2.
1.103 LICENSING LAWS: shall have the meaning set forth in Section 10.4.
1.104 LIEN: means with respect to any asset any mortgage, deed of
trust, pledge, security interest, hypothecation, assignment for security
purposes, encumbrance, lien (statutory or other), or other security agreement or
charge, or encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale, Capital Lease or other title retention
agreement related to such asset).
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1.105 LOANS: shall mean, collectively, all Bid Rate Advances, all Base
Rate Loans, all LIBO Rate Loans, and all Overnight Loans outstanding at any
time.
1.106 This Section intentionally left blank.
1.107 LOAN DOCUMENTS: this Credit Agreement and the Notes.
1.108 MATERIAL ADVERSE EFFECT: means: (a) a material adverse effect on
the financial condition, results of operation, business or property of Borrower;
or (b) a material adverse effect on the ability of Borrower to perform its
obligations under this Credit Agreement and the other Loan Documents.
1.109 MATERIAL AGREEMENTS: all agreements of Borrower, the termination
or breach of which, based upon Borrower's knowledge as of the date of making any
representation with respect thereto, would have a Material Adverse Effect.
1.110 MERGER: means the combination, by merger, of the two Predecessor
Companies in accordance with (a) the Transaction Agreement between them dated as
of January 29, 1998, (b) the Plan of Combination dated as of February 2, 1998,
and (c) the Articles of Merger adopted and executed by each of the Predecessor
Companies, with Borrower being the surviving corporation.
1.111 MULTIEMPLOYER PLAN: means a Plan defined as such in Section 3(37)
of ERISA.
1.112 NEGOTIATED LC REQUEST: shall have the meaning set forth in
Subsection 5.1.2.
1.113 NEGOTIATED LETTER OF CREDIT: shall mean a letter of credit issued
by a Syndication Party pursuant to the provisions of Sections 5.1 and 5.3 hereof
and shall include all Existing Letters of Credit as to which such Syndication
Party was the Issuing Syndication Party.
1.114 NOTE OR NOTES: the promissory notes executed by Borrower pursuant
to Sections 2.4 and 3.4 hereof, and all amendments, renewals, substitutions and
extensions thereof.
1.115 OPERATING LEASE: means any lease of property (whether real,
personal or mixed) by a Person under which such Person is lessee, other than a
Capital Lease.
1.116 ORGANIZATION DOCUMENTS: in the case of a corporation, its
articles or certificate of incorporation and bylaws; in the case of a
partnership, its partnership agreement and certificate of limited partnership,
if applicable; in the case of a limited liability company, its articles of
organization and its operating agreement.
1.117 OVERNIGHT ADVANCE: shall have the meaning set forth in Section
4.7.
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1.118 OVERNIGHT ADVANCE REQUEST: shall have the meaning set forth in
Section 4.7.
1.119 OVERNIGHT FUNDING COMMITMENT: shall mean $20,000,000.00.
1.120 OVERNIGHT LENDER: shall mean CoBank.
1.121 OVERNIGHT MATURITY DATE: shall have the meaning set forth in
Section 4.7.
1.122 OVERNIGHT RATE: shall have the meaning set forth in Section 4.7.
1.123 PAYMENT ACCOUNT: shall have the meaning set forth in Section
16.10.
1.124 PAYMENT DISTRIBUTION: shall have the meaning set forth in Section
16.10.
1.125 PBGC: shall have the meaning set forth in Section 10.10.
1.126 PERMITTED ENCUMBRANCE: shall have the meaning set forth in
Section 10.12.
1.127 PERSON: any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, cooperative association, institution, or government or
governmental agency (whether national, federal, state, provincial, country,
city, municipal or otherwise, including without limitation, and instrumentality,
division, agency, body or department thereof), or other entity.
1.128 PLAN: means any plan, agreement, arrangement or commitment which
is an employee benefit plan, as defined in Section 3(3) of ERISA, maintained by
Borrower or any Subsidiary or any ERISA Affiliate or with respect to which
Borrower or any Subsidiary or any ERISA Affiliate at any relevant time has any
liability or obligation to contribute.
1.129 POTENTIAL DEFAULT: any event, other than an event described in
Section 15.1(a) hereof, which with the giving of notice or lapse of time, or
both, would become an Event of Default.
1.130 PREDECESSOR COMPANIES: shall mean Harvest States Cooperatives and
Cenex, Inc.
1.131 PROHIBITED TRANSACTION: means any transaction prohibited under
Section 406 of ERISA or Section 4975 of the Code.
1.132 REGULATORY CHANGE: shall have the meaning set forth in Section
17.12.
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1.133 REPORTABLE EVENT: means any of the events set forth in Section
4043(b) of ERISA or in the regulations thereunder.
1.134 REQUESTED 5-YEAR ADVANCE: shall mean the amount of Advance
requested by Borrower in any 5-Year Borrowing Notice.
1.135 REQUESTED 364-DAY ADVANCE: shall mean the amount of Advance
requested by Borrower in any 364-Day Borrowing Notice.
1.136 REQUIRED LENDERS: shall mean (a) with respect to the 364-Day
Facility, Syndication Parties whose Individual 364-Day Commitments constitute
sixty-six and two-thirds percent (66 2/3%) of the Aggregate 364-Day Commitment,
and (b) with respect to the 5-Year Facility, Syndication Parties whose
Individual 5-Year Commitments constitute sixty-six and two-thirds percent (66
2/3%) of the Aggregate 5-Year Commitment; provided that in the case of either
(a) or (b), the number of Syndication Parties which constitute the Required
Lenders must be no fewer than three (3) even if fewer than three (3) would
constitute sixty-six and two-thirds percent (66 2/3%) of the Aggregate 364-Day
Commitment or Aggregate 5-Year Commitment, as applicable.
1.137 REQUIRED LICENSE: shall have the meaning set forth in Section
10.09.
1.138 RESTRICTED SUBSIDIARY: shall mean those Subsidiaries identified
on Exhibit 1.138 hereto, as it may be amended from time to time with the prior
written consent of Borrower, the Administrative Agent and the Required Lenders.
1.139 SUBSIDIARY: means with respect to any Person: (a) any corporation
in which such Person, directly or indirectly, (i) owns fifty percent (50%) or
more of the outstanding stock thereof, or (ii) has the power under ordinary
circumstances to elect at least a majority of the directors thereof, or (b) any
partnership, association, joint venture, limited liability company, or other
unincorporated organization or entity with respect to which such Person,
directly or indirectly, owns an equity interest in an amount sufficient to
control the management thereof.
1.140 SUCCESSOR AGENT: such Person as may be appointed as successor to
the rights and duties of the Administrative Agent as provided in Section 16.22
of this Credit Agreement.
1.141 SUPER MAJORITY LENDERS: shall have the meaning set forth in
Section 16.22.
1.142 SYNDICATION ACQUISITION AGREEMENT: shall have the meaning set
forth in Section 16.27.
1.143 SYNDICATION INTEREST: shall have the meaning set forth in Section
16.1.
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1.144 SYNDICATION PARTIES: shall mean those entities listed on Schedule
1 hereto, including CoBank and St. Paul Bank in their roles as a lenders
hereunder, but not in their roles as Co-Syndication Agents, the Administrative
Agent, and/or the Bid Agent, as applicable, hereunder, and such Persons as shall
from time to time execute a Syndication Acquisition Agreement substantially in
the form of Exhibit 16.27 hereto signifying their election to purchase all or a
portion of the Syndication Interest of any Syndication Party, in accordance with
Section 16.27 hereof, and to become a Syndication Party hereunder.
1.145 SYNDICATION PARTY ADVANCE DATE: shall have the meaning set forth
in Section 16.2.
1.146 TERM LOAN CREDIT AGREEMENT: shall mean that certain Credit
Agreement (Term Loan) dated as of June 1, 1998 by and between Borrower and St.
Paul Bank, as administrative agent for all syndication parties thereunder, and
as a syndication party thereunder, CoBank, and the other syndication parties set
forth on the signature pages thereto.
1.147 364-DAY AVAILABILITY PERIOD: shall mean the period from the
Closing Date until the Banking Day immediately prior to the 364-Day Maturity
Date.
1.148 364-DAY BID ADVANCE: shall have the meaning set forth in Section
4.1.
1.149 364-DAY BID LOAN: shall have the meaning set forth in Section
4.1.
1.150 364-DAY BORROWING NOTICE: shall have the meaning set forth in
Section 2.3.
1.151 364-DAY FACILITY: shall mean the loan facility made available to
Borrower under Article 2 of this Agreement.
1.152 364-DAY FACILITY FEE: shall have the meaning set forth in
Subsection 6.5.1.
1.153 364-DAY FACILITY NOTE(S): shall have the meaning set forth in
Section 2.4.
1.154 364-DAY FUNDING NOTICE: shall have the meaning set forth in
Section 2.3.
1.155 364-DAY MARGIN : the 364-Day Margin as set forth in Schedule 2
hereto.
1.156 364-DAY MATURITY DATE: May 31, 1999.
1.157 364-DAY PRO RATA ADVANCE: shall have the meaning set forth in
Subsection 2.1.2.
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1.158 TRANSFER: shall have the meaning set forth in Section 16.27.
1.159 WIRE INSTRUCTIONS: shall have the meaning set forth in Section
16.29.
ARTICLE 2. 364-DAY FACILITY
2.1 364-DAY FACILITY LOAN. On the terms and conditions set forth in
this Credit Agreement, and so long as no Event of Default or Potential Default
has occurred (or if an Event of Default has occurred, it has been waived in
writing by the Administrative Agent), each of the Syndication Parties severally
agrees, to make Advances under the 364-Day Facility from time to time during the
364-Day Facility Availability Period, subject to the following:
2.1.1 INDIVIDUAL SYNDICATION PARTY 364-DAY COMMITMENT. No
Syndication Party shall be required or permitted to make Advances under the
364-Day Facility which would exceed its Individual 364-Day Lending Capacity as
in effect at the time of the Administrative Agent's receipt of the 364-Day
Borrowing Notice requesting such Advance.
2.1.2 INDIVIDUAL SYNDICATION PARTY 364-DAY PRO RATA SHARE. No
Syndication Party shall be required or permitted to make Advances under the
364-Day Facility ("364-DAY PRO RATA ADVANCE") in excess of an amount equal to
its Individual 364-Day Pro Rata Share multiplied by the amount of the requested
364-Day Pro Rata Advance. Each Syndication Party severally agrees to fund its
Individual 364-Day Pro Rata Share of each 364-Day Advance, except as provided in
Section 4.7 hereof regarding Overnight Loans and in Article 4 hereof regarding
364-Day Bid Advances.
2.2 AGGREGATE 364-DAY COMMITMENT. Borrower shall not be entitled to
request a 364-Day Pro Rata Advance in an amount which, when added to the
aggregate Individual Outstanding 364-Day Obligations of all Syndication Parties,
would exceed the Aggregate 364-Day Commitment.
2.3 364-DAY BORROWING NOTICE; FUNDING NOTICE. Borrower shall give the
Administrative Agent prior written notice by facsimile (effective upon receipt)
of each request for a 364-Day Pro Rata Advance (a) in the case of a Base Rate
Loan, on or before 11:00 A.M. (Central time) on the day of making such Base Rate
Loan, and (b) in the case of a LIBO Rate Loan, on or before 11:00 A.M. (Central
time) at least three (3) Banking Days prior to the date of making such LIBO Rate
Loan. Each notice must be in substantially the form of Exhibit 2.3 hereto
("364-DAY BORROWING NOTICE") and must specify (w) the amount of such Advance,
(x) the proposed date of making such Advance, (y) whether Borrower requests that
the Advance will bear interest at (i) the Base Rate or (ii) the LIBO Rate, and
(z) in the case of a LIBO Rate Loan, the initial LIBO Rate Period applicable
thereto. The Administrative Agent shall, on or before 12:00 noon (Central time)
of the same Banking Day, notify each Syndication Party ("364-DAY FUNDING
NOTICE") of its receipt of each such 364-Day Borrowing Notice and the amount of
such Syndication Party's Funding Share thereunder. Not later than 2:00 P.M.
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(Central time) on the date of a 364-Day Pro Rata Advance, each Syndication Party
will make available to the Administrative Agent at the Administrative Agent's
Office, in immediately available funds, such Syndication Party's Funding Share
of such Advance. After the Administrative Agent's receipt of such funds, but not
later than 3:00 P.M. (Central time), and upon fulfillment of the applicable
conditions set forth in Article 11 hereof, the Administrative Agent will make
such Advance available to Borrower, in immediately available funds, and will
transmit such funds by wire transfer to Borrower's Account.
2.4 364-DAY FACILITY PROMISSORY NOTES. Borrower's obligations to each
Syndication Party under the 364-Day Facility, including Borrower's payment
obligations with respect to all 364-Day Pro Rata Advances made by such
Syndication Party, all Overnight Advances made by the Overnight Lenders, and all
364-Day Bid Advances made by each Syndication Party shall be evidenced by, and
repaid with interest in accordance with, a single promissory note of Borrower in
substantially the form of Exhibit 2.4 hereto duly completed, in the stated
maximum principal amount equal to such Syndication Party's Individual 364-Day
Facility Commitment, dated the date such Syndication Party becomes a Syndication
Party, payable to such Syndication Party for the account of its Applicable
Lending Office, and maturing as to principal on the 364-Day Maturity Date (each
a "364-DAY FACILITY NOTE" and collectively, the "364-DAY FACILITY NOTES").
2.5 SYNDICATION PARTY RECORDS. Each Syndication Party shall record on
its books and records the amount of each Advance (including Overnight Advances
with respect to those Syndication Parties which are also Overnight Lenders) and
any unreimbursed obligations to such Syndication Party with respect to payments
by such Syndication Party under Negotiated Letters of Credit issued by such
Syndication Party hereunder, the rate and interest period applicable thereto,
all payments of principal and interest, and the principal balance from time to
time outstanding. Each Syndication Party's record thereof shall be prima facie
evidence as to all such amounts and shall be binding on Borrower absent manifest
error. Notwithstanding the foregoing, Borrower will never be required to pay to
any Syndication Party as principal more than the principal amount of the Loans
made by such Syndication Party and any unreimbursed obligations to such
Syndication Party with respect to payments by such Syndication Party under
Negotiated Letters of Credit issued by such Syndication Party.
2.6 USE OF PROCEEDS. The proceeds of the 364-Day Loans will be used by
Borrower for refinancing the revolving credit indebtedness owed by the
Predecessor Companies under the Existing Credit Agreements and existing on the
Closing Date, to fund working capital requirements, for general corporate
purposes, and to support the issuance of Letters of Credit, and Borrower agrees
not to request or use such proceeds for any other purpose. Borrower will not,
directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors or to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
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2.7 SYNDICATION PARTY FUNDING FAILURE. The failure of any Syndication
Party to make any requested 364-Day Pro Rata Advance or 364-Day Bid Advance to
be made by it on the date specified for such Advance shall not relieve any other
Syndication Party of its obligation (if any) to make any Advance on such date,
but, except as provided in Sections 4.8 and 4.9 hereof, no Syndication Party
shall be responsible for the failure of any other Syndication Party to make any
Advance to be made by such other Syndication Party.
2.8 REDUCTION OF AGGREGATE 364-DAY COMMITMENT. Borrower may, by written
facsimile notice to the Administrative Agent on or before 10:00 A.M. (Central
time) on any Banking Day, irrevocably reduce the Aggregate 364-Day Commitment;
provided that (a) such reduction must be in multiples of one-million dollars
($1,000,000.00), and (b) Borrower must simultaneously make any principal payment
necessary (along with any applicable Funding Losses on account of such principal
payment) so that (i) the principal amount outstanding under the 364-Day Facility
does not exceed the reduced Aggregate 364-Day Commitment on the date of such
reduction, and (ii) the Individual Outstanding 364-Day Obligations owing to any
Syndication Party do not exceed the Individual 364-Day Commitment of that
Syndication Party (after reduction thereof in accordance with the following
sentence). In the event the Aggregate 364-Day Commitment is reduced as provided
in the preceding sentence, then the Individual 364-Day Commitment of each
Syndication Party shall be reduced in the same proportion as the Individual
364-Day Commitment of such Syndication Party bears to the Aggregate 364-Day
Commitment before such reduction.
ARTICLE 3. 5-YEAR FACILITY
3.1 5-YEAR FACILITY LOAN. On the terms and conditions set forth in this
Credit Agreement, and so long as no Event of Default or Potential Default has
occurred (or if an Event of Default has occurred, it has been waived in writing
by the Administrative Agent), each of the Syndication Parties severally agrees,
to make Advances under the 5-Year Facility from time to time during the 5-Year
Facility Availability Period, subject to the following:
3.1.1 INDIVIDUAL SYNDICATION PARTY 5-YEAR COMMITMENT. No
Syndication Party shall be required or permitted to make Advances under the
5-Year Facility which would exceed its Individual 5-Year Lending Capacity as in
effect at the time of the Administrative Agent's receipt of the 5-Year Borrowing
Notice requesting such Advance.
3.1.2 INDIVIDUAL SYNDICATION PARTY 5-YEAR PRO RATA SHARE. No
Syndication Party shall be required or permitted to make Advances under the
5-Year Facility ("5-YEAR PRO RATA ADVANCE") in excess of an amount equal to its
Individual 5-Year Pro Rata Share multiplied by the amount of the requested
5-Year Pro Rata Advance. Each Syndication Party severally agrees to fund its
Individual 5-Year Pro Rata Share of each 5-Year Pro Rata Advance, except as
provided in Article 4 hereof regarding 5-Year Bid Advances.
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3.2 AGGREGATE 5-YEAR COMMITMENT. Borrower shall not be entitled to
request a 5-Year Pro Rata Advance in an amount which, when added to the
aggregate Individual Outstanding 5-Year Obligations of all Syndication Parties,
would exceed the Aggregate 5-Year Commitment.
3.3 5-YEAR BORROWING NOTICE. Borrower shall give the Administrative
Agent prior written notice by facsimile (effective upon receipt) of each request
for a 5-Year Pro Rata Advance (a) in the case of a Base Rate Loan, on or before
11:00 A.M. (Central time) on the day of making such Base Rate Loan, and (b) in
the case of a LIBO Rate Loan, on or before 11:00 A.M. (Central time) at least
three (3) Banking Days prior to the date of making such LIBO Rate Loan. Each
notice must be in substantially the form of Exhibit 3.3 hereto ("5-YEAR
BORROWING NOTICE") and must specify (w) the amount of such Advance, (x) the
proposed date of making such Advance, (y) whether Borrower requests that the
Advance will bear interest at (i) the Base Rate or (ii) the LIBO Rate, and (z)
in the case of a LIBO Rate Loan, the initial LIBO Rate Period applicable
thereto. The Administrative Agent shall, on or before 12:00 noon (Central time)
of the same Banking Day, notify each Syndication Party ("5-YEAR FUNDING NOTICE")
of its receipt of each such 5-Year Borrowing Notice and the amount of such
Syndication Party's Funding Share thereunder. Not later than 2:00 P.M. (Central
time) on the date of a 5-Year Pro Rata Advance, each Syndication Party will make
available to the Administrative Agent at the Administrative Agent's Office, in
immediately available funds, such Syndication Party's Funding Share of such
Advance. After the Administrative Agent's receipt of such funds, but not later
than 3:00 P.M. (Central time), and upon fulfillment of the applicable conditions
set forth in Article 11, the Administrative Agent will make such Advance
available to Borrower, in immediately available funds, and will transmit such
funds by wire transfer to Borrower's Account.
3.4 5-YEAR FACILITY PROMISSORY NOTES. Borrower's obligations to each
Syndication Party under the 5-Year Facility, including Borrower's payment
obligations with respect to all 5-Year Facility Advances made by each
Syndication Party shall be evidenced by, and repaid with interest in accordance
with, a single promissory note of Borrower in substantially the form of Exhibit
3.4 hereto duly completed, in the stated maximum principal amount equal to such
Syndication Party's Individual 5-Year Facility Commitment, dated the date such
Syndication Party becomes a Syndication Party, payable to such Syndication Party
for the account of its Applicable Lending Office, and maturing as to principal
on the 5-Year Maturity Date (each a "5-YEAR FACILITY NOTE" and collectively, the
"5-YEAR FACILITY NOTES").
3.5 SYNDICATION PARTY RECORDS. Each Syndication Party shall record on
its books and records the amount of each Advance and any unreimbursed
obligations to such Syndication Party with respect to payments by such
Syndication Party under Letters of Credit issued by such Syndication Party made
by it hereunder, the rate and interest period applicable thereto, all payments
of principal and interest, and the principal balance from time to time
outstanding. The Syndication Party's record thereof shall be prima facie
evidence as to all such amounts and shall be binding on Borrower absent manifest
error. Notwithstanding the foregoing, Borrower will never be required
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to pay as principal more than the principal amount of the Loans made by the
Syndication Parties and any unreimbursed obligations to such Syndication Party
with respect to payments by such Syndication Party under Letters of Credit
issued by such Syndication Party.
3.6 USE OF PROCEEDS. The proceeds of the 5-Year Loans will be used by
Borrower for refinancing the revolving credit indebtedness owed by the
Predecessor Companies under the Existing Credit Agreements and existing on the
Closing Date, to fund working capital requirements, for general corporate
purposes, and to support the issue of Letters of Credit, and Borrower agrees not
to request or use such proceeds for any other purpose. Borrower will not,
directly or indirectly, use any part of such proceeds for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors or to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
3.7 SYNDICATION PARTY FUNDING FAILURE. The failure of any Syndication
Party to make any requested 5-Year Pro Rata Advance or 5-Year Bid Advance to be
made by it on the date specified for such Advance shall not relieve any other
Syndication Party of its obligation (if any) to make any Advance on such date,
but, except as provided in Sections 4.8 and 4.9 hereof, no Syndication Party
shall be responsible for the failure of any other Syndication Party to make any
Advance to be made by such other Syndication Party.
3.8 REDUCTION OF AGGREGATE 5-YEAR COMMITMENT. Borrower may, by written
facsimile notice to the Administrative Agent on or before 10:00 A.M. (Central
time) on any Banking Day, irrevocably reduce the Aggregate 5-Year Commitment;
provided that (a) such reduction must be in multiples of one-million dollars
($1,000,000.00), and (b) Borrower must simultaneously make any principal payment
necessary (along with any applicable Funding Losses on account of such principal
payment) so that (i) the principal amount outstanding under the 5-Year Facility
does not exceed the reduced Aggregate 5-Year Commitment on the date of such
reduction, and (ii) the Individual Outstanding 5-Year Obligations owing to any
Syndication Party do not exceed the Individual 5-Year Commitment of that
Syndication Party (after reduction thereof in accordance with the following
sentence). In the event the Aggregate 5-Year Commitment is reduced as provided
in the preceding sentence, then the Individual 5-Year Commitment of each
Syndication Party shall be reduced in the same proportion as the Individual
5-Year Commitment of such Syndication Party bears to the Aggregate 5-Year
Commitment before such reduction.
ARTICLE 4. BID RATE FACILITY
4.1 364-DAY FACILITY BID RATE LOANS. Subject to the terms and
conditions of this Agreement, including the procedures set forth in Article 4
hereof, and so long as no Event of Default or Potential Default has occurred (or
if an Event of Default has occurred, it has been waived in writing by the
Administrative Agent), each Syndication Party may in its sole discretion make
Advances (each Advance made by a Syndication
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Party pursuant to this Section a "364-DAY BID ADVANCE" and the total of such
Advances made by the Syndication Parties the "364-DAY BID LOANS") to Borrower
from time to time during the 364-Day Facility Availability Period, provided
that:
4.1.1 INDIVIDUAL 364-DAY COMMITMENT. No Syndication Party shall
be permitted to make a 364-Day Bid Rate Advance under the 364-Day Facility
which, when added to its aggregate Individual Outstanding 364-Day Obligations,
would exceed such Syndication Party's Individual 364-Day Commitment.
4.1.2 AGGREGATE 364-DAY COMMITMENT. Borrower may not make a
364-Day Bid Request in an amount which, when added to the aggregate Individual
Outstanding 364-Day Obligations of all Syndication Parties, would exceed the
Aggregate 364-Day Commitment.
4.1.3 AMOUNTS. Each 364-Day Bid Request shall be in an amount at
least equal to five million dollars ($5,000,000) and in integral multiples of
one million dollars ($1,000,000), and each 364-Day Bid shall be in an amount at
least equal to one million dollars ($1,000,000) or the amount remaining under
its 364-Day Individual Commitment, if less. Each 364-Day Bid Advance made by a
Syndication Party will be in the amount of its Bids, or portions thereof, that
are accepted by Borrower in accordance with Section 4.5 hereof.
4.2 5-YEAR FACILITY BID RATE LOANS. Subject to the terms and conditions
of this Agreement, including the procedures set forth in Article 4 hereof, each
Syndication Party may in its sole discretion make Advances (each Advance made by
a Syndication Party pursuant to this Section a "5-YEAR BID ADVANCE" and the
total of such Advances made by the Syndication Parties the "5-YEAR BID LOANS")
to Borrower from time to time during the 5-Year Facility Availability Period,
provided that:
4.2.1 INDIVIDUAL 5-YEAR COMMITMENT. No Syndication Party shall be
permitted to make a 5-Year Bid Rate Advance under the 5-Year Facility which,
when added to its aggregate Individual Outstanding 5-Year Obligations, would
exceed such Syndication Party's Individual 5-Year Commitment.
4.2.2 AGGREGATE 5-YEAR COMMITMENT. Borrower may not make a 5-Year
Bid Request in an amount which, when added to the aggregate Individual
Outstanding 5-Year Obligations of all Syndication Parties, would exceed the
Aggregate 5-Year Commitment.
4.2.3 AMOUNTS. Each 5-Year Bid Request shall be in an amount at
least equal to five million dollars ($5,000,000) and in integral multiples of
one million dollars ($1,000,000), and each 5-Year Bid shall be in an amount at
least equal to one million dollars ($1,000,000) or the amount remaining under
its 5-Year Individual Commitment, if less. Each 5-Year Bid Advance made by a
Syndication Party will be in the amount of its Bids, or portions thereof, that
are accepted by Borrower in accordance with Section 4.5 hereof.
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4.3 BID REQUEST. No more frequently than once each Banking Day,
Borrower may request offers from all Syndication Parties which have an
Individual Commitment in the Facility under which the offers are being
requested, acting severally and not jointly, to make Bid Advances under such
Facility by giving the Bid Agent notice by facsimile (effective upon receipt),
substantially in the form of Exhibit 4.3 hereto ("BID REQUEST") on or before
9:00 A.M. (Central time) on the Banking Day the proposed Bid Loan is to be made.
By 9:30 A.M. (Central time) of the same Banking Day, the Bid Agent shall send to
all of the Syndication Parties eligible to receive a Bid Request by facsimile
transmission a copy of such Bid Request. Each Bid Request must specify (a) the
Facility under which the offers are being requested, (b) the total amount of
such requested Bid Advances, (c) the individual amount of each requested Bid
Advance with a different proposed Bid Maturity Date, (d) the proposed Banking
Day of making such Bid Advance (which shall be the same Banking Day on which the
Bid Request is submitted), and (e) the proposed maturity dates for such Bid
Advances ("BID MATURITY DATE") which must be Banking Days and which must not
extend beyond the 364-Day Maturity Date or the 5-Year Maturity Date, as
applicable. Borrower may request offers to make more than one Bid Loan (up to a
maximum of 5 Bid Loans in a single Bid Request for each of the two Facilities),
each with a different Bid Maturity Date, in a single Bid Request.
4.4 BID PROCEDURE. Each Syndication Party with an Individual Commitment
in the Facility under which the Bid Request is made may, in its sole discretion,
submit to the Bid Agent a written quote, substantially in the form of Exhibit
4.4 hereto ("BID"), containing an offer or offers to make one or more Bid
Advances in a specified amount or amounts in response to such Bid Request (and
may elect to bid with respect to any or all Bid Advances with different Bid
Maturity Dates specified in the Bid Request); provided, however, each
Syndication Party is limited to one Bid submission per Bid Request (which may
cover more than one Bid Maturity Date). Each Bid Quote for CoBank and/or St.
Paul Bank may be submitted by CoBank. A Bid may set forth offers for up to five
(5) separate Bid Rates for each of the applicable Bid Advances, provided that
each Bid shall specify the aggregate principal amount of Bid Advances for all
Bid Maturity Dates that the Syndication Party submitting such Bid is willing to
make at the interest rate or rates specified in such Bid (each a "BID Rate")
pursuant to such Bid. Each Bid by a Syndication Party (other than by the Bid
Agent acting in its capacity as a Syndication Party) must be submitted to the
Bid Agent by facsimile not later than 10:15 A.M. (Central time) on the same
Banking Day. Each Bid made by the Bid Agent in its capacity as a Syndication
Party must be finalized not later than 10:00 A.M. (Central time) on the same
Banking Day. Each Bid shall be irrevocable. The Bid Agent shall disregard a Bid
if it (a) is not substantially in conformity with Exhibit 4.4 hereto, (b)
contains qualifying or conditional language, (c) proposes terms other than or in
addition to those set forth in the applicable Bid Request, or (d) arrives after
the applicable time set forth in this Section. By 10:30 A.M. (Central time) on
the same Banking Day, the Bid Agent shall send copies of all Bids to Borrower by
facsimile ("BID RESULTS NOTICE").
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4.5 BID ACCEPTANCE PROCEDURE. Not later than 11:00 A.M. (Central time)
on the same Banking Day, Borrower shall provide to the Bid Agent by facsimile
notice, in the form of Exhibit 4.5 hereto, of its acceptance or rejection of
each of the Bids submitted to Borrower by the Bid Results Notice ("BID SELECTION
NOTICE"). In the case of each acceptance the Bid Selection Notice shall specify
the aggregate principal amount of Bid Advances for each of the Bids that are
accepted. Regardless of the amounts or interest rates bid by any Syndication
Party, Borrower may accept or decline any Bid in whole or in part, provided that
(a) the aggregate principal amount of Bid Advances accepted may not exceed the
applicable amount set forth in the related Bid Request, and (b) Borrower may not
accept any offer that fails to comply with this Article 4. Bids not accepted by
11:00 A.M. will be irrevocably deemed to have been rejected by Borrower. No
later than 12:00 noon (Central time) on the same Banking Day, the Bid Agent
shall send, by facsimile, a copy of such Bid Selection Notice to the
Administrative Agent and each Syndication Party which submitted a Bid.
4.6 BID LOAN FUNDING. Not later than 2:00 P.M. (Central time) on the
same Banking Day, each Syndication Party that is to make one or more Bid
Advances in accordance with the Bid Selection Notice will make available to the
Administrative Agent at the Administrative Agent's Office, in immediately
available funds, an amount sufficient to fund such Bid Advances. After the
Administrative Agent's receipt of such funds, but not later than 3:00 P.M.
(Central time), and upon fulfillment of the applicable conditions set forth in
Article 11 hereof, the Administrative Agent will make the proceeds of such Bid
Advances available to Borrower, in immediately available funds, and will
transmit such funds by wire transfer to Borrower's Account.
4.7 OVERNIGHT ADVANCES. In addition to Borrower's right to request
364-Day Bid Advances under Section 4.1 hereof, Borrower may, subject to the
terms and conditions of this Section, at any time before 2:30 P.M. (Central
time) on a Banking Day, request the Overnight Lender to make an Advance to
Borrower under the 364-Day Facility on the same Banking Day ("OVERNIGHT
ADVANCE") in accordance with the provisions of this Section. Each Banking Day by
10:30 A.M. (Central time) the Overnight Lender shall notify Borrower of the
interest rate ("OVERNIGHT RATE") that it will charge on all Overnight Advances
made that Banking Day. Borrower's request ("OVERNIGHT ADVANCE REQUEST") may be
made orally or in writing by facsimile (if orally, shall be confirmed in writing
on the same Banking Day), must be directed to the Overnight Lender, and must
specify (a) the amount of such Advance, (b) and the date when such Overnight
Advance will be due and payable ("OVERNIGHT MATURITY DATE"), which may not be
later than the fifth Banking Day thereafter. If Borrower submits an Overnight
Advance Request, the Overnight Lender shall promptly, but not later than 3:30
P.M. on the same Banking Day, fund such Overnight Advance. Each Overnight
Advance shall bear interest at the applicable Overnight Rate and shall be
payable in full, including interest, on the Overnight Maturity Date applicable
to such Overnight Advance. Such payment may, at Borrower's discretion, and
subject to the conditions of this Credit Agreement, be made by an Advance under
the 364-Day Facility or under the 5-Year Facility, as applicable. Overnight
Advances shall be made only by the Overnight
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Lender. Borrower's entitlement to receive, and the Overnight Lender's obligation
to fund, any Overnight Advance shall be subject to the conditions and
limitations set forth in Section 2.1 hereof and applicable to 364-Day Advances
generally, and, in addition, the aggregate outstanding principal amount of all
such Overnight Advances shall not at any time exceed the Overnight Funding
Commitment.
4.8 SYNDICATION PARTY FUNDING FAILURE. In the event any Syndication
Party fails to make any requested 364-Day Bid Advance or 5-Year Bid Advance to
be made by it on the date specified for such Advance, the Administrative Agent
(in that capacity) will advance such funds to Borrower on behalf of such
Syndication Party in its role and capacity of the Administrative Agent, and
therefore notwithstanding limitations, if any, contained herein relating to the
Administrative Agent in its role as a Syndication Party, including its
Individual 364-Day Commitment, Individual 5-Year Commitment, individual 364-Day
Lending Capacity, or individual 5-Year Lending Capacity, as applicable. In the
event of any such advance by the Administrative Agent, the Syndication Party
failing to fund such Advance will be treated as a Delinquent Syndication Party
under Section 16.4 hereof, and the Administrative Agent will be treated as a
Contributing Syndication Party under such Section.
4.9 OVERNIGHT LENDER FUNDING FAILURE. In the event the Overnight Lender
fails to make any requested Overnight Advance to be made by it on the date
specified for such Advance, the Administrative Agent (in that capacity) will, in
its role and capacity of the Administrative Agent, advance such funds to
Borrower on behalf of such Overnight Lender and, therefore, notwithstanding
limitations, if any, contained herein relating to the Administrative Agent in
its role as a Syndication Party, including its Individual 364-Day Commitment,
Individual 5-Year Commitment, Individual 364-Day Lending Capacity, or Individual
5-Year Lending Capacity, as applicable. In the event of any such advance by the
Administrative Agent, the Overnight Lender will be treated as a Delinquent
Syndication Party under Section 16.4 hereof, and the Administrative Agent will
be treated as a Contributing Syndication Party under such Section.
4.10 FAILURE TO IMPLEMENT BID PROCESS. In the event the Bid Agent fails
to hold an auction pursuant to a proper Bid Request, the Administrative Agent
(in that capacity) will make an Advance to Borrower on behalf of all Syndication
Parties (as though one-half of such Advance was a 364-Day Pro Rata Advance and
one-half was a 5-Year Pro Rata Advance), in the amount of each Bid Advance
requested in such Bid Request to bear interest at the then current LIBO Rate
(including the applicable 364-Day Margin) for a one (1) month LIBO Rate Period,
and will cause the Bid Agent to hold the auction for such Bid Advances the
following Banking Day.
ARTICLE 5. LETTER OF CREDIT FACILITY
5.1 LETTER OF CREDIT REQUEST. On the terms and conditions set forth in
this Credit Agreement, and so long as no Event of Default or Potential Default
has occurred (or if an Event of Default has occurred, it has been waived in
writing by the Administrative Agent), Borrower may request the issuance of one
or more documentary
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letters of credit or standby letters of credit as Committed Letters of Credit or
as Negotiated Letters of Credit pursuant to the conditions and limitations set
forth below.
5.1.1 REQUEST FOR COMMITTED LETTER OF CREDIT. Borrower may
request issuance of a Committed Letter of Credit by sending, not later than
11:00 A.M. (Central time) on a Banking Day, a written request therefore
("COMMITTED LC REQUEST") to the Letter of Credit Bank. The Committed LC Request
shall set forth (a) the face amount and expiry date, (b) the beneficiary, (c)
the terms thereof, and (d) such other information as the Letter of Credit Bank
shall request. Committed Letters of Credit shall be issued under the 364-Day
Facility if the expiry date therefore is no later than the 364-Day Maturity
Date, or under the 5-Year Facility if the expiry date therefore is later than
the 364-Day Maturity Date. In no event may the expiry date be later than the
5-Year Maturity Date.
5.1.2 REQUEST FOR NEGOTIATED LETTER OF CREDIT. Borrower may
request issuance of a Negotiated Letter of Credit by (a) providing, no later
than 12 noon (Central time) on a Banking Day, written notice to the
Administrative Agent of (i) the face amount and expiry date of each Negotiated
Letter of Credit which Borrower desires be issued and (ii) the identity of the
Syndication Party or Parties from which Borrower intends to seek each such
Negotiated Letter of Credit; (b) receiving written or oral confirmation from the
Administrative Agent, to be provided no later than 12:30 P.M. (Central time)
that such Syndication Party has sufficient Individual 364-Day Lending Capacity
or sufficient Individual 5-Year Lending Capacity, as applicable depending upon
the Facility under which each such Negotiated Letter of Credit will be issued,
to issue such Negotiated Letter(s) of Credit; and (c) following receipt of the
confirmation described in clause (b) above, but no later than 1:00 P.M. (Central
time), sending a written request therefore ("NEGOTIATED LC REQUEST") to each
such Syndication Party to issue such Negotiated Letter of Credit. Negotiated
Letters of Credit shall be issued under the 364-Day Facility if the expiry date
therefore is no later than the 364-Day Maturity Date, or under the 5-Year
Facility if the expiry date therefore is later than the 364-Day Maturity Date.
In no event may the expiry date be later than the 5-Year Maturity Date.
5.1.3 NOTIFICATION OF THE ADMINISTRATIVE AGENT. Borrower shall,
no later than 3:00 P.M. (Central time) on the date of issuance, notify the
Administrative Agent by facsimile of the face amount, expiry date, and Issuing
Syndication Party with respect to each Negotiated Letter of Credit issued. Each
Issuing Syndication Party shall also, no later than 3:00 P.M. (Central time) on
the date of issuance, notify the Administrative Agent by facsimile of the face
amount and expiry date with respect to each Negotiated Letter of Credit issued
by such Syndication Party.
5.2 COMMITTED LETTERS OF CREDIT. No later than 12:00 noon (Central
time) on the Banking Day of the receipt by the Letter of Credit Bank of a
Committed LC Request, it shall issue the requested Committed Letter of Credit
for any expiry period from seven (7) days to the earlier of (a) 364 days from
the date of issuance or (b) the 5-Year Maturity Date, subject to the following:
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5.2.1 AVAILABLE AMOUNT. The face amount of the requested
Committed Letter of Credit may not exceed the lesser of (a) with respect to
those Committed Letters of Credit which are, pursuant to Subsection 5.1.1
hereof, issued under the 364-Day Facility, an amount which, when added to the
aggregate Individual Outstanding 364-Day Obligations of all Syndication Parties,
would exceed the Aggregate 364-Day Commitment, (b) with respect to those
Committed Letters of Credit which are, pursuant to Subsection 5.1.1 hereof,
issued under the 5-Year Facility, an amount which, when added to the aggregate
Individual Outstanding 5-Year Obligations of all Syndication Parties, would
exceed the Aggregate 5-Year Commitment, or (c) with respect to all Committed
Letters of Credit, an amount which, when added to the undrawn face amount of all
Letters of Credit and Existing Letters of Credit then outstanding, would exceed
the Aggregate LC Commitment.
5.2.2 AVAILABILITY. Committed Letters of Credit may be requested
for issuance only during the 5-Year Availability Period.
5.2.3 FEES. Borrower shall pay at the time of issuance or
reissuance of each Committed Letter of Credit (a) to the Administrative Agent,
for the benefit of all Syndication Parties in accordance with their Individual
5-Year Pro Rata Share in effect on the date of such issuance or reissuance, the
Committed Letter of Credit Fee, and (b) to the Letter of Credit Bank the
Issuance Fee for each such Committed Letter of Credit.
5.2.4 TREATMENT OF DRAWS. Each draw under a Committed Letter of
Credit shall be funded by each of the Syndication Parties: (a) if such Committed
Letter of Credit was issued under the 364-Day Facility, as an Advance thereunder
in accordance with their respective Individual 364-Day Pro Rata Share as of the
date of issuance of such Committed Letter of Credit, and (b) if such Committed
Letter of Credit was issued under the 5-Year Facility, as an Advance thereunder
in accordance with their respective Individual 5-Year Pro Rata Share as of the
date of issuance of such Committed Letter of Credit.
5.3 NEGOTIATED LETTERS OF CREDIT. Any Syndication Party may, in its
sole discretion, issue a Negotiated Letter of Credit ("ISSUING SYNDICATION
PARTY") for any expiry period from seven (7) days to the 5-Year Maturity Date,
upon such terms and conditions as Borrower and such Issuing Syndication Party
may agree; provided that (a) all Negotiated Letters of Credit must be issued on
a Banking Day, and may be issued no earlier than 12:30 P.M. and no later than
2:30 P.M. (Central time), and (b) the issuance of Negotiated Letters of Credit
shall also be subject to the following:
5.3.1 LIMITS ON AVAILABLE AMOUNT. The face amount of a Negotiated
Letter of Credit issued under the 5-Year Facility may not exceed the lesser of
(a) an amount which, when added to the aggregate Individual Outstanding 5-Year
Obligations of all Syndication Parties, would exceed the Aggregate 5-Year
Commitment, (b) an amount which would exceed the Issuing Syndication Party's
Individual 5-Year Lending Capacity, or (c) an amount which, when added to the
undrawn face amount of all Letters of Credit and Existing Letters of Credit then
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outstanding, would exceed the Aggregate LC Commitment. The face amount of a
Negotiated Letter of Credit issued under the 364-Day Facility may not exceed the
lesser of (x) an amount which, when added to the aggregate Individual
Outstanding 364-Day Obligations of all Syndication Parties, would exceed the
Aggregate 364-Day Commitment, (y) an amount which would exceed the Issuing
Syndication Party's Individual 364-Day Lending Capacity, or (z) an amount which,
when added to the undrawn face amount of all Letters of Credit and Existing
Letters of Credit then outstanding, would exceed the Aggregate LC Commitment.
Prior to the issuance of a Negotiated Letter of Credit, the Issuing Syndication
Party shall confirm with the Administrative Agent that such Negotiated Letter of
Credit will not exceed the limitations set forth in this Subsection.
5.3.2 AVAILABILITY. Negotiated Letters of Credit may be requested
for issuance only during the 364-Day Availability Period or the 5-Year
Availability Period, as applicable.
5.3.3 FEES. Borrower will be required to pay only such fees as
the Issuing Syndication Party and Borrower agree upon in connection with each
such Negotiated Letter of Credit and all such fees shall be collected by, paid
to, and retained by the Issuing Syndication Party.
5.3.4 TREATMENT OF DRAWS. Each draw under a Negotiated Letter of
Credit shall be treated as an Advance by the Issuing Syndication Party under the
Facility under which such Negotiated Letter of Credit was issued and shall bear
interest at the Base Rate until paid in full.
5.4 NOTICE OF ISSUANCE OF NEGOTIATED LETTERS OF CREDIT. Borrower shall
notify the Administrative Agent of the face amount, expiry date, and name of the
Issuing Syndication Party, no later than 3:00 P.M. Central time on the same
Banking Day as any Negotiated Letters of Credit are issued.
5.5 EXISTING LETTERS OF CREDIT. Borrower and each Syndication Party
agree that each Existing Letter of Credit shall, as of the Closing Date, be
deemed to have been issued as a Negotiated Letter of Credit under the 364-Day
Facility (if its expiry date is no later than the 364-Day Maturity Date), or
under the 5-Year Facility (if its expiry date therefore is later than the
364-Day Maturity Date, but no later than the 5-Year Maturity Date), and that the
actual issuer thereof shall for all purposes be deemed to be the Issuing
Syndication Party hereunder with respect to each such Existing Letter of Credit.
ARTICLE 6. INTEREST AND FEES
6.1 INTEREST. Except as provided in Article 4 hereof, interest on all
Loans shall be calculated as follows:
6.1.1 BASE RATE OPTION. Unless Borrower requests and receives a
LIBO Rate Loan pursuant to Subsection 6.1.2 hereof, the outstanding principal
balance
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under the 364-Day Facility Notes and the 5-Year Facility Notes shall bear
interest at the Base Rate (each a "BASE RATE LOAN").
6.1.2 LIBO RATE OPTION. From time to time, and so long as no
Event of Default has occurred and is continuing, at the request of Borrower
included in a Borrowing Notice, all or any part of the outstanding principal
balance under the 364-Day Facility Notes or the 5-Year Facility Notes may bear
interest at the LIBO Rate (each a "LIBO RATE LOAN"); provided that Borrower may
have no more than ten (10) LIBO Rate Loans outstanding at any time. To effect
this option, the Borrowing Notice must specify (a) the principal amount that is
to bear interest at the LIBO Rate, which must be a minimum of $10,000,000.00 and
in incremental multiples of $1,000,000.00 and (b) the period selected by
Borrower during which the LIBO Rate is to be applied ("LIBO RATE PERIOD"), which
may be any period of one, two, three, or six months, and, if available from all
of the Syndication Parties, twelve months, but must expire no later than the
364-Day Maturity Date or the 5-Year Maturity Date, as applicable. In addition,
Borrower may convert any Base Rate Loan to a LIBO Rate Loan, or continue a LIBO
Rate Loan, by making a written request therefore ("LIBO REQUEST") to the
Administrative Agent by facsimile, specifying (y) the principal amount that is
to bear interest at the LIBO Rate, which must be a minimum of $10,000,000.00 and
in incremental multiples of $1,000,000.00 and (z) the LIBO Rate Period selected
by Borrower during which the LIBO Rate is to be applied. The Administrative
Agent shall incur no liability in acting upon a request which it believed in
good faith had been made by a properly authorized employee of Borrower.
Following the expiration of the LIBO Rate Period for any LIBO Rate Loan,
interest shall automatically accrue at the Base Rate unless Borrower requests
and receives another LIBO Rate Loan as provided in this Subsection.
6.2 ADDITIONAL PROVISIONS FOR LIBO RATE LOANS.
6.2.1 INAPPLICABILITY OR UNAVAILABILITY OF LIBO RATE. If the
Administrative Agent at any time shall determine that for any reason adequate
and reasonable means do not exist for ascertaining the LIBO Rate, then the
Administrative Agent shall promptly give notice thereof to Borrower. If such
notice is given and until such notice has been withdrawn by the Administrative
Agent, then any portion of the outstanding principal balance hereof which bears
interest determined in relation to the LIBO Rate shall, subsequent to the end of
the LIBO Rate Period applicable thereto, bear interest at the Base Rate.
6.2.2 CHANGE IN LAW; LIBO RATE LOAN UNLAWFUL. If any law, treaty,
rule, regulation or determination of a court or governmental authority or any
change therein or in the interpretation or application thereof (each, a "CHANGE
IN LAW") shall make it unlawful for any of the Syndication Parties to (a)
advance its Funding Share of any LIBO Rate Loan or (b) maintain its share of all
or any portion of the LIBO Rate Loans, each such Syndication Party shall
promptly, by telephone or facsimile, notify the Administrative Agent thereof,
and of the reasons therefor and the Administrative Agent shall promptly notify
Borrower thereof and if the notice from such
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Syndication Party is in writing, the Administrative Agent shall provide a copy
of such notice to Borrower. In the former event, any obligation of any such
Syndication Party to make available its Funding Share of any future LIBO Rate
Loan shall immediately be canceled (and, in lieu thereof shall be made as a Base
Rate Loan), and in the latter event, any such unlawful LIBO Rate Loans or
portions thereof then outstanding shall be converted, at the option of such
Syndication Party, to a Base Rate Loan; provided, however, that if any such
Change in Law shall permit the LIBO Rate to remain in effect until the
expiration of the LIBO Rate Period applicable to any such unlawful LIBO Rate
Loan, then such LIBO Rate Loan shall continue in effect until the expiration of
such LIBO Rate Period. Upon the occurrence of any of the foregoing events on
account of any change in any law, treaty, rule, regulation or determination of a
court or governmental authority or in the interpretation or application thereof,
Borrower shall pay to the Administrative Agent immediately upon demand such
amounts as may be necessary to compensate any such Syndication Party for any
fees, charges, or other costs incurred or payable by such Syndication Party as a
result thereof and which are attributable to any LIBO Rate Loan made available
to Borrower hereunder, and any reasonable allocation made by any such
Syndication Party among its operations shall be conclusive and binding upon
Borrower absent manifest error.
6.3 DEFAULT INTEREST RATE. All past due payments on the Notes or of any
other Bank Debt (whether as a result of nonpayment by Borrower when due, at
maturity, or upon acceleration) shall bear interest at the Default Interest Rate
from and after the due date for the payment, or on the date of maturity or
acceleration, as the case may be.
6.4 INTEREST CALCULATION. Interest on (a) LIBO Rate Loans, (b) 364-Day
Bid Loans, and (c) 5-Year Bid Loans shall be calculated on the actual number of
days the principal owing thereunder is outstanding with the daily rate
calculated on the basis of a year consisting of 360 days. Interest on Base Rate
Loans shall be calculated on the actual number of days each Advance is
outstanding on the basis of a year consisting of 365 days. In calculating
interest, the Advance Date shall be included and the date each payment is
received shall be excluded.
6.5 FEES. Borrower shall pay or cause to be paid the following fees:
6.5.1 364-DAY FACILITY FEE. A non-refundable fee ("364-DAY
FACILITY FEE") calculated on the Closing Date and on each annual anniversary
thereof until the Loan is paid in full, all Letters of Credit are canceled or
have expired, and the Syndication Parties have no further obligation to make
Advances or issue Letters of Credit hereunder. The 364-Day Facility Fee for each
year shall be equal to 0.10% of the Aggregate 364-Day Commitment in effect on
the date of such calculation, and shall be payable quarterly to the
Administrative Agent in arrears on the Banking Day coinciding with, or
immediately preceding the three (3) month anniversary of the Closing Date and
every third month thereafter for distribution to each Syndication Party in the
ratio that its Individual 364-Day Commitment bears to the Aggregate 364-Day
Commitment as calculated by the Administrative Agent on such date, until the
Loan is paid in full, all
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Letters of Credit are canceled or have expired, and the Syndication Parties have
no further obligation to make Advances or issue Letters of Credit hereunder.
6.5.2 5-YEAR FACILITY FEE. A non-refundable fee ("5-YEAR FACILITY
FEE") calculated on the Closing Date and on each annual anniversary thereof
until the Loan is paid in full, all Letters of Credit are canceled or have
expired, and the Syndication Parties have no further obligation to make Advances
or issue Letters of Credit hereunder. The 5-Year Facility Fee for each year
shall be equal to 0.125% of the Aggregate 5-Year Commitment in effect on the
date of such calculation, and shall be payable quarterly to the Administrative
Agent in arrears on the Banking Day coinciding with, or immediately preceding
the three (3) month anniversary of the Closing Date and every third month
thereafter for distribution to each Syndication Party in the ratio that its
Individual 5-Year Commitment bears to the Aggregate 5-Year Commitment as
calculated by the Administrative Agent on such date, until the Loan is paid in
full, all Letters of Credit are canceled or have expired, and the Syndication
Parties have no further obligation to make Advances or issue Letters of Credit
hereunder.
6.6 364-DAY MARGIN; 5-YEAR MARGIN. If the Compliance Certificate with
respect to any Fiscal Quarter is not received by the Administrative Agent by the
date required as provided in Subsections 12.2.1 and 12.2.2 hereof, the 364-Day
Margin and the 5-Year Margin for the period commencing on the first day of the
Fiscal Quarter commencing immediately after the Fiscal Quarter for which such
Compliance Report was required, shall be 52.5 basis points and 50.0 basis
points, respectively.
ARTICLE 7.PAYMENTS; FUNDING LOSSES
7.1 PRINCIPAL PAYMENTS. Principal shall be payable under the 364-Day
Facility on the 364-Day Maturity Date, and under the 5-Year Facility on the
5-Year Maturity Date; provided that (a) principal owing on all Bid Advances
shall be payable on the Bid Maturity Date as provided in the Bid under which
such Bid Advance was made, (b) principal owing on all Overnight Advances shall
be payable on the applicable Overnight Maturity Date, and (c) prepayments may be
made only as provided in Section 7.5 hereof.
7.2 INTEREST PAYMENTS. Interest shall be payable as follows: (a)
interest on Base Rate Loans shall be payable monthly in arrears on the fifth
Banking Day of the next month, (b) interest on LIBO Rate Loans shall be payable
on the last day of the LIBO Rate Period therefor unless the LIBO Rate Period is
longer than three (3) months, in which case interest shall also be payable every
ninety (90) days from the date of the relevant Advance, (c) interest on each Bid
Rate Loan shall be payable on the Bid Maturity Date therefor unless the Bid
Maturity Date is more than three (3) months from the date of the Advance under
such Bid Rate Loan, in which case interest shall also be payable every ninety
(90) days from the date of the relevant Advance, (d) interest on Overnight
Advances shall be payable on the Overnight Maturity Date, and (e) interest on
all Loans then accrued and unpaid shall be payable on the 364-Day Maturity Date
or 5-Year Maturity Date, as applicable.
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7.3 APPLICATION OF PRINCIPAL PAYMENTS. Principal payments and
prepayments shall be applied (a) to principal amounts owing under the 364-Day
Facility or the 5-Year Facility, or to Overnight Advances as Borrower directs in
writing (provided that Bid Rate Loans under each Facility may not be prepaid),
or (b) if Borrower provides no specific direction, then to principal amounts
owing under the 364-Day Facility, the 5-Year Facility (other than Bid Rate Loans
under the two Facilities), and the Overnight Advances in the ratio of the amount
of the outstanding principal balance owed under each, divided by the principal
balance owed under all three (excluding Bid Rate Loan balances in both cases).
In the case of (a) and (b) and subject to the provisions of such clauses,
payments shall be applied first to Base Rate Loans and then to LIBO Rate Loans
unless Borrower directs otherwise in writing. However, upon the occurrence and
during the continuance of an Event of Default or Potential Default, all
principal payments shall be applied, as the Administrative Agent in its sole
discretion shall determine, to fees, interest or principal indebtedness under
the Notes, or to any other Bank Debt.
7.4 MANNER OF PAYMENT. All payments, including prepayments, that
Borrower is required or permitted to make under the terms of this Credit
Agreement shall be made to the Administrative Agent (a) in immediately available
federal funds, to be received no later than 2:00 P.M. Central time of the
Banking Day on which such payment is due by wire transfer through Federal
Reserve Bank, Kansas City, Routing Number: 307088754, COBANK ENGWD (or to such
other account as the Administrative Agent may designate by notice); and (b)
without setoff or counterclaim and free and clear of and without deduction for
any taxes, levies, impost, duties, charges, fees, deductions, withholding,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless Borrower is required by law to make
such deduction or withholding.
7.5 VOLUNTARY PREPAYMENTS. Borrower shall have the right to prepay all
or any part of the outstanding principal balance under the Loans at any time in
integral multiples of $1,000,000.00 (or the entire outstanding balance, if less)
and subject to a $5,000,000.00 minimum prepayment on LIBO Rate Loans, on any
Banking Day; provided that (a) in the event of prepayment of any LIBO Rate Loan,
whether voluntary or on account of acceleration (i) Borrower must provide three
(3) Banking Days notice to the Administrative Agent prior to making such
prepayment, and (ii) Borrower must, at the time of making such prepayment, pay
all Funding Losses applicable to such prepayment, and (b) Borrower shall not
have the right to prepay any Bid Loan before the applicable Bid Loan Maturity
Date, but if a Bid Loan is deemed prepaid on account of acceleration, Borrower
must pay all Funding Losses applicable to such prepayment. Principal amounts
prepaid may be reborrowed under the terms and conditions of this Credit
Agreement. "FUNDING LOSSES" shall be determined on an individual Syndication
Party basis as the amount which would result in such Syndication Party being
made whole (on a present value basis) for the actual or imputed funding losses
(including, without limitation, any loss, cost or expense incurred by reason of
obtaining, liquidating
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or employing deposits or other funds acquired by such Syndication Party to fund
or maintain such LIBO Rate Loan or Bid Loan) incurred by such Syndication Party
as a result of such prepayment. In the event of any such prepayment, each
Syndication Party which had funded the Loan being prepaid shall, promptly after
being notified of such prepayment, send written notice ("FUNDING LOSS NOTICE")
to the Administrative Agent by facsimile setting forth the amount of
attributable Funding Losses and the method of calculating the same. The
Administrative Agent shall notify Borrower orally or in writing of the amount of
such Funding Losses. A determination by a Syndication Party as to the amounts
payable pursuant to this Section shall be conclusive absent manifest error.
7.6 DISTRIBUTION OF PRINCIPAL AND INTEREST PAYMENTS. The Administrative
Agent shall distribute payments of principal and interest among the Syndication
Parties as follows:
7.6.1 PRINCIPAL AND INTEREST PAYMENTS ON 364-DAY PRO RATA
ADVANCES. Principal and interest payments on 364-Day Pro Rata Advances shall be
remitted to the Syndication Parties which made the 364-Day Pro Rata Advance to
which such payments are applied in the ratio in which they funded such Advance.
7.6.2 PRINCIPAL AND INTEREST PAYMENTS ON 5-YEAR PRO RATA RATE
ADVANCES. Principal and interest payments on 5-Year Pro Rata Advances shall be
remitted to the Syndication Parties which made the 5-Year Pro Rata Advance to
which such payments are applied in the ratio in which they funded such Advance.
7.6.3 PRINCIPAL AND INTEREST PAYMENTS ON BID RATE ADVANCES.
Principal and interest payments on Bid Rate Advances shall be remitted to the
Syndication Party which made the Bid Rate Advance to which such payments are
applied.
7.6.4 PRINCIPAL AND INTEREST PAYMENTS ON OVERNIGHT ADVANCES.
Principal and interest payments on Overnight Advances shall be remitted to the
Overnight Lenders which made the Overnight Advance to which such payments are
applied in the ratio in which they funded such Advance.
ARTICLE 8. BANK EQUITY INTERESTS
Borrower agrees to purchase such equity interests in CoBank and St.
Paul Bank ("BANK EQUITY INTERESTS") as CoBank and St. Paul Bank may from time to
time require in accordance with their bylaws and capital plans as applicable to
cooperative borrowers generally. In connection with the foregoing, Borrower
hereby acknowledges receipt, prior to the execution of this Credit Agreement, of
the following with respect to CoBank and St. Paul Bank (a) the bylaws, (b) a
written description of the terms and conditions under which the Bank Equity
Interests are issued, (c) the most recent annual report, and if more recent than
the latest annual report, the latest quarterly report. CoBank and St.
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Paul Bank reserve the right to sell participations under the provisions of
Section 16.27 on a non-patronage basis.
ARTICLE 9. SECURITY
The obligations of Borrower under this Credit Agreement shall be
unsecured.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
To induce the Syndication Parties to make the Loans, and the Letter of
Credit Bank to issue Committed Letters of Credit, and recognizing that the
Syndication Parties, the Administrative Agent, the Letter of Credit Bank, and
the Bid Agent are relying thereon, Borrower represents and warrants as follows:
10.1 ORGANIZATION, GOOD STANDING, ETC. Borrower: (a) is duly organized,
validly existing, and in good standing under the laws of its state of
incorporation; (b) qualifies as a cooperative association under the laws of its
state of incorporation; (c) is duly qualified to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
such qualification necessary, except to the extent that the failure to so
qualify has not resulted in, and could not reasonably be expected to cause, a
Material Adverse Effect; and (d) has all requisite corporate and legal power to
own and operate its assets and to carry on its business, and to enter into and
perform the Loan Documents to which it is a party. Each Subsidiary: (a) is duly
organized, validly existing, and in good standing under the laws of its state of
incorporation; (b) is duly qualified to do business and is in good standing in
each jurisdiction in which the transaction of its business makes such
qualification necessary, except to the extent that the failure to so qualify has
not resulted in, and could not reasonably be expected to cause, a Material
Adverse Effect; and (c) has all requisite corporate and legal power to own and
operate its assets and to carry on its business.
10.2 CORPORATE AUTHORITY, DUE AUTHORIZATION; CONSENTS. Borrower has
full power and authority to conduct its business, and has taken, or on or before
June 4, 1998 will take, all corporate action necessary to execute, deliver and
perform its obligations under the Loan Documents to which it is a party. All
consents or approvals of any Person which are necessary for, or are required as
a condition of Borrower's execution, delivery and performance of and under the
Loan Documents, have been obtained or will be obtained on or before June 4,
1998.
10.3 LITIGATION. Except as described on Exhibit 10.3 hereto, there are
no pending legal or governmental actions, proceedings or investigations to which
Borrower or any Subsidiary is a party or to which any property of Borrower or
any Subsidiary is subject which might reasonably be expected to result in any
Material Adverse Effect and, to Borrower's knowledge, no such actions or
proceedings are threatened or contemplated by any federal, state, county, or
city (or similar unit) governmental agency or any other Person.
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10.4 NO VIOLATIONS. The execution, delivery and performance of the Loan
Documents will not: (a) violate any provision of Borrower's articles of
incorporation or bylaws, or any law, rule, regulation (including, without
limitation, Regulations T, U, and X of the Board of Governors of the Federal
Reserve System), or any judgment, order or ruling of any court or governmental
agency; (b) violate, require consent under (except such consent as has been
obtained), conflict with, result in a breach of, constitute a default under, or
with the giving of notice or the expiration of time or both, constitute a
default under, any existing real estate mortgage, indenture, lease, security
agreement, contract, note, instrument or any other agreements or documents
binding on Borrower or affecting its property; or (c) violate, conflict with,
result in a breach of, constitute a default under, or result in the loss of, or
restriction of rights under, any Required License or any order, law, rule, or
regulation under or pursuant to which any Required License was issued or is
maintained ("LICENSING LAWS").
10.5 BINDING AGREEMENT. Each of the Loan Documents to which Borrower is
a party is, or when executed and delivered, will be, the legal, valid and
binding obligation of Borrower, enforceable in accordance with its terms,
subject only to limitations on enforceability imposed by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally and by general principles of equity.
10.6 COMPLIANCE WITH LAWS. Borrower and each Subsidiary are in
compliance with all federal, state, and local laws, rules, regulations,
ordinances, codes and orders, including without limitation all Environmental
Laws and all Licensing Laws, with respect to which noncompliance would result in
a Material Adverse Effect.
10.7 PRINCIPAL PLACE OF BUSINESS. Borrower's place of business, or
chief executive office if it has more than one place of business, and the place
where the records required by Section 12.1 hereof are kept, is located at 5500
Cenex Drive, Inver Grove Heights, Minnesota 55077.
10.8 PAYMENT OF TAXES. Except as shown on Exhibit 10.8 hereto, Borrower
and each Subsidiary have filed all required federal, state and local tax returns
and have paid all taxes as shown on such returns as they have become due, and
have paid when due all other taxes, assessments or impositions levied or
assessed against Borrower or any Subsidiary, or their business or properties,
except where the failure to make such filing or payment could not reasonably be
expected to result in a Material Adverse Effect. Exhibit 10.8 specifically
indicates all such taxes which are subject to a Good Faith Contest.
10.9 LICENSES AND APPROVALS. Borrower and each Subsidiary have
ownership of, or license to use, or have been issued, all trademarks, patents,
copyrights, franchises, certificates, approvals, permits, authorities,
agreements, and licenses which are used or necessary to permit it to own its
properties and to conduct the business as presently being conducted as to which
the termination or revocation thereof could reasonably be expected to have a
Material Adverse Effect ("REQUIRED LICENSES"). Each Required
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License is in full force and effect, and there is no outstanding notice of
cancellation or termination or, to Borrower's knowledge, any threatened
cancellation or termination in connection therewith, nor has an event occurred
with respect to any Required License which, with the giving of notice or passage
of time or both, could result in the revocation or termination thereof or
otherwise in any impairment of Borrower's rights with respect thereto, which
impairment could reasonably be expected to have a Material Adverse Effect. No
consent, permission, authorization, order, or license of any governmental
authority, is necessary in connection with the execution, delivery, performance,
or enforcement of and under the Loan Documents to which Borrower is a party
except such as have been obtained and are in full force and effect.
10.10 EMPLOYEE BENEFIT PLANS. Borrower and its Subsidiaries are in
compliance in all material respects with the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder ("ERISA"), to the extent
applicable to them, and have not received any notice to the contrary from the
Pension Benefit Guaranty Corporation ("PBGC").
10.11 EQUITY INVESTMENTS. Borrower does not now own any stock or other
voting or equity interest, directly or indirectly, in any Person valued at the
greater of book value or market value at $5,000,000 or more, other than: (a) the
Bank Equity Interests, and (b) as set forth on Exhibit 10.11.
10.12 TITLE TO REAL AND PERSONAL PROPERTY. Borrower and each Subsidiary
have good and marketable title to, or valid leasehold interests in, all of their
material properties and assets, real and personal, including the properties and
assets and leasehold interests reflected in the financial statements of the
Borrower and its Subsidiaries referred to in Section 10.13 hereof, except (a)
any properties or assets disposed of in the ordinary course of business, and (b)
for defects in title and encumbrances which could not reasonably be expected to
result in a Material Adverse Effect; and none of the properties of Borrower or
any Restricted Subsidiary are subject to any Lien, except as permitted by
Section 13.3 hereof ("PERMITTED ENCUMBRANCES"). All such property is in good
operating condition and repair, reasonable wear and tear excepted, and suitable
in all material respects for the purposes for which it is being utilized except
where their failure to be in good operating condition could not reasonably be
expected to result in a Material Adverse Effect. All of the leases of Borrower
and each Subsidiary which constitute Material Agreements are in full force and
effect and afford Borrower or such Subsidiary peaceful and undisturbed
possession of the subject matter thereof.
10.13 FINANCIAL STATEMENTS. The consolidated balance sheets of the
Predecessor Companies and their Subsidiaries as of May 31, 1997 and September
30, 1997 (respectively for Harvest States Cooperatives and Cenex, Inc.), and the
related consolidated statements of operations, cash flows and consolidated
statements of capital shares and equities for the Fiscal Year then ended, and
the accompanying footnotes, together with the unqualified opinion thereon, dated
August 15, 1997 and October 27, 1997 (respectively for Harvest States
Cooperatives and Cenex, Inc.) of Deloitte &
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Touche LLP, independent certified public accountants, copies of which have been
furnished to the Syndication Parties, fairly present in all material respects
the consolidated financial condition of the Predecessor Companies and their
Subsidiaries as at such dates and the results of the consolidated operations of
the Predecessor Companies and their Subsidiaries for the periods covered by such
statements, all in accordance with GAAP consistently applied. Since May 31, 1997
and September 30, 1997 (respectively for Harvest States Cooperatives and Cenex,
Inc.), there has been no material adverse change in the financial condition,
results of operations, business or prospects of the Predecessor Companies or any
of their Subsidiaries. As of the Closing Date, there are no liabilities of the
Predecessor Companies or any of their Subsidiaries, fixed or contingent, which
are material but are not reflected in the financial statements of the
Predecessor Companies and their Subsidiaries referred to above or referred to in
the notes thereto, other than liabilities arising in the ordinary course of
business since May 31, 1997 and September 30, 1997 (respectively for Harvest
States Cooperatives and Cenex, Inc.). No information, exhibit, or report
furnished by Borrower or any of its Subsidiaries to the Syndication Parties in
connection with the negotiation of this Credit Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially misleading in light of
the circumstances in which they were made and taken together with the other
information, exhibits and reports furnished to the Syndication Parties.
10.14 ENVIRONMENTAL COMPLIANCE. Except as set forth on Exhibit 10.14
hereto, Borrower and each Subsidiary have obtained all permits, licenses and
other authorizations which are required under all applicable Environmental Laws,
except to the extent failure to have any such permit, license or authorization
could not reasonably be expected to result in a Material Adverse Effect. Except
as set forth on Exhibit 10.14 hereto, Borrower and each Subsidiary are in
compliance with all Environmental Laws and the terms and conditions of the
required permits, licenses and authorizations, and are also in compliance with
all other limitations, restrictions, obligations, schedules and timetables
contained in those Laws or contained in any plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent, in each case, failure to comply has not
resulted in, and could not reasonably be expected to result in, a Material
Adverse Effect.
10.15 FISCAL YEAR. Each fiscal year of Borrower begins on September 1
of each calendar year and ends on August 31 of each calendar year.
10.16 MATERIAL AGREEMENTS. Neither Borrower nor, to Borrower's
knowledge, any other party to any Material Agreement, is in default thereunder,
and no facts exist which with the giving of notice or the passage of time, or
both, would constitute such a default.
10.17 REGULATIONS U AND X. No portion of any Advance will be used for
the purpose of purchasing, carrying, or making loans to finance the purchase of,
any "margin security" or "margin stock" as such terms are used in Regulations U
or X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224.
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10.18 TRADEMARKS, TRADENAMES, ETC. Borrower has ownership or the lawful
right to use all tradenames, trademarks, and other intellectual property which
it utilizes in its business as presently being conducted and as anticipated to
be conducted, except where the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.
10.19 NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Borrower and each
Subsidiary have satisfied all judgments and Borrower and each Subsidiary are not
in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
Governmental Authority, commission, board, bureau, agency or instrumentality,
domestic or foreign, except to the extent such failure to satisfy any or all
such judgments or to be in such a default has not resulted in, and could not
reasonably be expected to result in, a Material Adverse Effect.
10.20 NO DEFAULT IN OTHER AGREEMENTS. Neither Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any certificate of incorporation or
corporate restriction which has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect. Neither Borrower nor any Subsidiary is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument where such failure to perform, observe or fulfill has resulted in, or
could reasonably be expected to result in, a Material Adverse Effect.
10.21 LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
properties of Borrower or any Subsidiary are currently affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) which has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
10.22 GOVERNMENTAL REGULATION. Neither Borrower nor any Subsidiary is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act, the Federal Power
Act or any statute or regulation, in each case, limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
10.23 DISCLOSURE. The representations and warranties contained in this
Article 10 and in the other Loan Documents or in any financial statements
provided to the Administrative Agent do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
representations or warranties not misleading; and all projections provided to
the Administrative Agent were prepared in good faith based on reasonable
assumptions.
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ARTICLE 11. CONDITIONS TO ADVANCES
11.1 CONDITIONS TO CLOSING. The obligation of the Syndication Parties
to make any Advances or the obligation of the Letter of Credit Bank to issue any
Committed Letters of Credit hereunder is subject to satisfaction, in the sole
discretion of the Administrative Agent and the Syndication Parties (except that
satisfaction of Subsection 11.1.6 shall be determined in the reasonable
discretion of the Administrative Agent and the Syndication Parties), of each of
the following conditions precedent:
11.1.1 LOAN DOCUMENTS. The Administrative Agent shall have
received duly executed originals of the Loan Documents.
11.1.2 APPROVALS. The Administrative Agent shall have received
evidence satisfactory to it that all consents and approvals of governmental
authorities and third parties which are with respect to Borrower, necessary for,
or required as a condition of: (a) the validity and enforceability of the Loan
Documents to which it is a party; and (b) the Merger.
11.1.3 ORGANIZATIONAL DOCUMENTS. The Administrative Agent shall
have received: (a) good standing certificate, dated no more than thirty (30)
days prior to the Closing Date, for Borrower for its state of incorporation; (b)
a copy of the articles of incorporation of Borrower certified by the Secretary
of State of its state of organization; and (c) a copy of the bylaws of Borrower,
certified as true and complete by the Secretary or Assistant Secretary of
Borrower.
11.1.4 EVIDENCE OF INSURANCE. Borrower shall have provided the
Administrative Agent with insurance certificates and such other evidence, in
form and substance satisfactory to the Administrative Agent, of all insurance
required to be maintained by it under the Loan Documents.
11.1.5 APPOINTMENT OF AGENT FOR SERVICE. The Administrative Agent
shall have received evidence satisfactory to the Administrative Agent that
Borrower has appointed The Corporation Company to serve as its agent for service
of process at their Denver, Colorado office (presently at 1675 Broadway), and
that The Corporation Company has accepted such appointment by Borrower.
11.1.6 NO MATERIAL CHANGE. No change shall have occurred in the
condition or operations of the Predecessor Companies since May 31, 1997 and
September 30, 1997 (respectively for Harvest States Cooperatives and Cenex,
Inc.) which could reasonably be expected to result in a Material Adverse Effect.
11.1.7 FEES AND EXPENSES. Borrower shall have paid the
Administrative Agent, by wire transfer of immediately available federal funds
all fees set forth in Section 6.5 hereof and any other fees owing to the
Administrative Agent which are due on the Closing Date, and all expenses owing
pursuant to Section 17.1 hereof.
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11.1.8 BANK EQUITY INTEREST PURCHASE OBLIGATION. Borrower shall
have purchased such Bank Equity Interests as CoBank and/or St. Paul Bank may
require pursuant to Article 8 hereof.
11.1.9 OPINION OF COUNSEL. Borrower shall have provided a
favorable opinion of its counsel addressed to the Administrative Agent and each
of the present and future Syndication Parties, covering such matters as the
Administrative Agent may reasonably require.
11.1.10 FURTHER ASSURANCES. Borrower shall have provided and/or
executed and delivered to the Administrative Agent such further assignments,
documents or financing statements, in form and substance satisfactory to the
Administrative Agent, that Borrower is to execute and/or deliver pursuant to the
terms of the Loan Documents or as the Administrative Agent may reasonably
request.
11.2 CONDITIONS TO ADVANCE. The Syndication Parties' obligation to fund
each Advance and the obligation of the Letter of Credit Bank to issue Committed
Letters of Credit is subject to the satisfaction, in the sole discretion of the
Administrative Agent and the Syndication Parties, of each of the following
conditions precedent, as well as those set forth in Section 11.1 hereof, and
each request by Borrower for an Advance or Committed Letter of Credit shall
constitute a representation by Borrower, upon which the Administrative Agent may
rely, that the conditions set forth in Subsections 11.2.4 and 11.2.5 hereof have
been satisfied:
11.2.1 CONSUMMATION OF MERGER; AMENDMENT OF ARTICLES OF
INCORPORATION. Borrower shall have provided proof satisfactory to the
Administrative Agent that (a) the Plan of Combination has been executed by the
Predecessor Companies and filed with the Minnesota Secretary of State, (b) the
Merger has been consummated in accordance with the Plan of Combination effective
as of 11:59 P.M. May 31, 1998, and (c) Borrower has properly amended its
Articles of Incorporation (as in effect for Harvest States Cooperatives) and
changed its name to "Cenex Harvest States Cooperatives" and filed such amendment
with the Minnesota Secretary of State.
11.2.2 EVIDENCE OF CORPORATE ACTION. The Administrative Agent
shall have received in form and substance satisfactory to the Administrative
Agent: (a) documents evidencing all corporate action taken by Borrower to
authorize (including the specific names and titles of the persons authorized to
so act (each an "AUTHORIZED OFFICER")) the execution, delivery and performance
of the Loan Documents to which it is a party, certified to be true and correct
by the Secretary or Assistant Secretary of Borrower; (b) a certificate of the
Secretary or Assistant Secretary of Borrower, dated the Closing Date, certifying
the names and true signatures of the Authorized Officers; and (c) documents
evidencing all corporate action taken by the Predecessor Companies to effect the
Merger.
11.2.3 CANCELLATION OF EXISTING CREDIT AGREEMENTS. All amounts
owing under the Existing Credit Agreements shall be paid in full and the
Existing Credit
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Agreements canceled and terminated by all parties thereto and all liens in
connection therewith released or terminated.
11.2.4 DEFAULT. As of the Advance Date no Event of Default or
Potential Default shall have occurred and be continuing, and the disbursing of
the amount of the Advance requested shall not result in an Event of Default or
Potential Default.
11.2.5 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Borrower herein shall be true and correct in all material respects
on and as of the date on which the Advance is to be made as though made on such
date. Borrower shall have paid the Administrative Agent, by wire transfer of
immediately available U.S. funds all fees set forth in Section 6.5 hereof which
are then due and payable, including all expenses owing pursuant to Section 17.1
hereof.
11.3 LIMITATION ON LIBO RATE LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of the LIBO Rate for any
LIBO Rate Period:
(a) The Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates in the definition of LIBO Rate are
not being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBO Rate Loans as provided in
this Credit Agreement; or
(b) any Syndication Party determines (which determination shall be
conclusive) that the relevant rates of interest referred to in the definition of
LIBO Rate upon the basis of which the rate of interest for LIBO Rate Loans for
such LIBO Rate Period is to be determined do not adequately cover the cost to
the Syndication Parties of making or maintaining such LIBO Rate Loans for such
LIBO Rate Period;
(c) then the Administrative Agent shall give Borrower prompt notice
thereof, and so long as such condition remains in effect, in the case of clause
(a) above, the Syndication Parties, and in the case of clause (b) above, the
Syndication Party that makes the determination, shall be under no obligation to
make LIBO Rate Loans, convert Base Rate Loans into LIBO Rate Loans, or continue
LIBO Rate Loans, and Borrower shall, on the last day(s) of the then current
applicable LIBO Rate Period(s) for the outstanding LIBO Rate Loans, either
prepay such LIBO Rate Loans or convert such LIBO Rate Loans into a Base Rate
Loan in accordance with Section 6.1 hereof.
11.4 ILLEGALITY OF LOAN. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Syndication Party or
its Applicable Lending Office to honor its obligation to make or maintain LIBO
Rate Loans hereunder or convert Base Rate Loans into LIBO Rate Loans, then such
Syndication Party shall promptly notify the Administrative Agent and Borrower
thereof and such Syndication Party's obligation to make or continue, or to
convert Base Rate Loans into,
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LIBO Rate Loans shall be suspended until such time as such Syndication Party may
again make and maintain LIBO Rate Loans (in which case the provisions of Section
11.5 hereof shall be applicable).
11.5 TREATMENT OF AFFECTED LOANS. If the obligations of any Syndication
Party to make or continue LIBO Rate Loans, or to convert Base Rate Loans into
LIBO Rate Loans, are suspended pursuant to Section 11.3 or 11.4 hereof (all LIBO
Rate Loans so affected being herein called "AFFECTED LOANS"), such Syndication
Party's Affected Loans shall be automatically converted into Base Rate Loans on
the last day(s) of the then current LIBO Rate Period(s) for the Affected Loans
(or, in the case of a conversion required by Section 11.3 or 11.4, on such
earlier date as such Syndication Party may specify to Borrower). To the extent
that such Syndication Party's Affected Loans have been so converted, all
payments and prepayments of principal which would otherwise be applied to such
Syndication Party's Affected Loans shall be applied instead to its Base Rate
Loans. All Advances which would otherwise be made or continued by such
Syndication Party as LIBO Rate Loans shall be made or continued instead as Base
Rate Loans, and all Base Rate Loans of such Syndication Party which would
otherwise be converted into LIBO Rate Loans shall remain as Base Rate Loans.
ARTICLE 12. AFFIRMATIVE COVENANTS
From and after the date of this Credit Agreement and until the Bank
Debt is indefeasibly paid in full, all Letters of Credit and Existing Letters of
Credit have expired, and the Syndication Parties have no obligation to make any
Advance, and the Letter of Credit Bank has no obligation to issue any Committed
Letters of Credit hereunder, Borrower agrees that it will observe and comply
with the following covenants for the benefit of the Administrative Agent, the
Syndication Parties, and the Letter of Credit Bank:
12.1 BOOKS AND RECORDS. Borrower shall at all times keep, and cause
each Subsidiary to keep, proper books of record and account, in which correct
and complete entries shall be made of all its dealings, in accordance with GAAP.
12.2 REPORTS AND NOTICES. Borrower shall provide to the Administrative
Agent the following reports, information and notices:
12.2.1 ANNUAL FINANCIAL STATEMENTS. As soon as available, but in
no event later than one hundred and twenty (120) days after the end of any
Fiscal Year of Borrower occurring during the term hereof one copy of the audit
report for such year and accompanying consolidated financial statements
(including all footnotes thereto), including a consolidated balance sheet, a
consolidated statement of earnings, a consolidated statement of capital, and a
consolidated statement of cash flow for the Borrower and its Subsidiaries,
showing in comparative form the figures for the previous Fiscal Year, all in
reasonable detail, prepared in conformance with GAAP consistently applied and
certified without qualification by Deloitte & Touche LLP, or other independent
public accountants of nationally recognized standing selected by the
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Borrower and satisfactory to the Administrative Agent, and to be accompanied by
a copy of the management letter of such accountants addressed to the board of
directors of Borrower related to such annual audit; and annual financial
statements of Borrower. Such annual financial statements required pursuant to
this Subsection shall be accompanied by a Compliance Certificate signed by
Borrower's Vice President-Finance or other officer of Borrower acceptable to the
Administrative Agent.
12.2.2 QUARTERLY FINANCIAL STATEMENTS. As soon as available but
in no event more than forty-five (45) days after the end of each Fiscal Quarter
(except the last Fiscal Quarter of Borrower's Fiscal Year) the following
financial statements or other information concerning the operations of Borrower
and its Subsidiaries for such Fiscal Quarter, the Fiscal Year to date, and for
the corresponding periods of the preceding Fiscal Year, all prepared in
accordance with GAAP consistently applied: (a) a consolidated balance sheet, (b)
a consolidated summary of earnings, (c) a consolidated statement of cash flows,
and (d) such other statements as the Administrative Agent may reasonably
request. Such quarterly financial statements required pursuant to this
Subsection shall be accompanied by a Compliance Certificate signed by Borrower's
Vice President-Finance or other officer of Borrower acceptable to the
Administrative Agent (subject to normal year end adjustments).
12.2.3 NOTICE OF DEFAULT. As soon as the existence of any Event
of Default or Potential Default becomes known to any officer of Borrower, prompt
written notice of such Event of Default or Potential Default, the nature and
status thereof, and the action being taken or proposed to be taken with respect
thereto.
12.2.4 ERISA REPORTS. As soon as possible and in any event within
twenty (20) days after Borrower or any Subsidiary knows or has reason to know
that any Reportable Event or Prohibited Transaction has occurred with respect to
any Plan or that the PBGC or Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, or that
Borrower, any Subsidiary or any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan, or that a Plan which is a Multiemployer
Plan is in reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA) or is terminating, a
certificate of the Group Vice President-Finance of Borrower or such Subsidiary
setting forth details as to such Reportable Event or Prohibited Transaction or
Plan termination or withdrawal or reorganization or insolvency and the action
Borrower or such Subsidiary proposes to take with respect thereto, provided,
however, that notwithstanding the foregoing, no reporting is required under this
subsection (6) unless the matter(s), individually or in the aggregate, result,
or could be reasonably expected to result, in aggregate obligations or
liabilities of Borrower and/or the Subsidiaries in excess of five million
dollars ($5,000,000).
12.2.5 NOTICE OF LITIGATION. Promptly after the commencement
thereof, notice of all actions, suits, arbitration and any other proceedings
before any Governmental Authority, affecting Borrower or any Subsidiary which,
if determined adversely to Borrower or any Subsidiary, could reasonably be
expected to require
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Borrower or any Subsidiary to have to pay or deliver assets having a value of
five million dollars ($5,000,000) or more (whether or not the claim is covered
by insurance) or could reasonably be expected to result in a Material Adverse
Effect.
12.2.6 NOTICE OF MATERIAL ADVERSE EFFECT. Promptly after Borrower
obtains knowledge thereof, notice of any matter which, alone or when considered
together with other matters, has resulted or could reasonably be expected to
result in, a Material Adverse Effect.
12.2.7 NOTICE OF ENVIRONMENTAL PROCEEDINGS. Without limiting the
provisions of Subsection 12.2.5 hereof, promptly after Borrower's receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or other communication alleging a condition that may require
Borrower or any Subsidiary to undertake or to contribute to a cleanup or other
response under Environmental Regulations, or which seeks penalties, damages,
injunctive relief, or criminal sanctions related to alleged violations of such
laws, or which claims personal injury or property damage to any person as a
result of environmental factors or conditions or which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
12.2.8 REGULATORY AND OTHER NOTICES. Promptly after Borrower's
receipt thereof, copies of any notices or other communications received from any
Governmental Authority with respect to any matter or proceeding the effect of
which could reasonably be expected to have a Material Adverse Effect.
12.2.9 ADVERSE ACTION REGARDING REQUIRED LICENSES. As soon as
Borrower learns that any petition, action, investigation, notice of violation or
apparent liability, notice of forfeiture, order to show cause, complaint or
proceeding is pending, or, to the best of Borrower's knowledge, threatened, to
seek to revoke, cancel, suspend, modify, or limit any of the Required Licenses,
prompt written notice thereof and Borrower shall contest any such action in a
Good Faith Contest.
12.2.10 BUDGET. Promptly upon becoming available and in any event
within thirty (30) days after the beginning of each Fiscal Year, a copy of the
Annual Operating Budget for the next succeeding Fiscal Year and for each Fiscal
Year through the 5-Year Maturity Date approved by Borrower's board of directors,
together with the assumptions and projections on which such budget is based and
a copy of forecasts of operations and capital expenditures (including
investments) for each Fiscal Year; provided that the first such Annual Operating
Budget shall not be required until September 30, 1998. In addition, if any
material changes are made to such budget or projections or forecasts during the
year, then Borrower will furnish copies to the Administrative Agent of any such
changes promptly after such changes have been approved.
12.2.11 ADDITIONAL INFORMATION. With reasonable promptness, such
other information respecting the condition or operations, financial or
otherwise, of
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Borrower or any Subsidiary as any Syndication Party may from time to time
reasonably request.
12.3 ELIGIBILITY. Borrower shall preserve and maintain its status as an
entity eligible to borrow from CoBank and St. Paul Bank.
12.4 MAINTENANCE OF EXISTENCE AND QUALIFICATION. Borrower shall, and
shall cause each Subsidiary to, maintain its corporate existence in good
standing under the laws of its state of organization. Borrower shall, and shall
cause each Subsidiary to, qualify and remain qualified as a foreign corporation
in each jurisdiction in which such qualification is necessary in view of its
business, operations and properties except where the failure to so qualify has
not and could not reasonably be expected to result in a Material Adverse Effect.
12.5 COMPLIANCE WITH LEGAL REQUIREMENTS AND AGREEMENTS. Borrower shall,
and shall cause each Subsidiary to: (a) comply with all laws, rules, regulations
and orders applicable to Borrower (or such Subsidiary, as applicable) or its
business unless such failure to comply is the subject of a Good Faith Contest;
and (b) comply with all agreements, indentures, mortgages, and other instruments
to which it (or any Subsidiary, as applicable) is a party or by which it or any
of its (or any Subsidiary, or any of such Subsidiary's, as applicable) property
is bound; provided, however, that the failure of Borrower to comply with this
sentence in any instance not directly involving the Administrative Agent or a
Syndication Party shall not constitute an Event of Default unless such failure
would have a Material Adverse Effect.
12.6 COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limiting the
provisions of Section 12.5 of this Credit Agreement, Borrower shall, and shall
cause Subsidiary to, comply in all material respects with, and take all
reasonable steps necessary to cause all persons occupying or present on any
properties owned or leased by Borrower (or any Subsidiary, as applicable) to
comply with, all Environmental Regulations, the failure to comply with which
would have a Material Adverse Effect or unless such failure to comply is the
subject of a Good Faith Contest.
12.7 TAXES. Borrower shall cause to be paid, and shall cause each
Subsidiary to pay, when due all taxes, assessments, and other governmental
charges upon it, its income, its sales, its properties (or upon Subsidiary and
its income, sales, and properties, as applicable), and federal and state taxes
withheld from its (or Subsidiary's, as applicable) employees' earnings, unless
(a) the failure to pay such taxes, assessments, or other governmental charges
could not reasonably be expected to result in a Material Adverse Effect, or (b)
such taxes, assessments, or other governmental charges are the subject of a Good
Faith Contest and Borrower has established adequate reserves therefor in
accordance with GAAP.
12.8 INSURANCE. Borrower shall maintain, and cause each Subsidiary to
maintain, insurance with one or more financially sound and reputable insurance
carrier or carriers reasonably acceptable to the Administrative Agent, in such
amounts
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(including deductibles) and covering such risks (including fidelity coverage) as
are usually carried by companies engaged in the same or a similar business and
similarly situated, provided, however, that Borrower may, to the extent
permitted by Law, provide for appropriate self-insurance with respect to
workers' compensation. At the request of Administrative Agent, copies of all
policies (or such other proof of compliance with this Section as may be
reasonably satisfactory) shall be delivered to the Administrative Agent.
Borrower agrees to pay all premiums on such insurance as they become due
(including grace periods).
12.9 MAINTENANCE OF PROPERTIES. Borrower shall maintain, keep and
preserve, and cause each Subsidiary to maintain, keep and preserve, all of its
material properties (tangible and intangible) necessary or used in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and shall cause to be made all repairs, renewals, replacements,
betterments and improvements thereof, all as in the sole judgment of Borrower
may be reasonably necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
12.10 PAYMENT OF LIABILITIES. Borrower shall pay, and shall cause its
Subsidiaries to pay, all liabilities (including, without limitation: (a) any
indebtedness for borrowed money or for the deferred purchase price of property
or services; (b) any obligations under leases which have or should have been
characterized as Capitalized Leases; and (c) any contingent liabilities, such as
guaranties, for the obligations of others relating to indebtedness for borrowed
money or for the deferred purchase price of property or services or relating to
obligations under leases which have or should have been characterized as
Capitalized Leases) as they become due beyond any period of grace under the
instrument creating such liabilities, unless (with the exception of the Bank
Debt) (a) the failure to pay such liabilities within such time period could not
reasonably be expected to result in a Material Adverse Effect, or (b) they are
contested in good faith by appropriate actions or legal proceedings, Borrower
establishes adequate reserves therefor in accordance with GAAP, and such
contesting will not result in a Material Adverse Effect.
12.11 INSPECTION. Borrower shall permit, and cause its Subsidiaries to
permit, the Administrative Agent or any Syndication Party or their agents,
during normal business hours or at such other times as the parties may agree, to
examine, and make copies of or abstracts from, Borrower's properties, books, and
records, and to discuss Borrower's affairs, finances, operations, and accounts
with its respective officers, directors, employees, and independent certified
public accountants; provided, that, in the case of each meeting with the
independent accountants Borrower is given an opportunity to have a
representative present at such meeting.
12.12 REQUIRED LICENSES; PERMITS; ETC. Borrower shall duly and lawfully
obtain and maintain in full force and effect, and shall cause its Subsidiaries
to obtain and maintain in full force and effect, all Required Licenses as
appropriate for the
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business being conducted and properties owned by Borrower or such Subsidiaries
at any given time.
12.13 ERISA. Borrower shall make or cause to be made, and cause each
Subsidiary to make or cause to be made, all payments or contributions to all
Plans covered by Title IV of ERISA, which are necessary to enable those Plans to
continuously meet all minimum funding standards or requirements.
12.14 MAINTENANCE OF COMMODITY POSITION. Borrower shall protect its
commodity inventory holdings or commitments to buy or sell commodities against
adverse price movements, including the taking of equal and opposite positions in
the cash and futures markets, to minimize losses and protect margins in
commodity production, storage, processing and marketing as is recognized as
financially sound and reputable by prudent business persons in the commodity
business.
12.15 FINANCIAL COVENANTS. Borrower shall maintain the following
financial covenants, measured as an aggregation of the results of the
Predecessor Companies (to the extent Borrower has not been in operation for four
(4) full Fiscal Quarters) and current financial results of Borrower through the
first four Fiscal Quarters, for example measurement at the end of the first
Fiscal Quarter ending after the Closing Date will incorporate the financial
results of the Borrower for such Fiscal Quarter(or portion thereof) and the
financial results of the Predecessor Companies for the three previous Fiscal
Quarters (and, if applicable, for a portion of the Fiscal Quarter during which
the Closing Date occurred):
12.15.1 WORKING CAPITAL. Borrower shall have at all times
Consolidated Current Assets minus Consolidated Current Liabilities of not less
than $150,000,000.
12.15.2 CONSOLIDATED FUNDED DEBT TO CONSOLIDATED CASH FLOW.
Borrower shall have at all times and measured as of the end of each Fiscal
Quarter, a ratio of Consolidated Funded Debt divided by Consolidated Cash Flow
of no greater than 3.00 to 1.00 as measured on the previous consecutive four
Fiscal Quarters.
12.15.3 ADJUSTED CONSOLIDATED FUNDED DEBT TO CONSOLIDATED
MEMBERS' AND PATRONS' EQUITY. Borrower shall not permit the ratio of Adjusted
Consolidated Funded Debt to Consolidated Members' and Patrons' Equity to exceed
at any time .80 to 1.00.
ARTICLE 13. NEGATIVE COVENANTS
From and after the date of this Credit Agreement until the Bank Debt is
indefeasibly paid in full, all Letters of Credit and Existing Letters of Credit
have expired, the Syndication Parties have no obligation to make any Advance,
and the Letter of Credit Bank has no obligation to issue any Committed Letters
of Credit hereunder, Borrower agrees that it will observe and comply with the
following covenants:
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13.1 BORROWING. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) create, incur, assume or permit to exist, directly
or indirectly, any Debt, except for: (a) indebtedness of Borrower arising under
this Credit Agreement and the other Loan Documents; (b) trade payables arising
in the ordinary course of business; (c) Capital Leases in existence from time to
time, (d) current operating liabilities (other than for borrowed money) incurred
in the ordinary course of business; (e) unsecured indebtedness arising under
uncommitted lines of credit; provided that the maximum principal amount that may
be outstanding at any one time shall not exceed $15,000,000, (f) indebtedness on
the date hereof as set forth in Exhibit 13.1 attached hereto; (g) unsecured
long-term indebtedness, (h) Debt of Borrower incurred pursuant to the Term Loan
Credit Agreement, (i) documentary and standby letters of credit issued at the
request of Borrower or any Restricted Subsidiary by a financial institution
other than the Letter of Credit Bank or a Syndication Party, provided the
aggregate principal amount outstanding under such letters of credit together
with the undrawn face amount under all of the Letters of Credit does not exceed
$75,000,000 and provided further that the aggregate principal amount outstanding
under such letters of credit together with all Advances, undrawn face amount of
all the Letters of Credit and unreimbursed obligations with respect to payments
made under all the Letters of Credit shall not exceed the Aggregate 364-Day
Commitment, and (j) such other indebtedness agreed upon in writing between
Borrower and the Syndication Parties.
13.2 NO OTHER BUSINESSES. Borrower shall not engage in any material
respects in any business activity or operations other than operations or
activities (a) in the agriculture industry, (b) in the food industry, or (c)
which are not substantially different from or are related to its present
business activities or operations.
13.3 LIENS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) create, incur, assume or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance on, or any security interest
in, any of its real or personal properties (including, without limitation,
leasehold interests, leasehold improvements and any other interest in real
property or fixtures), now owned or hereafter acquired, except:
(a) Liens for taxes or assessments or other charges or levies of any
Governmental Authority, that are not delinquent or if delinquent (i) are the
subject of a Good Faith Contest but in no event past the time when a penalty
would be incurred, and (ii) the aggregate amount of liabilities so secured
(including interest and penalties) does not exceed $10,000,000 at any one time
outstanding;
(b) Liens imposed by Law, such as mechanic's, worker's, repairman's,
miner's, agister's, attorney's, materialmen's, landlord's, warehousemen's and
carrier's Liens and other similar Liens which are securing obligations incurred
in the ordinary course of business for sums not yet due and payable or if due
and payable which are the subject of a Good Faith Contest;
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(c) Liens under workers' compensation, unemployment insurance, social
security or similar legislation (other than ERISA), or to secure payments of
premiums for insurance purchased in the ordinary course of business, or to
secure the performance of tenders, statutory obligations, surety and appearance
bonds and bids, bonds for release of an attachment, stay of execution or
injunction, leases, government contracts, performance and return-of-money bonds
and other similar obligations, all of which are incurred in the ordinary course
of business and not in connection with the borrowing of money;
(d) Any attachment or judgment Lien, the time for appeal or petition
for rehearing of which shall not have expired or in respect of which Borrower or
the Subsidiary is protected in all material respects by insurance or for the
payment of which adequate reserves have been provided, provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are the subject of a Good Faith Contest, and provided
further that the aggregate amount of liabilities of Borrower and its
Subsidiaries so secured (including interest and penalties) shall not be in
excess of $5,000,000 at any one time outstanding;
(e) Easements, rights-of-way, restrictions, encroachments, covenants,
servitudes, zoning and other similar encumbrances which, in the aggregate, do
not materially interfere with the occupation, use and enjoyment by Borrower or
any Restricted Subsidiary of the property or assets encumbered thereby in the
normal course of its business or materially impair the value of the property
subject thereto;
(f) Liens arising in the ordinary course of business and created in
connection with amounts on deposit in charge card and like accounts (such as
Visa or MasterCard);
(g) Liens on land, buildings and equipment existing at the time of
their acquisition or Liens to secure the payment of all or any part of the
purchase price of such land, buildings or equipment or to secure Funded Debt
incurred prior to, at the time of, or within one-hundred eighty (180) days after
the acquisition of such property for the purpose of financing all or any part of
the purchase price thereof, provided that any such Liens shall not encumber any
other property of Borrower or its Restricted Subsidiaries;
(h) Liens assumed in connection with permitted mergers and
acquisitions, but only to the extent that such Liens shall secure only Funded
Debt and shall not encumber any other property of Borrower or any Restricted
Subsidiary;
(i) Liens on financed property created or incurred in connection with
leases, mortgages, conditional sales contracts, security interests or
arrangements for the retention of title entered into by Borrower or any of its
Restricted Subsidiaries to secure "industrial revenue bonds" as defined in
Section 103(b)(2) of the Code and treated as obligations described in
legislation similar to the provisions of said Sections of the Code enacted in
any State of the United States or Puerto Rico, which are issued to finance
property useful and intended to be used in carrying on the business of Borrower
or any of its Restricted Subsidiaries, provided that upon creation of any such
Lien
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Borrower or such Restricted Subsidiary shall incur Funded Debt secured thereby
in conformity with the provisions of Section 13.1 hereof;
(j) Liens on property or assets of a Restricted Subsidiary to secure
Debt of such Restricted Subsidiary to Borrower;
(k) Liens of CoBank, St. Paul Bank and other cooperatives,
respectively, on Investments by Borrower in the stock, participation
certificates, or allocated reserves of CoBank, St. Paul Bank or other
cooperatives, respectively, owned by Borrower;
(l) All precautionary filings of financing statements under the
Uniform Commercial Code which cover property that is made available to or used
by Borrower or any Restricted Subsidiary pursuant to the terms of an Operating
Lease or Capital Lease; and
(m) Liens securing its reimbursement obligations under any letter of
credit issued in connection with the acquisition of an asset; provided that (i)
the lien attaches only to such asset, and (ii) the lien is released upon
satisfaction of such reimbursement obligation.
13.4 SALE OF ASSETS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) sell, convey, assign, lease or otherwise transfer or
dispose of, voluntarily, by operation of law or otherwise, any material part of
its now owned or hereafter acquired assets during any twelve (12) month period
commencing June 1, 1998 and each June 1 thereafter, except: (a) the sale of
inventory, equipment and fixtures disposed of in the ordinary course of
business, (b) the sale or other disposition of assets no longer necessary or
useful for the conduct of its business, and (c) leases of assets to an entity in
which Borrower has at least a fifty-percent (50%) interest in ownership,
profits, and governance. For purposes of this Section, "material part" shall
mean ten percent (10%) or more of the lesser of the book value or the market
value of the assets of Borrower or such Restricted Subsidiary as shown on the
balance sheets thereof as of the May 31 immediately preceding each such twelve
(12) month measurement period.
13.5 LIABILITIES OF OTHERS. Borrower shall not (nor shall it permit any
of its Restricted Subsidiaries to) assume, guarantee, become liable as a surety,
endorse, contingently agree to purchase, or otherwise be or become liable,
directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed
to ensure any creditor against loss), for or on account of the obligation of any
Person, except (a) by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of the Borrower's or
any Restricted Subsidiary's business, and (b) guarantees made from time to time
by Borrower and its Restricted Subsidiaries in the ordinary course of their
respective businesses; provided, however, that the aggregate amount of all
indebtedness guaranteed under clause (b) above shall not exceed $100,000,000 in
the aggregate.
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13.6 LOANS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) lend or advance money, credit, or property to any
Person, except for (a) loans to Restricted Subsidiaries, (b) trade credit
extended in the ordinary course of business, (c) loans made by Borrower to its
members on open account maintained by such members with Borrower or made by
Borrower to its members pursuant to its Affiliate Financing CoBank Participation
Program; provided that the aggregate principal amount of all such loans
outstanding at any time shall not exceed $150,000,000, and (d) loans made by
Fin-Ag, Inc. to agricultural producers, provided that the aggregate principal
amount of all such loans outstanding at any time shall not exceed $50,000,000.
13.7 MERGER; ACQUISITIONS; BUSINESS FORM; ETC. Borrower shall not merge
(nor shall it permit any of its Restricted Subsidiaries to) or consolidate with
any entity, or acquire all or substantially all of the assets of any person or
entity, or form or create any new subsidiary (other than a Restricted Subsidiary
formed by Borrower) or affiliate, change its business form from a cooperative
corporation, or commence operations under any other name, organization, or
entity, including any joint venture; provided, however, that the foregoing shall
not prevent any consolidation or merger if after giving effect thereto:
(a) The book value of Borrower and its Subsidiaries does not increase
due to all such mergers, consolidations or acquisitions by an aggregate amount
in excess of $50,000,000 in any fiscal year of Borrower;
(b) Borrower is the surviving entity; and
(c) No Event of Default or Potential Default shall have occurred and
be continuing.
13.8 INVESTMENTS. Except for the purchase of Bank Equity Interests,
Borrower shall not (nor shall it permit any of its Restricted Subsidiaries to)
own, purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person, except that
Borrower and the Restricted Subsidiaries may own, purchase or acquire:
(a) commercial paper maturing not in excess of one year from the date
of acquisition and rated P1 by Moody's Investors Service, Inc. or A1 by Standard
& Poor's Corporation on the date of acquisition;
(b) certificates of deposit in North American commercial banks rated
C or better by Keefe, Bruyette & Woods, Inc. or 3 or better by Cates Consulting
Analysts, maturing not in excess of one year from the date of acquisition;
(c) obligations of the United States government or any agency
thereof, the obligations of which are guaranteed by the United States
government, maturing, in each case, not in excess of one year from the date of
acquisition;
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(d) repurchase agreements of any bank or trust company incorporated
under the laws of the United States of America or any state thereof and fully
secured by a pledge of obligations issued or fully and unconditionally
guaranteed by the United States government;
(e) Investments permitted under Sections 13.5, 13.6, and 13.9;
(f) Investments made prior to the Closing Date in Persons, which are
not Restricted Subsidiaries, identified on Exhibit 13.8 hereto as it may be
supplemented (by adding or removing Persons) from time to time by Borrower;
(g) Investments (by Borrower) in the Restricted Subsidiaries; and
(h) Investments (by Borrower) in Subsidiaries, other than Restricted
Subsidiaries, in an aggregate amount not exceeding $75,000,000.00;
(i) Investments in the form of non-cash patronage dividends in any
Person; and
(j) Investments, in addition to those permitted by clauses (a)
through (i) above, in an aggregate amount not exceeding $75,000,000.00.
13.9 TRANSACTIONS WITH RELATED PARTIES. Borrower shall not purchase,
acquire, provide, or sell any equipment, other personal property, real property
or services from or to any Subsidiary (other than a Restricted Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms no less favorable than
would be obtained by Borrower in a comparable arm's-length transaction with an
unrelated Person.
13.10 PATRONAGE REFUNDS, ETC. Borrower shall not, directly or
indirectly, in any Fiscal Year (a) declare or pay any cash patronage refunds to
patrons or members which in the aggregate exceed 20% of Borrower's consolidated
net patronage income for the Fiscal Year of Borrower preceding the Fiscal Year
in which such patronage refunds are to be paid, (b) directly or indirectly
redeem or otherwise retire its equity, or (c) make any cash distributions of any
kind or character in respect of its equity, unless, in the case of (a), (b), or
(c), (i) at the time of taking such action no Event of Default or Potential
Default exists hereunder and (ii) after giving effect thereto no Event of
Default or Potential Default would exist hereunder.
13.11 CHANGE IN FISCAL YEAR. Borrower shall not change its Fiscal Year
from a year ending on August 31 unless required to do so by the Internal Revenue
Service, in which case Borrower agrees to such amendment of the terms Fiscal
Quarter and Fiscal Year, as used herein, as the Administrative Agent reasonably
deems necessary.
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ARTICLE 14. INDEMNIFICATION
14.1 GENERAL; STAMP TAXES; INTANGIBLES TAX. Borrower agrees to
indemnify and hold the Administrative Agent and each Syndication Party and their
directors, officers, employees, agents, professional advisers and
representatives ("INDEMNIFIED PARTIES") harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the
Administrative Agent or any other Indemnified Party may incur (or which may be
claimed against any such Indemnified Party by any Person), including attorneys'
fees incurred by any Indemnified Party, arising out of or resulting from: (a)
the material inaccuracy of any representation or warranty of or with respect to
Borrower in this Credit Agreement or the other Loan Documents; (b) the material
failure of Borrower to perform or comply with any covenant or obligation of
Borrower under this Credit Agreement or the other Loan Documents; or (c) the
exercise by the Administrative Agent of any right or remedy set forth in this
Credit Agreement or the other Loan Documents, provided that Borrower shall have
no obligation to indemnify any Indemnified Party against claims, damages,
losses, liabilities, costs or expenses to the extent that a court of competent
jurisdiction renders a final non-appealable determination that the foregoing are
solely the result of the willful misconduct or gross negligence of such
Indemnified Party. In addition, Borrower agrees to indemnify and hold the
Indemnified Parties harmless from and against any and all claims, damages,
losses, liabilities, costs or expenses whatsoever which the Administrative Agent
or any other Indemnified Party may incur (or which may be claimed against any
such Indemnified Party by any Person), including attorneys' fees incurred by any
Indemnified Party, arising out of or resulting from the imposition or nonpayment
by Borrower of any stamp tax, intangibles tax, or similar tax imposed by any
state, including any amounts owing by virtue of the assertion that the property
valuation used to calculate any such tax was understated. Borrower shall have
the right to assume the defense of any claim as would give rise to Borrower's
indemnification obligation under this Section with counsel of Borrower's
choosing so long as such defense is being diligently and properly conducted and
Borrower shall establish to the Indemnified Party's satisfaction that the amount
of such claims are not, and will not be, material in comparison to the liquid
and unrestricted assets of Borrower available to respond to any award which may
be granted on account of such claim. So long as the conditions of the preceding
sentence are met, Indemnified Party shall have no further right to reimbursement
of attorneys' fees incurred thereafter. The obligation to indemnify set forth in
this Section shall survive the termination of this Credit Agreement and other
covenants.
14.2 INDEMNIFICATION RELATING TO HAZARDOUS SUBSTANCES. Borrower shall
not locate, produce, treat, transport, incorporate, discharge, emit, release,
deposit or dispose of any Hazardous Substance in, upon, under, over or from any
property owned or held by Borrower, except in accordance with all Environmental
Regulations; Borrower shall not permit any Hazardous Substance to be located,
produced, treated, transported, incorporated, discharged, emitted, released,
deposited, disposed of or to escape in, upon, under, over or from any property
owned or held by Borrower, except in accordance with
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Environmental Regulations; and Borrower shall comply with all Environmental
Regulations which are applicable to such property. Borrower shall indemnify the
Indemnified Parties against, and shall reimburse the Indemnified Parties for,
any and all claims, demands, judgments, penalties, liabilities, costs, damages
and expenses, including court costs and attorneys' fees incurred by the
Indemnified Parties (prior to trial, at trial and on appeal) in any action
against or involving the Indemnified Parties, resulting from any breach of the
foregoing covenants in this Section or the covenants in Section 12.6 hereof, or
from the discovery of any Hazardous Substance in, upon, under or over, or
emanating from, such property, it being the intent of Borrower and the
Indemnified Parties that the Indemnified Parties shall have no liability or
responsibility for damage or injury to human health, the environmental or
natural resources caused by, for abatement and/or clean-up of, or otherwise with
respect to, Hazardous Substances as the result of the Administrative Agent or
any Syndication Party exercising any of its rights or remedies with respect
thereto, including but not limited to becoming the owner thereof by foreclosure
or conveyance in lieu of foreclosure of a judgment lien; provided that such
indemnification as it applies to the exercise by the Administrative Agent or any
Syndication Party of its rights or remedies with respect to the Loan Documents
shall not apply to claims arising solely with respect to Hazardous Substances
brought onto such property by the Administrative Agent or such Syndication Party
while engaged in activities other than operations substantially the same as the
operations previously conducted on such property by Borrower. The foregoing
covenants of this Section shall be deemed continuing covenants for the benefit
of the Indemnified Parties, and any successors and assigns of the Indemnified
Parties, including but not limited to, any transferee of the title of the
Administrative Agent or any Syndication Party or any subsequent owner of the
property, and shall survive the satisfaction or release of any lien, any
foreclosure of any lien and/or any acquisition of title to the property or any
part thereof by the Administrative Agent or any Syndication Party, or anyone
claiming by, through or under the Administrative Agent or any Syndication Party
or Borrower by deed in lieu of foreclosure or otherwise. Any amounts covered by
the foregoing indemnification shall bear interest from the date incurred at the
Default Interest Rate, shall be payable on demand, and shall be secured by the
Security Documents. The indemnification and covenants of this Section shall
survive the termination of this Credit Agreement and other covenants.
ARTICLE 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
15.1 EVENTS OF DEFAULT. The occurrence of any of the following events
(each an "EVENT OF DEFAULT") shall, at the option of the Administrative Agent,
make the entire Bank Debt immediately due and payable (provided, that in the
case of an Event of Default under Subsection 15.1(f) all amounts owing under the
Notes and the other Loan Documents shall automatically and immediately become
due and payable without any action by or on behalf of the Administrative Agent),
and the Administrative Agent may exercise all rights and remedies for the
collection of any amounts outstanding hereunder and take whatever action it
deems necessary to secure itself, all without notice of
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default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character:
(a) Failure of Borrower to pay (i) when due, whether by acceleration
or otherwise, any principal in accordance with this Credit Agreement or the
other Loan Documents, or (ii) within five (5) days of the date when due, whether
by acceleration or otherwise, any interest or amounts other than principal in
accordance with this Credit Agreement or the other Loan Documents.
(b) Any representation or warranty set forth in any Loan Document,
any Borrowing Notice, any financial statements or reports or projections or
forecasts, or in connection with any transaction contemplated by any such
document, shall prove in any material respect to have been false or misleading
when made or furnished by Borrower.
(c) Any default by Borrower in the performance or compliance with the
covenants, promises, conditions or provisions of Sections 12.3, 12.8, 12.11,
12.15, 13.1, 13.3, 13.4, 13.5, 13.7, or 13.10 of this Credit Agreement; provided
that a default under Subsection 12.15.1 hereof shall not constitute an Event of
Default nor a Potential Default if Borrower is in compliance with such
Subsection within five (5) Banking Days after the earlier of (i) the date on
which Borrower discovers that it is not in compliance with such test, or (ii)
the date by which Borrower is required by Subsections 12.2.1 or 12.2.2 hereof to
provide quarterly or year-end financial statements and/or Compliance
Certificates to the Administrative Agent.
(d) Any default by Borrower in the performance or compliance with the
covenants, promises, conditions or provisions of Sections 12.2, 12.5, 12.6,
12.7, 12.9, 12.10, (except as provided in Section 15.1(e)), 12.12, 12.13, 12.14,
13.6, 13.8, 13.9, or 13.11 of this Credit Agreement, and such failure continues
for fifteen (15) days after Borrower learns of such failure to comply, whether
by Borrower's own discovery or through notice from the Administrative Agent.
(e) The failure of Borrower to pay when due, or failure to perform or
observe any other obligation or condition with respect to any of the following
obligations to any Person, beyond any period of grace under the instrument
creating such obligation: (i) any indebtedness for borrowed money or for the
deferred purchase price of property or services, (ii) any obligations under
leases which have or should have been characterized as Capitalized Leases, or
(iii) any contingent liabilities, such as guaranties, for the obligations of
others relating to indebtedness for borrowed money or for the deferred purchase
price of property or services or relating to obligations under leases which have
or should have been characterized as Capitalized Leases; provided that no such
failure will be deemed to be an Event of Default hereunder unless and until the
aggregate amount owing under obligations with respect to which such failures
have occurred and are continuing is at least $1,000,000.00.
(f) Borrower applies for or consents to the appointment of a trustee
or receiver for any part of its properties; any bankruptcy, reorganization, debt
arrangement,
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dissolution or liquidation proceeding is commenced or consented to by Borrower;
or any application for appointment of a receiver or a trustee, or any proceeding
for bankruptcy, reorganization, debt management or liquidation is filed for or
commenced against Borrower, and is not withdrawn or dismissed within sixty (60)
days thereafter.
(g) Failure of Borrower to comply with any other provision of this
Credit Agreement or the other Loan Documents not constituting an Event of
Default under any of the preceding subparagraphs of this Section 15.1, and such
failure continues for thirty (30) days after Borrower learns of such failure to
comply, whether by Borrower's own discovery or through notice from the
Administrative Agent.
(h) The entry of one or more judgments in an aggregate amount in
excess of $5,000,000.00 against Borrower not stayed, discharged or paid within
thirty (30) days after entry.
(i) The occurrence of an "Event of Default" under the Term Loan
Credit Agreement.
15.2 NO ADVANCE. The Syndication Parties shall have no obligation to
make any Advance or issue any Letter of Credit if a Potential Default or an
Event of Default shall occur and be continuing.
15.3 RIGHTS AND REMEDIES. In addition to the remedies set forth in
Section 15.1 and 15.2 hereof, upon the occurrence of an Event of Default, the
Administrative Agent shall be entitled to exercise all the rights and remedies
provided in the Loan Documents and by any applicable law. Each and every right
or remedy granted to the Administrative Agent pursuant to this Credit Agreement
and the other Loan Documents, or allowed the Administrative Agent by law or
equity, shall be cumulative. Failure or delay on the part of the Administrative
Agent to exercise any such right or remedy shall not operate as a waiver
thereof. Any single or partial exercise by the Administrative Agent of any such
right or remedy shall not preclude any future exercise thereof or the exercise
of any other right or remedy.
ARTICLE 16. AGENCY AGREEMENT
16.1 FUNDING OF SYNDICATION INTEREST. Each Syndication Party, severally
but not jointly, hereby irrevocably agrees to fund its Funding Share of the
Advances ("ADVANCE PAYMENT") as determined pursuant to the terms and conditions
contained herein and in particular, Articles 2, 3, and 4 hereof. Each
Syndication Party's interest ("SYNDICATION INTEREST") in each Advance hereunder
shall be without recourse to the Administrative Agent or any other Syndication
Party and shall not be construed as a loan from any Syndication Party to the
Administrative Agent or any other Syndication Party.
16.2 SYNDICATION PARTIES' OBLIGATIONS TO REMIT FUNDS. Each Syndication
Party agrees to remit its Funding Share to the Administrative Agent as, and
within the
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time deadlines ("SYNDICATION PARTY ADVANCE DATE"), required in this Credit
Agreement. Unless the Administrative Agent shall have received notice from a
Syndication Party prior to the date on which such Syndication Party is to
provide funds to the Administrative Agent for an Advance to be made by such
Syndication Party that such Syndication Party will not make available to the
Administrative Agent such funds, the Administrative Agent may assume that such
Syndication Party has made such funds available to the Administrative Agent on
the date of such Advance in accordance with the terms of this Credit Agreement
and the Administrative Agent in its sole discretion may, but shall not be
obligated to, in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent such Syndication Party
shall not have made such funds available to the Administrative Agent by 2:00
P.M. (Central time) on the Banking Day due, such Syndication Party agrees to
repay the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to Borrower until the Banking Day such amount is repaid to the
Administrative Agent (assuming payment is received by the Administrative Agent
at or prior to 2:00 P.M. (Central time), and until the next Banking Day if
payment is not received until after 2:00 P.M.), at the customary rate set by the
Administrative Agent for the correction of errors among banks for three (3)
Banking Days and thereafter at the Base Rate. If such Syndication Party shall
repay to the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Syndication Party's Advance for purposes of this
Credit Agreement. If such Syndication Party does not pay such corresponding
amount forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent shall promptly notify Borrower, and Borrower shall
immediately pay such corresponding amount to the Administrative Agent with the
interest thereon, for each day from the date such amount is made available to
Borrower until the date such amount is repaid to the Administrative Agent, at
the rate of interest applicable at the time to such Advance.
16.3 NOTICES TO ADMINISTRATIVE AGENT. On or prior to 3:00 P.M. (Central
time) on each Banking Day, each Syndication Party will notify the Administrative
Agent of each Negotiated Letter of Credit issued by such Syndication Party on
such day, and all payments on, reimbursements made to such Syndication Party, or
terminations of Negotiated Letters of Credit on such Day.
16.4 SYNDICATION PARTY'S FAILURE TO REMIT FUNDS. If a Syndication Party
("DELINQUENT SYNDICATION PARTY") fails to remit (a) its Funding Share, (b) its
364-Day Bid Advance, or (c) its 5-Year Bid Advance, in full by the date and time
required (the unpaid amount of any such payment being hereinafter referred to as
the "DELINQUENT AMOUNT"), in addition to any other remedies available hereunder,
any other Syndication Party or Syndication Parties may, but shall not be
obligated to, advance the Delinquent Amount (the Syndication Party or
Syndication Parties which advance such Delinquent Amount are referred to as the
"CONTRIBUTING SYNDICATION PARTIES"), in which case (a) the Delinquent Amount
which any Contributing Syndication Party advances shall be treated as a loan to
the Delinquent Syndication Party and shall not be counted in
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determining the Individual Outstanding 364-Day Obligations or Individual
Outstanding 5-Year Obligations, as applicable, of any Contributing Syndication
Party, and (b) the Delinquent Syndication Party shall be obligated to pay to the
Administrative Agent, for the account of the Contributing Syndication Parties,
interest on the Delinquent Amount at a rate of interest equal to the rate of
interest which Borrower is obligated to pay on the Delinquent Amount plus 200
basis points ("DELINQUENCY INTEREST") until the Delinquent Syndication Party
remits the full Delinquent Amount and remits all Delinquency Interest to the
Administrative Agent, which will distribute such payments to the Contributing
Syndication Parties (pro rata based on the amount of the Delinquent Amount which
each of them (if more than one) advanced) on the same Banking Day as such
payments are received by the Administrative Agent if received no later than
11:00 A.M. Central time or the next Banking Day if received by the
Administrative Agent thereafter. In addition, the Contributing Syndication
Parties shall be entitled to share, on the same pro rata basis, and the
Administrative Agent shall pay over to them, for application against Delinquency
Interest and the Delinquent Amount, the Delinquent Syndication Party's Payment
Distribution and any fee distributions or distributions made under Section 16.11
hereof until the Delinquent Amount and all Delinquency Interest have been paid
in full. For voting purposes the Administrative Agent shall readjust the
Individual Commitments of such Delinquent Syndication Party and the Contributing
Syndication Parties from time to time first to reflect the advance of the
Delinquent Amount by the Contributing Syndication Parties, and then to reflect
the full or partial reimbursement to the Contributing Syndication Parties of
such Delinquent Amount. As between the Delinquent Syndication Party and the
Contributing Syndication Parties, the Delinquent Syndication Party's interest in
its Notes shall be deemed to have been partially assigned to the Contributing
Syndication Parties in the amount of the Delinquent Amount and Delinquency
Interest owing to the Contributing Syndication Parties from time to time. This
Section shall also be applicable to Advances funded by the Administrative Agent
(y) under Section 4.8 hereof, in which case the Administrative Agent, in its
capacity as such, shall be deemed to be the Contributing Syndication Party, and
(z) under Section 4.9 hereof, in which case the Administrative Agent, in its
capacity as such, shall be deemed to be the Contributing Syndication Party and
the Overnight Lender shall be deemed to be the Delinquent Syndication Party. For
the purposes of calculating interest owed by a Delinquent Syndication Party,
payments received on other than a Banking Day shall be deemed to have been
received on the next Banking Day, and payments received after 2:00 P.M. (Central
time) shall be deemed to have been received on the next Banking Day.
16.5 AGENCY APPOINTMENT. Each of the Syndication Parties hereby
designates and appoints the Administrative Agent to act as agent to service and
collect the Loans and its respective Notes and to take such action on behalf of
such Syndication Party with respect to the Loans and such Notes, and to execute
such powers and to perform such duties, as specifically delegated or required
herein, as well as to exercise such powers and to perform such duties as are
reasonably incident thereto, and to receive and benefit from such fees and
indemnifications as are provided for or set forth herein, until such time as a
successor is appointed and qualified to act as the Administrative Agent.
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16.6 POWER AND AUTHORITY OF THE ADMINISTRATIVE AGENT. Without limiting
the generality of the power and authority vested in the Administrative Agent
pursuant to Section 16.5 hereof, the power and authority vested in the
Administrative Agent includes, but is not limited to, the following:
16.6.1 ADVICE. To solicit the advice and assistance of each of
the Syndication Parties concerning the administration of the Loans and the
exercise by the Administrative Agent of its various rights, remedies, powers,
and discretions with respect thereto. As to any matters not expressly provided
for by this Credit Agreement or any other Loan Document, the Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by all of the
Syndication Parties, the Required Lenders, or Super Majority Lenders, as the
case may be, and any action taken or failure to act pursuant thereto shall be
binding on all of the Syndication Parties and the Administrative Agent.
16.6.2 DOCUMENTS. To execute, seal, acknowledge, and deliver as
the Administrative Agent, all such instruments as may be appropriate in
connection with the administration of the Loans and the exercise by the
Administrative Agent of its various rights with respect thereto.
16.6.3 PROCEEDINGS. To initiate, prosecute, defend, and to
participate in, actions and proceedings in its name as the Administrative Agent
for the ratable benefit of the Syndication Parties.
16.6.4 RETAIN PROFESSIONALS. To retain attorneys, accountants,
and other professionals to provide advice and professional services to the
Administrative Agent, with their fees and expenses reimbursable to the
Administrative Agent by Syndication Parties pursuant to Section 16.18 hereof.
16.6.5 INCIDENTAL POWERS. To exercise powers reasonably incident
to the Administrative Agent's discharge of its duties enumerated in Section 16.7
hereof.
16.7 DUTIES OF THE ADMINISTRATIVE AGENT. The duties of the
Administrative Agent hereunder shall consist of the following:
16.7.1 POSSESSION OF DOCUMENTS. To safekeep one original of each
of the Loan Documents other than the Notes (which will be in the possession of
the Syndication Party named as payee therein).
16.7.2 DISTRIBUTE PAYMENTS. To receive and distribute to the
Syndication Parties payments made by Borrower pursuant to the Loan Documents, as
provided herein.
16.7.3 LOAN ADMINISTRATION. Subject to the provisions of Section
16.9 hereof, to, on behalf of and for the ratable benefit of all Syndication
Parties, in accordance with customary banking practices, exercise all rights,
powers,
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privileges, and discretion to which the Administrative Agent is entitled to
administer the Loans, including, without limitation: (a) monitor all borrowing
activity, issuances of Letters of Credit, Individual Commitment balances, and
maturity dates of all LIBO Rate Loans; (b) prepare and provide to Borrower by
4:00 P.M. (Central time) of each Banking Day a report detailing all outstanding
Advances and the Individual 364-Day Lending Capacity and Individual 5-Year
Lending Capacity of each Syndication Party; (c) monitor and report Credit
Agreement and covenant compliance, and coordinate required credit actions by the
Syndication Parties; (d) manage the process for future waivers and amendments if
modifications to the Credit Agreement are required; and (e) administer, record,
and process all assignments to be made for the current and future Syndication
Parties.
16.7.4 DETERMINATION OF INDIVIDUAL LENDING CAPACITY AND
INDIVIDUAL PRO RATA SHARES. The Administrative Agent shall (a) on or before
10:00 A.M. and again at 12:30 P.M. (Central time) on each Banking Day calculate
the respective Individual 364-Day Lending Capacity and the respective Individual
5-Year Lending Capacity of each Syndication Party, which 10:00 A.M. calculation
shall be in effect until 12:30 P.M. of the same Banking Day and which 12:30 P.M.
calculation shall be in effect until 10:00 A.M. of the next succeeding Banking
Day; and (b) on or before 12:00 noon (Central time) on each Banking Day
calculate the respective Individual 364-Day Pro Rata Share and the respective
Individual 5-Year Pro Rata Share of each Syndication Party, which calculation
shall be in effect until 12:00 noon of the next succeeding Banking Day.
16.7.5 ACTION UPON DEFAULT. Each Syndication Party agrees that
upon its learning of any facts which would constitute a Potential Default or
Event of Default, it shall promptly notify the Administrative Agent by a writing
designated as a notice of default specifying in detail the nature of such facts
and default, and the Administrative Agent shall promptly send a copy of such
notice to all other Syndication Parties. The Administrative Agent shall be
entitled to assume that no Event of Default or Potential Default has occurred or
is continuing unless an officer thereof primarily responsible for the
Administrative Agent's duties as such with respect to the Loans or primarily
responsible for the credit relationship between the Administrative Agent and
Borrower has actual knowledge of facts which would result in or constitute a
Potential Default or Event of Default, or has received written notice from
Borrower of such fact, or has received written notice of default from a
Syndication Party. In the event the Administrative Agent has obtained actual
knowledge (in the manner described above) or received written notice of the
occurrence of a Potential Default or Event of Default as provided in the
preceding sentences, the Administrative Agent may, but is not required to
exercise or refrain from exercising any rights which may be available under the
Loan Documents or at law on account of such occurrence and shall be entitled to
use its discretion with respect to exercising or refraining from exercising any
such rights, unless and until the Administrative Agent has received specific
written instruction from the Required Lenders to refrain from exercising such
rights or to take specific designated action, in which case it shall follow such
instruction; provided that the
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Administrative Agent shall not be required to take any action which will subject
it to personal liability, or which is or may be contrary to any provision of the
Loan Documents or applicable law. The Administrative Agent shall not be subject
to any liability by reason of its acting or refraining from acting pursuant to
any such instruction.
16.7.6 INDEMNIFICATION AS CONDITION TO ACTION. Except for action
expressly required of the Administrative Agent hereunder, the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Syndication Parties
under Section 16.19 hereof in respect of any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
16.8 BID AGENT'S APPOINTMENT, POWER, AUTHORITY, DUTIES AND RESIGNATION
OR REMOVAL. Each of the Syndication Parties hereby designates and appoints the
Bid Agent to act as such and to take such action on behalf of such Syndication
Party with respect to the acceptance and processing of Bid Requests and Bids as
provided herein, as well as to exercise such powers and to perform such duties
as are reasonably incident thereto, and to receive and benefit from such fees
and indemnifications as are provided for or set forth herein, until such time as
a successor is appointed and qualified to act as the Bid Agent. The Bid Agent
shall have such duties as specified in this Credit Agreement. The resignation,
removal, and designation of a successor for, the Bid Agent shall be in
accordance with the procedures set forth in Section 16.22 hereof with respect to
the Administrative Agent.
16.9 CONSENT REQUIRED FOR CERTAIN ACTIONS. Notwithstanding the fact
that this Credit Agreement may otherwise provide that the Administrative Agent
may act at its discretion, the Administrative Agent may not take any of the
following actions (nor may the Syndication Parties take the action described in
Subsection 16.9.1(c)) with respect to, or under, the Loan Documents without the
prior written consent, given after notification by the Administrative Agent of
its intention to take any such action (or notification by such Syndication
Parties as are proposing the action described in Subsection 16.9.1(c) of their
intention to do so), of:
16.9.1 UNANIMOUS. Each of the Syndication Parties holding an
Individual 364-Day Commitment or an Individual 5-Year Commitment, as applicable,
before:
(a) Agreeing to an increase in the Aggregate 364-Day
Commitment or the Aggregate 5-Year Commitment, as applicable, or an extension of
the 364-Day Maturity Date or the 5-Year Maturity Date, as applicable;
(b) Agreeing to a reduction in the amount, or to a delay
in the due date, of any payment by Borrower of interest, principal, or fees with
respect to the 364-Day Facility or the 5-Year Facility, as applicable; provided,
however, this
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restriction shall not apply to a delay in payment granted by the Administrative
Agent in the ordinary course of administration of the Loans and the exercise of
reasonable judgment, so long as such payment delay does not exceed five (5)
days;
(c) Reducing the voting rights percentage set forth in
this Subsection 16.9.1; or
(d) Agreeing to waive any material provisions of this
Credit Agreement relating to the 364-Day Facility or the 5-Year Facility, as
applicable.
16.9.2 REQUIRED LENDERS. The Required Lenders before:
(a) Consenting to any action, amendment, or granting any
waiver with respect to either the 364-Day Facility or the 5-Year Facility, not
covered in Subsection 16.9.1; or
(b) Agreeing to amend Article 16 of this Credit
Agreement (other than Subsection 16.9.1(c)).
16.9.3 ACTION WITHOUT VOTE. Notwithstanding any other provisions
of this Section, the Administrative Agent may take the following actions without
obtaining the consent of the Syndication Parties:
(a) Determining (i) whether the conditions to an Advance
have been met, and (ii) the amount of such Advance;
(b) Determining whether the Bid Advance conditions and
procedures as set forth in Article 4 hereof have been properly satisfied.
If no written consent or denial is received from a Syndication Party within five
(5) Banking Days after written notice of any proposed action as described in
this Section is delivered to such Syndication Party by the Administrative Agent,
such Syndication Party shall be conclusively deemed to have consented thereto
for the purposes of this Section.
16.10 DISTRIBUTION OF PRINCIPAL AND INTEREST. The Administrative Agent
will receive and accept all payments (including prepayments) of principal and
interest made by Borrower on the Loans and the Notes and will hold all such
payments in trust for the benefit of all present and future Syndication Parties,
and, if requested in writing by the Required Lenders, in an account segregated
from the Administrative Agent's other funds and accounts ("PAYMENT ACCOUNT").
After the receipt by the Administrative Agent of any payment representing
interest or principal on the Loans, the Administrative Agent shall remit to each
Syndication Party its share of such payment as provided in Article 7 hereof,
("PAYMENT DISTRIBUTION") no later than 3:00 P.M. (Central time) on the same
Banking Day as such payment is received by the Administrative Agent if received
no later than 1:00 P.M. (Central time) or the next Banking Day if received by
the
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Administrative Agent thereafter. Any Syndication Party's rights to its Payment
Distribution shall be subject to the rights of any Contributing Syndication
Parties to such amounts as set forth in Section 16.4 hereof.
16.11 DISTRIBUTION OF CERTAIN AMOUNTS. The Administrative Agent shall
(a) receive and hold in trust for the benefit of all present and future
Syndication Parties, in the Payment Account and, if requested in writing by the
Required Lenders, segregated from the Administrative Agent's other funds and
accounts and (b) shall remit to the Syndication Parties, as indicated, the
amounts described below:
16.11.1 FUNDING LOSSES. To each Syndication Party the amount of
any Funding Losses paid by Borrower to the Administrative Agent in connection
with a prepayment of any portion of a LIBO Rate Loan or a Bid Loan, in
accordance with the Funding Loss Notice such Syndication Party provided to the
Administrative Agent, no later than 3:00 P.M. (Central time) on the same Banking
Day that payment of such Funding Losses is received by the Administrative Agent,
if received no later than 1:00 P.M. (Central time), or the next Banking Day if
received by the Administrative Agent thereafter.
16.11.2 FEES. To each Syndication Party its share of any 364-Day
Facility Fees and 5-Year Facility Fees paid by Borrower to the Administrative
Agent, no later than 3:00 P.M. (Central time) on the same Banking Day that
payment of such fees is received by the Administrative Agent, if received no
later than 1:00 P.M. (Central time), or the next Banking Day if received by the
Administrative Agent thereafter.
16.12 POSSESSION OF LOAN DOCUMENTS. The Loan Documents (other than the
Notes) shall be held by the Administrative Agent in its name, for the ratable
benefit of itself and the other Syndication Parties without preference or
priority.
16.13 COLLATERAL APPLICATION. The Syndication Parties shall have no
interest in any other loans made to Borrower by any other Syndication Party
other than the Loans, or in any property taken as security for any other loan or
loans made to Borrower by any other Syndication Party, or in any property now or
hereinafter in the possession or control of any other Syndication Party, which
may be or become security for the Loans solely by reason of the provisions of a
security instrument that would cause such security instrument and the property
covered thereby to secure generally all indebtedness owing by Borrower to such
other Syndication Party. Notwithstanding the foregoing, to the extent such other
Syndication Party applies such funds or the proceeds of such property to
reduction of the Loans, such other Syndication Party shall share such funds or
proceeds with all Syndication Parties according to their respective Individual
Commitments. In the event that any Syndication Party shall obtain payment,
whether partial or full, from any source in respect of the Loans, including
without limitation payment by reason of the exercise of a right of offset,
banker's lien, general lien, or counterclaim, such Syndication Party shall
promptly make such adjustments (which may include payment in cash or the
purchase of further syndications or participations in the Loans) to the end that
such excess payment shall be shared with all other Syndication
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Parties in accordance with their respective Individual Commitments.
Notwithstanding any of the foregoing provisions of this Section or Article 9
hereof: (a) no Syndication Party other than CoBank shall have any right to, or
to the proceeds of, or any right to the application to any amount owing to such
Syndication Party hereunder of any the proceeds of, any Bank Equity Interests
issued to Borrower by CoBank or on account of any statutory lien held by CoBank
on such Bank Equity Interests, and (b) no Syndication Party other than St. Paul
Bank shall have any right to, or to the proceeds of, or any right to the
application to any amount owing to such Syndication Party hereunder of any the
proceeds of, any Bank Equity Interests issued to Borrower by St. Paul Bank or on
account of any statutory lien held by St. Paul Bank on such Bank Equity
Interests.
16.14 AMOUNTS REQUIRED TO BE RETURNED. If the Administrative Agent
makes any payment to a Syndication Party in anticipation of the receipt of final
funds from Borrower, and such funds are not received from Borrower, or if excess
funds are paid by the Administrative Agent to any Syndication Party as the
result of a miscalculation by the Administrative Agent, then such Syndication
Party shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent any such amounts, plus interest thereon (from the day such
amounts were transferred by the Administrative Agent to the Syndication Party
to, but not including, the day such amounts are returned by Syndication Party)
at a rate per annum equal to the customary rate set by the Administrative Agent
for the correction of errors among banks for three (3) Banking Days and
thereafter at the Base Rate. If the Administrative Agent is required at any time
to return to Borrower or a trustee, receiver, liquidator, custodian, or similar
official any portion of the payments made by Borrower to the Administrative
Agent, whether pursuant to any bankruptcy or insolvency law or otherwise, then
each Syndication Party shall, on demand of the Administrative Agent, forthwith
return to the Administrative Agent any such payments transferred to such
Syndication Party by the Administrative Agent but without interest or penalty
(unless the Administrative Agent is required to pay interest or penalty on such
amounts to the person recovering such payments).
16.15 REPORTS AND INFORMATION TO SYNDICATION PARTIES. The
Administrative Agent shall use reasonable efforts to provide to Syndication
Parties, as soon as practicable after actual knowledge thereof is acquired by an
officer thereof primarily responsible for the Administrative Agent's duties as
such with respect to the Loans or primarily responsible for the credit
relationship between the Administrative Agent and Borrower, any material factual
information which has a material adverse effect on the creditworthiness of
Borrower and Borrower hereby authorizes such disclosure by the Administrative
Agent to the Syndication Parties (and by the Syndication Parties to any of their
participants). Failure of the Administrative Agent to provide the information
referred to in this Section or in Subsection 16.7.5 hereof shall not result in
any liability upon, or right to make a claim against, the Administrative Agent
except where a court of competent jurisdiction renders a final non-appealable
determination that such failure is a result of the willful misconduct or gross
negligence of the Administrative Agent. Syndication Parties acknowledge and
agree that all information and reports received pursuant to this Credit
Agreement will be received in confidence in connection with
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their Syndication Interest, and that such information and reports constitute
confidential information and shall not, without the prior written consent of the
Administrative Agent or Borrower, as applicable, be (x) disclosed to any third
party (other than the Administrative Agent, another Syndication Party or
potential Syndication Party, or a participant or potential participant in the
interest of a Syndication Party, which disclosure is hereby approved by
Borrower), except pursuant to appropriate legal or regulatory process, or (y)
used by the Syndication Party except in connection with the Loans and its
Syndication Interest.
16.16 STANDARD OF CARE. the Administrative Agent shall not be liable to
Syndication Parties for any error in judgment or for any action taken or not
taken by the Administrative Agent or its agents, except for its gross negligence
or willful misconduct. Subject to the preceding sentence, the Administrative
Agent will exercise the same care in administering the Loans and the Loan
Documents as it exercises for similar loans which it holds for its own account
and risk, and the Administrative Agent shall not have any further responsibility
to the Syndication Parties. Without limiting the foregoing, the Administrative
Agent may rely on the advice of counsel concerning legal matters and on any
written document it believes to be genuine and correct and to have been signed
or sent by the proper Person or Persons.
16.17 NO TRUST RELATIONSHIP. Neither the execution of this Credit
Agreement, nor the sharing in the Loans, nor the holding of the Loan Documents
in its name by the Administrative Agent, nor the management and administration
of the Loans and Loan Documents by the Administrative Agent (including the
obligation to hold certain payments and proceeds in the Payment Account in trust
for the Syndication Parties), nor any other right, duty or obligation of the
Administrative Agent under or pursuant to this Credit Agreement is intended to
be or create, and none of the foregoing shall be construed to be or create, any
express, implied or constructive trust relationship between the Administrative
Agent and any Syndication Party. Each Syndication Party hereby agrees and
stipulates that the Administrative Agent is not acting as trustee for such
Syndication Party with respect to the Loans, this Credit Agreement, or any
aspect of either, or in any other respect.
16.18 SHARING OF COSTS AND EXPENSES. To the extent not paid by
Borrower, each Syndication Party will promptly upon demand reimburse the
Administrative Agent for its proportionate share (based on the ratio of the
total of its Individual Commitments to the sum of the Aggregate 364-Day
Commitment and the Aggregate 5-Year Commitment), for all reasonable costs,
disbursements, and expenses incurred by the Administrative Agent on or after the
date of this Credit Agreement for legal, accounting, consulting, and other
services rendered to the Administrative Agent in its role as the Administrative
Agent in the administration of the Loans, interpreting the Loan Documents, and
protecting, enforcing, or otherwise exercising any rights, both before and after
default by Borrower under the Loan Documents, and including, without limitation,
all costs and expenses incurred in connection with any bankruptcy proceedings;
provided, however, that the costs and expenses to be shared in accordance with
this Section shall not include any costs or expenses incurred by the
Administrative
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Agent solely as a Syndication Party in connection with the Loans, nor to the
Administrative Agent's internal costs and expenses.
16.19 SYNDICATION PARTIES' INDEMNIFICATION OF THE ADMINISTRATIVE AGENT.
Each of the Syndication Parties agree to indemnify the Administrative Agent,
including any Successor Agent, and the Bid Agent, and their respective
directors, officers, employees, agents, professional advisers and
representatives ("INDEMNIFIED AGENCY PARTIES"), (to the extent not reimbursed by
Borrower, and without in any way limiting the obligation of Borrower to do so),
ratably (based on the ratio of the total of its Individual Commitments to the
sum of the Aggregate 364-Day Commitment and the Aggregate 5-Year Commitment),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans and/or the expiration or termination of
this Credit Agreement) be imposed on, incurred by or asserted against the
Administrative Agent or the Bid Agent (or any of the Indemnified Agency Parties
while acting for the Administrative Agent or for any Successor Agent) in any way
relating to or arising out of this Credit Agreement or the Loan Documents, or
the performance of the duties of the Administrative Agent or the Bid Agent
hereunder or thereunder or any action taken or omitted while acting in the
capacity of the Administrative Agent or the Bid Agent under or in connection
with any of the foregoing; provided that the Syndication Parties shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of an Indemnified Agency Party to the extent that any of the forgoing result
from the gross negligence or willful misconduct of that Indemnified Agency Party
as determined by a court of competent jurisdiction. The agreements and
obligations in this Section shall survive the payment of the Loans and the
expiration or termination of this Credit Agreement.
16.20 BOOKS AND RECORDS. The Administrative Agent shall maintain such
books of account and records relating to the Loans as it maintains with respect
to other loans of similar type and amount, and which shall clearly and
accurately reflect the Syndication Interest of each Syndication Party.
Syndication Parties, or their agents, may inspect such books of account and
records at all reasonable times during the Administrative Agent's regular
business hours.
16.21 ADMINISTRATIVE AGENT FEE. CoBank and any Successor Agent shall be
entitled to the Administrative Agent Fee for acting as the Administrative Agent.
In the event the Successor Agent is contractually entitled to an additional fee,
each Syndication Party will be responsible for its proportionate share (based on
the ratio of the total of its Individual Commitments to the sum of the Aggregate
364-Day Commitment and the Aggregate 5-Year Commitment) thereof.
16.22 THE ADMINISTRATIVE AGENT'S RESIGNATION OR REMOVAL. The
Administrative Agent may resign at any time by giving at least sixty (60) days'
prior written notice of its intention to do so to each of the Syndication
Parties and Borrower.
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After the receipt of such notice, the Syndication Parties holding Individual
Commitments in the aggregate at least sixty-six and two-thirds percent (66 2/3%)
of the sum of the Aggregate 364-Day Commitment and the Aggregate 5-Year
Commitment ("SUPER MAJORITY LENDERS") shall appoint a successor ("SUCCESSOR
AGENT"). If (a) no Successor Agent shall have been so appointed which is either
(i) a Syndication Party, or (ii) if not a Syndication Party, which is a Person
approved by Borrower, or (b) if such Successor Agent has not accepted such
appointment, in either case within forty-five (45) days after the retiring
Administrative Agent's giving of such notice of resignation, then the retiring
Administrative Agent may, after consulting with, but without requiring the
approval of, Borrower, appoint a Successor Agent which shall be a bank or a
trust company organized under the laws of the United States of America or any
state thereof and having a combined capital, surplus and undivided profit of at
least $250,000,000. Any Administrative Agent may be removed upon the written
demand of the Super Majority Lenders, which demand shall also appoint a
Successor Agent. Upon the appointment of a Successor Agent hereunder, (a) the
term "Administrative Agent" shall for all purposes of this Credit Agreement
thereafter mean such Successor Agent, and (b) the Successor Agent shall notify
Borrower of its identity and of the information called for in Subsection 17.4.2
hereof. After any retiring Administrative Agent's resignation hereunder as the
Administrative Agent, or the removal hereunder of any Administrative Agent, the
provisions of this Credit Agreement shall continue to inure to the benefit of
such Administrative Agent as to any actions taken or omitted to be taken by it
while it was the Administrative Agent under this Credit Agreement.
16.23 REPRESENTATIONS AND WARRANTIES OF ALL PARTIES. The Administrative
Agent, the Bid Agent, and each Syndication Party represents and warrants that:
(a) the execution and delivery of, and performance of its obligations under,
this Credit Agreement is within its power and has been duly authorized by all
necessary corporate and other action by it; (b) this Credit Agreement is in
compliance with all applicable laws and regulations promulgated under such laws
and does not conflict with nor constitute a breach of its charter or by-laws nor
any agreements by which it is bound, and does not violate any judgment, decree
or governmental or administrative order, rule or regulation applicable to it;
(c) no approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by it in connection with the execution and
delivery of, and performance of its obligations under, this Credit Agreement;
and (d) this Credit Agreement has been duly executed by it, and constitutes the
legal, valid, and binding obligation of such Person, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or in equity). Each Syndication Party that is a state or national bank
represents and warrants that the act of entering into and performing its
obligations under this Credit Agreement has been approved by its board of
directors or its loan committee and such action was duly noted in the written
minutes of the meeting
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of such board or committee, and that it will furnish the Administrative Agent
with a certified copy of such minutes or an excerpt therefrom reflecting such
approval.
16.24 REPRESENTATIONS AND WARRANTIES OF COBANK. Except as expressly set
forth in Section 16.23 hereof, CoBank, in its role as a Syndication Party and as
the Administrative Agent, makes no express or implied representation or warranty
and assumes no responsibilities with respect to the due authorization,
execution, or delivery of the Loan Documents; the accuracy of any information,
statements, or certificates provided by Borrower, the legality, validity, or
enforceability of the Loan Documents; the filing or recording of any document;
the collectibility of the Loans; the performance by Borrower of any of its
obligations under the Loan Documents; or the financial condition or solvency of
Borrower or any other party obligated with respect to the Loans or the Loan
Documents.
16.25 SYNDICATION PARTIES' INDEPENDENT CREDIT ANALYSIS. Each
Syndication Party acknowledges receipt of true and correct copies of all Loan
Documents (other than any Note payable to another Syndication Party) from the
Administrative Agent. Each Syndication Party agrees and represents that it has
relied upon its independent review (a) of the Loan Documents, and (b) any
information independently acquired by such Syndication Party from Borrower or
otherwise in making its decision to acquire an interest in the Loans
independently and without reliance on the Administrative Agent. Each Syndication
Party represents and warrants that it has obtained such information as it deems
necessary (including any information such Syndication Party independently
obtained from Borrower or others) prior to making its decision to acquire an
interest in the Loans. Each Syndication Party further agrees and represents that
it has made its own independent analysis and appraisal of and investigation into
each Borrower's authority, business, operations, financial and other condition,
creditworthiness, and ability to perform its obligations under the Loan
Documents and has relied on such review in making its decision to acquire an
interest in the Loans. Each Syndication Party agrees that it will continue to
rely solely upon its independent review of the facts and circumstances related
to Borrower, and without reliance upon the Administrative Agent, in making
future decisions with respect to all matters under or in connection with the
Loan Documents and the Loans. The Administrative Agent assumes no responsibility
for the financial condition of Borrower or for the performance of Borrower's
obligations under the Loan Documents. Except as otherwise expressly provided
herein, no Syndication Party shall have any duty or responsibility to furnish to
any other Syndication Parties any credit or other information concerning
Borrower which may come into its possession.
16.26 NO JOINT VENTURE OR PARTNERSHIP. Neither the execution of this
Credit Agreement, the sharing in the Loans, nor any agreement to share in
payments or losses arising as a result of this transaction is intended to be or
to create, and the foregoing shall not be construed to be, any partnership,
joint venture or other joint enterprise between the Administrative Agent and any
Syndication Party, nor between or among any of the Syndication Parties.
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16.27 PURCHASE FOR OWN ACCOUNT; RESTRICTIONS ON TRANSFER;
PARTICIPATIONS. Each Syndication Party represents that it has acquired and is
retaining its interest in the Loans for its own account in the ordinary course
of its banking or financing business and not with a view toward the sale,
distribution, further participation, or transfer thereof. Each Syndication Party
other than CoBank and St. Paul Bank agrees that it will not sell, assign, convey
or otherwise dispose of ("TRANSFER"), or create or permit to exist any lien or
security interest on all or any part of its interest in the Loans, without the
prior written consent of the Administrative Agent and Borrower (which consent
will not be unreasonably withheld); provided that: (a) any such Transfer (except
a Transfer to another Syndication Party or a Transfer by CoBank or by St. Paul
Bank) must be in a minimum amount of $10,000,000.00; (b) each Syndication Party
must maintain an Individual Commitment of no less than $15,000,000.00, unless it
Transfers its entire interest in the Loans; (c) the transferee must execute an
agreement substantially in the form of Exhibit 16.27 hereto ("SYNDICATION
ACQUISITION AGREEMENT") and assume all of the transferor's obligations hereunder
and execute such documents as the Administrative Agent may reasonably require;
and (d) the Syndication Party making such Transfer must pay the Administrative
Agent an assignment fee of $3,500.00. Any Syndication Party may participate any
part of its interest in the Loans to any Person with the prior written consent
of the Administrative Agent and Borrower (which consent will not be unreasonably
withheld), and each Syndication Party understands and agrees that in the event
of any such participation: (x) its obligations hereunder will not change on
account of such participation; (y) except as provided in Section 16.28 hereof,
the participant will have no rights under this Credit Agreement, including,
without limitation, voting rights or the right to receive payments or
distributions; and (z) the Administrative Agent shall continue to deal directly
with the Syndication Party with respect to the Loans (including with respect to
voting rights) as though no participation had been granted and will not be
obligated to deal directly with any participant. Notwithstanding any provision
contained herein to the contrary, any Syndication Party may at any time pledge
or assign all or any portion of its interest in the Loans to any Federal Reserve
Bank in accordance with applicable law. CoBank and St. Paul Bank reserve the
right to sell participations on a non-patronage basis.
16.28 CERTAIN PARTICIPANTS' VOTING RIGHTS. All Persons which purchase a
participation interest in the interest of CoBank or St. Paul Bank as a
Syndication Party hereunder may, in the sole discretion of CoBank or St. Paul
Bank, respectively (or as required in any agreement under which such purchase is
made and governed), be allowed by CoBank or St. Paul Bank to vote, on a dollar
basis, as if such participant were a Syndication Party, on any matter requiring
or allowing CoBank or St. Paul Bank, as applicable, in its capacity as a
Syndication Party, to provide or withhold its consent, or to otherwise vote on
any proposed action.
16.29 METHOD OF MAKING PAYMENTS. Payment and transfer of all amounts
owing or to be paid or remitted hereunder, including, without limitation,
payment of the Advance Payment by Syndication Parties, and distribution of
principal or interest payments or fees or other amounts by the Administrative
Agent, shall be by wire
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transfer in accordance with the instructions contained on Exhibit 16.29 hereto
("WIRE INSTRUCTIONS").
16.30 EVENTS OF SYNDICATION DEFAULT/REMEDIES.
16.30.1 SYNDICATION PARTY DEFAULT. Any of the following
occurrences, failures or acts, with respect to any of the Syndication Parties
shall constitute an "EVENT OF SYNDICATION DEFAULT" hereunder by such party: (a)
if any representation or warranty made by such party in this Credit Agreement
shall be found to have been untrue in any material respect; (b) if such party
fails to make any distributions or payments required under this Credit Agreement
within five (5) days of the date required; (c) if such party breaches any other
covenant, agreement, or provision of this Credit Agreement which breach shall
have continued uncured for a period of thirty (30) consecutive days after such
breach first occurs, unless a shorter period is required to avoid prejudicing
the rights and position of the other Syndication Parties; (d) if any agency
having supervisory authority over such party, or any creditors thereof, shall
file a petition to reorganize or liquidate such party pursuant to any applicable
federal or state law or regulation and such petition shall not be discharged or
denied within fifteen (15) days after the date on which it is filed; (e) if by
the order of a court of competent jurisdiction or by any appropriate supervisory
agency, a receiver, trustee or liquidator shall be appointed for such party or
for all or any material part of its property or if such party shall be declared
insolvent; or (f) if such party shall be dissolved, or shall make an assignment
for the benefit of its creditors, or shall file a petition seeking to take
advantage of any debtors' act, including the bankruptcy act, or shall admit in
writing its inability to pay its debts generally as they become due, or shall
consent to the appointment of a receiver or liquidator of all or any material
part of its property.
16.30.2 REMEDIES. Upon the occurrence of an Event of Syndication
Default, the non-defaulting parties, acting by, or through the direction of, a
simple majority (determined based on the ratio of the total of their Individual
Commitments to the sum of the Aggregate 364-Day Commitment and the Aggregate
5-Year Commitment) of the non-defaulting parties, may, in addition to any other
remedy specifically set forth in this Credit Agreement, have and exercise any
and all remedies available generally at law or equity, including the right to
damages and to specific performance.
16.31 WITHHOLDING TAXES. Each Syndication Party represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Administrative Agent and to
Borrower such forms, certifications, statements and other documents as the
Administrative Agent or Borrower may request from time to time to evidence such
Syndication Party's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Administrative Agent or Borrower, as the case may
be, to comply with any applicable laws or regulations relating thereto. Without
limiting the effect of the foregoing, if any Syndication Party is not created or
organized under the laws of the United States of America or any state thereof,
such Syndication Party will furnish to the Administrative Agent and Borrower
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IRS Form 4224 or Form 1001, or such other forms, certifications, statements or
documents, duly executed and completed by such Syndication Party, as evidence of
such Syndication Party's exemption from the withholding of United States tax
with respect thereto. Notwithstanding anything herein to the contrary, Borrower
shall not be obligated to make any payments hereunder to such Syndication Party
until such Syndication Party shall have furnished to the Administrative Agent
and Borrower the requested form, certification, statement or document.
16.32 AMENDMENTS CONCERNING AGENCY FUNCTION. Neither the Administrative
Agent nor the Bid Agent shall be bound by any waiver, amendment, supplement or
modification of this Credit Agreement or any other Loan Document which affects
its duties hereunder or thereunder unless it shall have given its prior written
consent thereto.
16.33 FURTHER ASSURANCES. The Administrative Agent and each Syndication
Party agree to take whatever steps and execute such documents as may be
reasonable and necessary to implement this Article 16 and to carry out fully the
intent thereof.
ARTICLE 17. MISCELLANEOUS
17.1 COSTS AND EXPENSES. To the extent permitted by law, Borrower
agrees to pay to the Administrative Agent and the Syndication Parties, on
demand, all out-of-pocket costs and expenses (a) incurred by the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
counsel retained by the Administrative Agent, and including fees and expenses
incurred for consulting, appraisal, engineering, inspection, and environmental
assessment services) in connection with the preparation, negotiation, and
execution of the Loan Documents and the transactions contemplated thereby, and
processing the Borrowing Notices; and (b) incurred by the Administrative Agent
or any Syndication Party (including, without limitation, the reasonable fees and
expenses of counsel retained by the Administrative Agent and the Syndication
Parties) in connection with the enforcement or protection of the Syndication
Parties' rights under the Loan Documents upon the occurrence of an Event of
Default or upon the commencement of an action by Borrower against the
Administrative Agent or any Syndication Party, including without limitation
collection of the Loan (regardless of whether such enforcement or collection is
by court action or otherwise). Borrower shall not be obligated to pay the costs
or expenses of any Person whose only interest in the Loan is as a holder of a
participation interest.
17.2 SERVICE OF PROCESS AND CONSENT TO JURISDICTION. Borrower hereby
agrees that any litigation with respect to this Credit Agreement or to enforce
any judgment obtained against Borrower for breach of this Credit Agreement or
under the Notes or other Loan Documents may be brought in the courts of the
State of Colorado and in the United States District Court for the District of
Colorado (if applicable subject matter jurisdictional requirements are present),
as the Administrative Agent may elect; and, by execution and delivery of this
Credit Agreement, Borrower irrevocably submits to such jurisdiction. With
respect to litigation concerning this Credit Agreement or under the
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Notes or other Loan Documents within the jurisdiction of the courts of the State
of Colorado or the United States District Court for the District of Colorado,
Borrower hereby irrevocably appoints, until January 15, 2004, The Corporation
Company to serve as the agent of Borrower to receive for and on behalf of
Borrower at such agent's Denver, Colorado office (presently at 1675 Broadway),
service of process, which service may be made by mailing a copy of any summons
or other legal process to Borrower in care of such agent. Borrower agrees that
Borrower shall maintain a duly appointed agent in Colorado for service of
summons and other legal process as long as Borrower remains obligated under this
Credit Agreement and shall keep the Administrative Agent advised in writing of
the identity and location of such agent. The receipt by such agent and/or by
Borrower of such summons or other legal process in any such litigation shall be
deemed personal service and acceptance by Borrower for all purposes of such
litigation.
17.3 JURY WAIVER. IT IS MUTUALLY AGREED BY AND BETWEEN THE
ADMINISTRATIVE AGENT, EACH SYNDICATION PARTY, AND BORROWER THAT THEY EACH WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY OF THEM
AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS CREDIT AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS.
17.4 NOTICES. All notices, requests and demands required or permitted
under the terms of this Credit Agreement shall be in writing and (a) shall be
addressed as set forth below or at such other address as either party shall
designate in writing, (b) shall be deemed to have been given or made: (i) if
delivered personally, immediately upon delivery, (ii) if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt, (iii) if by nationally recognized overnight courier service with
instructions to deliver the next Banking Day, one (1) Banking Day after sending,
and (iv) if by United States Mail, certified mail, return receipt requested,
five (5) days after mailing.
17.4.1 BORROWER:
Cenex Harvest States Cooperatives
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
FAX: (612) 451-4554
Attention: Vice President Finance
with a copy to:
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Cenex Harvest States Cooperatives
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
FAX: (612) 451-4554
Attention: General Counsel
17.4.2 ADMINISTRATIVE AGENT:
CoBank, ACB
5500 South Quebec Street
Englewood, Colorado 80111
FAX: (303) 694-5830
Attention: Administrative Agent
17.4.3 BID AGENT:
CoBank, ACB
5500 South Quebec Street
Englewood, Colorado 80111
FAX: (303) 740-4021
Attention: Bid Agent
17.4.4 CO-SYNDICATION AGENT:
St. Paul Bank for Cooperatives
375 Jackson Street
St. Paul, MN 55101-1849
FAX: (612) 282-8201
Attention: Jeff Swanhorst, Associate Vice President
17.4.5 SYNDICATION PARTIES:
See signature pages hereto.
17.5 LIABILITY OF ADMINISTRATIVE AGENT AND BID AGENT. Neither the
Administrative Agent nor the Bid Agent shall have any liabilities or
responsibilities to Borrower or any Subsidiary on account of the failure of any
Syndication Party to perform its obligations hereunder or to any Syndication
Party on account of the failure of Borrower or any Subsidiary to perform their
respective obligations hereunder or under any other Loan Document.
17.6 SUCCESSORS AND ASSIGNS. This Credit Agreement shall be binding
upon and inure to the benefit of Borrower, the Administrative Agent, the Bid
Agent, and the Syndication Parties, and their respective successors and assigns,
except that Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of all of the Syndication Parties.
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17.7 SEVERABILITY. The invalidity or unenforceability of any provision
of this Credit Agreement or the other Loan Documents shall not affect the
remaining portions of such documents or instruments; in case of such invalidity
or unenforceability, such documents or instruments shall be construed as if such
invalid or unenforceable provisions had not been included therein.
17.8 ENTIRE AGREEMENT. This Credit Agreement (together with all
exhibits hereto, which are incorporated herein by this reference) and the other
Loan Documents represent the entire understanding of the Administrative Agent,
the Bid Agent, each Syndication Party, and Borrower with respect to the subject
matter hereof and shall replace and supersede any previous agreements of the
parties with respect to the subject matter hereof.
17.9 APPLICABLE LAW. To the extent not governed by federal law, this
Credit Agreement and the other Loan Documents, and the rights and obligations of
the parties hereto and thereto shall be governed by and interpreted in
accordance with the internal laws of the State of Colorado, without giving
effect to any otherwise applicable rules concerning conflicts of law.
17.10 CAPTIONS. The captions or headings in this Credit Agreement and
any table of contents hereof are for convenience only and in no way define,
limit or describe the scope or intent of any provision of this Credit Agreement.
17.11 COMPLETE AGREEMENT; AMENDMENTS. THIS CREDIT AGREEMENT, THE NOTES,
AND THE OTHER LOAN DOCUMENTS ARE INTENDED BY THE PARTIES HERETO TO BE A COMPLETE
AND FINAL EXPRESSION OF THEIR AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT. BY INITIALING IN THE MARGIN, THE
ADMINISTRATIVE AGENT, THE BID AGENT, EACH SYNDICATION PARTY, AND BORROWER
ACKNOWLEDGE AND AGREE THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT. This Credit Agreement may not
be modified or amended unless such modification or amendment is in writing and
is signed by Borrower, the Administrative Agent, the Bid Agent, and all
Syndication Parties (and each Syndication Party hereby agrees to execute any
such amendment approved pursuant to Section 16.9 hereof). Borrower agrees that
it shall reimburse the Administrative Agent for all fees and expenses incurred
by the Administrative Agent in retaining outside legal counsel in connection
with any amendment or modification to this Credit Agreement requested by
Borrower.
17.12 ADDITIONAL COSTS OF MAINTAINING LOAN. Borrower shall pay to the
Administrative Agent from time to time such amounts as the Administrative Agent
may determine to be necessary to compensate any Syndication Party for any
increase in costs to such Syndication Party which the Administrative Agent
determines, based on information presented to it by such Syndication Party, are
attributable to such Syndication Party's making or maintaining an Advance
hereunder or its obligation to
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make such Advance, or any reduction in any amount receivable by such Syndication
Party under this Credit Agreement or the Notes payable to it in respect to such
Advance or such obligation (such increases in costs and reductions in amounts
receivable being herein called "ADDITIONAL COSTS"), resulting from any change
after the date of this Credit Agreement in United States federal, state,
municipal, or foreign laws or regulations (including Regulation D of the Federal
Reserve Board), or the adoption or making after such date of any
interpretations, directives, or requirements applying to a class of banks
including such Syndication Party of or under any United States federal, state,
municipal, or foreign laws or regulations (whether or not having the force of
law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof ("REGULATORY CHANGE"), which: (a)
changes the basis of taxation of any amounts payable to such Syndication Party
under this Credit Agreement or the Notes payable to such Syndication Party in
respect of such Advance (other than taxes imposed on the overall net income of
such Syndication Party); or (b) imposes or modifies any reserve, special
deposit, or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Syndication Party;
or (c) imposes any other condition affecting this Credit Agreement or the Notes
payable to such Syndication Party (or any of such extensions of credit or
liabilities). The Administrative Agent will notify Borrower of any event
occurring after the date of this Credit Agreement which will entitle such
Syndication Party to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. the Administrative Agent shall include with such notice, a
certificate from such Syndication Party setting forth in reasonable detail the
calculation of the amount of such compensation. Determinations by the
Administrative Agent for purposes of this Section of the effect of any
Regulatory Change on the costs of such Syndication Party of making or
maintaining an Advance or on amounts receivable by such Syndication Party in
respect of Advances, and of the additional amounts required to compensate such
Syndication Party in respect of any Additional Costs, shall be conclusive absent
manifest error, provided that such determinations are made on a reasonable
basis.
17.13 CAPITAL REQUIREMENTS. In the event that the introduction of or
any change in: (a) any law or regulation; or (b) the judicial, administrative,
or other governmental interpretation of any law or regulation; or (c) compliance
by any Syndication Party or any corporation controlling any such Syndication
Party with any guideline or request from any governmental authority (whether or
not having the force of law) has the effect of requiring an increase in the
amount of capital required or expected to be maintained by such Syndication
Party or any corporation controlling such Syndication Party, and such
Syndication Party certifies that such increase is based in any part upon such
Syndication Party's obligations hereunder with respect to the 364-Day Facility
and/or the 5-Year Facility, and other similar obligations, Borrower shall pay to
such Syndication Party such additional amount as shall be certified by such
Syndication Party to the Administrative Agent and to Borrower to be the net
present value (discounted at the Base Rate) of (a) the amount by which such
increase in capital reduces the rate of return on capital which such Syndication
Party could have achieved
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over the period remaining until the 364-Day Maturity Date or the 5-Year Maturity
Date, as applicable (depending upon which Facility or Facilities such claim to
increase costs is based), but for such introduction or change, (b) multiplied by
the product of such Syndication Party's Individual 364-Day Pro Rata Share times
the Aggregate 364-Day Commitment or such Syndication Party's Individual 5-Year
Pro Rata Share times the Aggregate 5-Year Commitment, as applicable. The
Administrative Agent will notify Borrower of any event occurring after the date
of this Credit Agreement that will entitle any such Syndication Party to
compensation pursuant to this Section as promptly as practicable after it
obtains knowledge thereof and of such Syndication Party's determination to
request such compensation. The Administrative Agent shall include with such
notice, a certificate from such Syndication Party setting forth in reasonable
detail the calculation of the amount of such compensation. Determinations by any
Syndication Party for purposes of this Section of the effect of any increase in
the amount of capital required to be maintained by any such Syndication Party
and of the amount of compensation owed to any such Syndication Party under this
Section shall be conclusive absent manifest error, provided that such
determinations are made on a reasonable basis.
17.14 REPLACEMENT NOTES. Upon receipt by Borrower of evidence
satisfactory to it of: (a) the loss, theft, destruction or mutilation of any
Note, and (in case of loss, theft or destruction) of the agreement of the
Syndication Party to which the Note was payable to indemnify Borrower, and upon
surrender and cancellation of such Note, if mutilated; or (b) the assignment by
any Syndication Party of its interest hereunder and the Note relating thereto,
or any portion thereof, pursuant to this Credit Agreement, then Borrower will
pay any unpaid principal and interest (and Funding Losses, if applicable) then
or previously due and payable on such Note and will (upon delivery of such Note
for cancellation, unless covered by subparagraph (a) of this Section) deliver in
lieu of such Note a new Note or, in the case of an assignment of a portion of
any such Syndication Party's Interest, new Notes, for any remaining balance.
17.15 PATRONAGE PAYMENTS. Borrower acknowledges and agrees that: (a)
only that portion of the Loan represented by CoBank's Individual 364-Day Pro
Rata Share and/or CoBank's Individual 5-Year Pro Rata Share which is retained by
CoBank for its own account is entitled to patronage distributions in accordance
with CoBank's bylaws and its practices and procedures related to patronage
distribution; (b) any patronage, or similar, payments to which Borrower is
entitled on account its ownership of Bank Equity Interests or otherwise will not
be based on any portion of CoBank's interest in the Loans in which CoBank has at
any time granted a participation interest; (c) only that portion of the Loan
represented by St. Paul Bank's Individual 364-Day Pro Rata Share and/or St. Paul
Bank's Individual 5-Year Pro Rata Share which is retained by St. Paul Bank for
its own account is entitled to patronage distributions in accordance with St.
Paul Bank's bylaws and its practices and procedures related to patronage
distribution; and (d) any patronage, or similar, payments to which Borrower is
entitled on account its ownership of Bank Equity Interests or otherwise will not
be based on any portion of St.
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Paul Bank's interest in the Loans in which St. Paul Bank has at any time granted
a participation interest.
17.16 MUTUAL RELEASE. Upon full indefeasible payment and satisfaction
of the Bank Debt and Notes and the other obligations contained in this Credit
Agreement, the parties, including Borrower, the Administrative Agent, the Bid
Agent, and each Syndication Party shall, except as provided in Article 14
hereof, thereupon automatically each be fully, finally, and forever released and
discharged from any further claim, liability, or obligation in connection with
the Bank Debt.
17.17 LIBERAL CONSTRUCTION. This Credit Agreement constitutes a fully
negotiated agreement between commercially sophisticated parties, each assisted
by legal counsel, and shall not be construed and interpreted for or against any
party hereto.
17.18 COUNTERPARTS. This Credit Agreement may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof, each signed by less than all, but together signed by all of
the parties hereto.
17.19 CONFIDENTIALITY. Each Syndication Party shall maintain the
confidential nature of, and shall not use or disclose, any of Borrower's
financial information, confidential information or trade secrets without first
obtaining Borrower's written consent. Nothing in this Section shall require any
Syndication Party to obtain such consent after there is an Event of Default. The
obligations of the Syndication Parties shall in no event apply to: (a) providing
information about Borrower to any financial institution contemplated in Sections
16.7, 16.15, and 16.27 hereof or to such Syndication Party's parent holding
company or any of such Syndication Party's affiliates; (b) any situation in
which any Syndication Party is required by Law or required by any Governmental
Authority to disclose information; (c) providing information to counsel to any
Syndication Party in connection with the transactions contemplated by the Loan
Documents; (d) providing information to independent auditors retained by the
such Syndication Party; (e) any information that is in or becomes part of the
public domain otherwise than through a wrongful act of such Syndication Party or
any of its employees or agents thereof; (f) any information that is in the
possession of any Syndication Party prior to receipt thereof from Borrower or
any other Person known to such Syndication Party to be acting on behalf of
Borrower; (g) any information that is independently developed by any Syndication
Party; and (h) any information that is disclosed to any Syndication Party by a
third party that has no obligation of confidentiality with respect to the
information disclosed. A Syndication Party's confidentiality requirements
continue after it is no longer a Syndication Party under this Credit Agreement.
[signature pages commence with page 69]
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IN WITNESS WHEREOF, the parties have executed this Credit Agreement as
of the date first above written.
BORROWER:
CENEX HARVEST STATES
COOPERATIVES, a cooperative corporation
formed under the laws of the State of
Minnesota
By: /s/ T. F. Baker
---------------------------------------
Name: T. F. Baker
Title: Executive Vice President Finance and
Administration
ADMINISTRATIVE AGENT:
COBANK, ACB
By: /s/ Greg E. Somerhalder
---------------------------------------
Name: Greg E. Somerhalder
Title: Vice President
BID AGENT:
CoBANK, ACB
By: /s/ Greg E. Somerhalder
---------------------------------------
Name: Greg E. Somerhalder
Title: Vice President
CO-SYNDICATION AGENT:
ST. PAUL BANK FOR COOPERATIVES
By: /s/ Jeff Swanhorst
---------------------------------------
Name: Jeff Swanhorst
Title: Associate Vice President
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<PAGE>
SYNDICATION PARTIES:
COBANK, ACB
By: /s/ Greg Somerhalder
---------------------------------------
Name: Greg Somerhalder
Title: Vice President
Contact Name: Greg Somerhalder
Title: Vice President
Address: 245 North Waco
Wichita, KS 67202
Phone No.: 316/290-2052
Fax No.: 316/290-2006
Individual 364-Day Commitment: $96,666,666.64
Individual 5-Year Commitment: $48,333,333.36
Payment Instructions:
CoBank, ACB
ABA No.: 307088754
Acct. Name: CoBank, ACB
Account No.: 22274433
Attn: Marshall Allen
Reference: Cenex Harvest States
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<PAGE>
SYNDICATION PARTIES:
ST. PAUL BANK FOR COOPERATIVES
By: /s/ Jeff Swanhorst
---------------------------------------
Name: Jeff Swanhorst
Title: Associate Vice President
Contact Name: Jeff Swanhorst
Title: Associate Vice President
Address: 375 Jackson Street
St. Paul, MN 55101-1849
Phone No.: 612/282-8205
Fax No.: 612/282-8249
Individual 364-Day Commitment: $43,333,333.33
Individual 5-Year Commitment: $21,666,666.67
Payment Instructions:
St. Paul Bank for Cooperatives
ABA No.: 296090471
Acct. Name: Cenex Harvest States
Account No.: 271998
Reference: Scott Malm
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<PAGE>
SYNDICATION PARTIES:
CARIPLO-CASSA DI RISPARMIO DELLE PROVINCIE
LOMBARDE SPA
By: /s/ Maria Elena Greene
---------------------------------------
Name: Maria Elena Greene
Title: Asst. Treasurer
By: /s/ Charles W. Kennedy
---------------------------------------
Name: Charles W. Kennedy
Title: First Vice President
Contact Name: Anthony Giobbi
Title: First Vice President
Address: 10 East 53rd Street, 36th Floor
New York, NY 10022
Phone No.: 212/527-8737
Fax No.: 212/527-8777
Individual 364-Day Commitment: $16,666,666.67
Individual 5-Year Commitment: $8,333,333.33
Payment Instructions:
Citibank - New York
ABA - 021000089
For account of Cariplo - New York
Account No.: 36022295
Attn: M. Greene
Ref: Cenex Harvest States Cooperatives
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<PAGE>
SYNDICATION PARTIES:
CREDIT AGRICOLE INDOSUEZ
By: /s/ K. L. Abbott
---------------------------------------
Name: Katherine L. Abbott
Title: First Vice President
By: /s/ Dean Balice
---------------------------------------
Name: Dean Balice
Title: Branch Manager
Contact Name: Theodore D. Tice
Title: Vice President
Address: 55 E. Monroe Street
Chicago, IL 60603-5702
Phone No.: 312/917-7463
Fax No.: 312/372-3455
Individual 364-Day Commitment: $33,333,333.33
Individual 5-Year Commitment: $16,666,666.67
Payment Instructions:
Citibank - New York, New York
ABA - 021-000-089
Acct. Name: Credit Agricole Indoseuz
Chgo Branch
Account No.: 36023853
Swift Code: CITIUS33
Ref: Cenex Harvest States
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<PAGE>
SYNDICATION PARTIES:
SUNTRUST BANK, ATLANTA
By: /s/ Brian M. Davis
---------------------------------------
Name: Brian M. Davis
Title: Assistant Vice President
By: /s/ Robert V. Honeycutt
---------------------------------------
Name: Robert V. Honeycutt
Title: Vice President
Contact Name: Brian M. Davis
Title: Assistant Vice President
Address: 25 Park Place
Atlanta, GA 30303
Phone No.: 404/581-1792
Fax No.: 404/230-5305
Individual 364-Day Commitment: $16,666,666.67
Individual 5-Year Commitment: $8,333,333.33
Payment Instructions:
SunTrust Bank, Atlanta
ABA - 061000104
Acct. Name: Corporate Banking
Operations General Ledger Account
Account No.: 9088000112
Ref: Cenex Harvest States Cooperatives
82
<PAGE>
SYNDICATION PARTIES:
BANQUE NATIONALE DE PARIS
By: /s/ Arnaud Collin du Bocage
---------------------------------------
Name: Arnaud Collin du Bocage
Title: Executive Vice President and General
Manager
Contact Name: Cathleen F. Schaede
Title: Assistant Vice President
Address: 209 South LaSalle Street
Chicago, IL 60604
Phone No.: 312/977-1383
Fax No.: 312/977-1380
Individual 364-Day Commitment: $26,666,666.67
Individual 5-Year Commitment: $13,333,333.33
Payment Instructions:
Banque Nationale de Paris - New York
ABA - 0260-0768-9
Acct. Name: Banque Nationale de Paris
- Chicago
Account No.: 14119400189
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<PAGE>
SYNDICATION PARTIES:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ Hans F. Breukhoven
---------------------------------------
Name: Hans F. Breukhoven
Title: Vice President
By: /s/ W. Jeffrey Vollack
---------------------------------------
Name: W. Jeffrey Vollack
Title: Senior Vice President
Contact Name: David Nelson
Title: Vice President
Address: 300 South Wacker Drive
Suite 3500
Chicago, IL 60606
Phone No.: 312/408-8207
Fax No.: 312/408-8240
Individual 364-Day Commitment: $26,666,666.67
Individual 5-Year Commitment: $13,333,333.33
Payment Instructions:
The Bank of New York
(New York, NY 10167)
ABA - 021 000 018
Acct. Name: Rabobank Nederland
Account No.: 802 6002 533
Attn: Debra Rivers
Ref: Cenex Harvest States
84
<PAGE>
SYNDICATION PARTIES:
NATIONSBANK, N.A.
By: /s/ Steven O. Stoecker
---------------------------------------
Name: Steven O. Stoecker
Title: Senior Vice President
Contact Name: Steven O. Stoecker
Title: Senior Vice President
Address: 14 W. 10th Street
P.O. Box 419038
Kansas City, MO 64105
(box 464183)
Phone No.: 816/979-7149
Fax No.: 816/979-7426
Individual 364-Day Commitment: $36,666,666.67
Individual 5-Year Commitment: $18,333,333.33
Payment Instructions:
NationsBank, N.A.
ABA - 111000012
Acct. Name: Corporate Funds Transfer
Account No.: 1292000883
Attn: Jane Mitchell
Ref: Cenex Harvest States Cooperatives
85
<PAGE>
SYNDICATION PARTIES:
THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO
BRANCH
By: /s/ Jeffrey R. Arnold
---------------------------------------
Name: Jeffrey R. Arnold
Title: Vice President and Manager
Contact Name: Peter Kline
Title: Assistant Vice President
Address: 90 South Seventh Street
5100 Norwest Center
Minneapolis, MN 55402
Phone No.: 612/333-0505
Fax No.: 612/333-3735
Loan Administration Contact Name:
Janice Hennig
Address: 227 West Monroe Street
Suite 2300
Chicago, Illinois 60606
Phone No.: 312/696-4710
Fax No.: 312/696-4532
Individual 364-Day Commitment: $16,666,666.67
Individual 5-Year Commitment: $8,333,333.33
Payment Instructions:
The Federal Reserve Bank of Chicago
ABA - 071002341
Acct. Name: The Bank of Tokyo-
Mitsubishi, Ltd.
Attention: Loan Administration
Ref: Cenex Harvest States Cooperatives
86
<PAGE>
SYNDICATION PARTIES:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By: /s/ John W. Wenbbe
---------------------------------------
Name: John W. Wenbbe
Title: Vice President
Contact Name: Edward L. Cooper, III
Title: Vice President
Address: 231 South La Salle Street
Chicago, IL 60697
Phone No.: 312/828-1273
Fax No.: 312/828-1974
Individual 364-Day Commitment: $26,666,666.67
Individual 5-Year Commitment: $13,333,333.33
Payment Instructions:
Bank of America National Trust and
Savings Association
ABA - 071000039
Acct. Name: Attention: Cash Book 418
Loan Department
Attention: Laura A. Ikens
Ref: Cenex Harvest States Cooperatives
87
<PAGE>
SYNDICATION PARTIES:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: /s/ Douglas A. Lindstrom
---------------------------------------
Name: Douglas A. Lindstrom
Title: Assistant Vice President
Contact Name: Douglas A. Lindstrom
Title: Assistant Vice President
Address: Sixth and Marquette
Minneapolis, MN 55479-0085
Phone No.: 612/667-5542
Fax No.: 612/667-4145
Individual 364-Day Commitment: $16,666,666.67
Individual 5-Year Commitment: $8,333,333.33
Payment Instructions:
Norwest Bank Minnesota
ABA - 091000019
Acct. Name: Commercial Loan Clearing
Account
Account No.: 840165
Ref: Cenex Harvest States
88
<PAGE>
SYNDICATION PARTIES:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
CAYMAN ISLAND BRANCH
By: /s/ Lynne McCarthy
---------------------------------------
Name: Lynne McCarthy
Title: Asst. Vice President
By: /s/ W. D. Casey
---------------------------------------
Name: William D. Casey
Title: Vice President
Contact Name: Mark Connelly
Title: Vice President
Address: 609 Fifth Avenue
New York, NY 10017
Phone No.: 212/745-1560
Fax No.: 212/745-1556
Individual 364-Day Commitment: $26,666,666.67
Individual 5-Year Commitment: $13,333,333.33
Payment Instructions:
(1) DG Bank
via Chips System
DG Bank ABA #845
(2) Federal Reserve Bank of New York
Routing/Account # 026008455
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<PAGE>
SYNDICATION PARTIES:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Thomas W. Cherry
---------------------------------------
Name: Thomas W. Cherry
Title: Vice President
Contact Name: Thomas W. Cherry
Title: Vice President
Address: 601 Second Avenue South
Minneapolis, MN 55402-4302
Phone No.: 612/973-0555
Fax No.: 612/973-0825
Individual 364-Day Commitment: $16,666,666.67
Individual 5-Year Commitment: $8,333,333.33
Payment Instructions:
U.S. Bank National Association
ABA - 091000022
Acct. Name: Commercial Loans
Account No.: 30000472160600
Attn: Karen Johnson
Ref: Cenex Harvest States Cooperatives
90
<PAGE>
EXHIBIT 2.4
to Credit Agreement
364-DAY FACILITY NOTE
$__________.00 Effective Date: _____ __, 199_
FOR VALUE RECEIVED, CENEX HARVEST STATES COOPERATIVES, a Minnesota
cooperative corporation ("Maker"), promises to pay to the order of
_______________ ("Payee") at the office of the Administrative Agent (as defined
in the Credit Agreement), %CoBank, ACB at 5500 South Quebec Street, Englewood,
Colorado 80111, or such other place as the Administrative Agent shall direct in
writing, the principal sum of ______________ Dollars ($__________.00) or, if
less, the amount outstanding under this Note for (a) 364-Day Pro Rata Advances,
[and] (b) 364-Day Bid Advances[, and (c) Overnight Advances] made pursuant to
the Credit Agreement dated as of June 1, 1998, by and between CoBank (for its
own benefit as a Syndication Party, and as the Administrative Agent for the
benefit of the present and future Syndication Parties as named or defined
therein, and as the Bid Agent) and Maker (as it may be amended from time to time
in the future, the "Credit Agreement") and any Bank Debt related thereto. This
Note is issued and delivered to Payee pursuant to the Credit Agreement. All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings as set forth in the Credit Agreement.
The unpaid balance of this Note from time to time outstanding shall
bear interest as set forth in the Credit Agreement. Interest shall be payable as
provided in the Credit Agreement. Principal shall be payable on the 364-Day
Maturity Date and as otherwise provided in the Credit Agreement. This Note has
been issued by Maker to Payee pursuant to the Credit Agreement and reference is
made thereto for specific terms and conditions under which this Note is made and
to which this Note is subject.
This Note is subject to voluntary and mandatory prepayments as set
forth in the Credit Agreement. Amounts repaid may be reborrowed during the
364-Day Availability Period. Upon the occurrence of an Event of Default, Maker
agrees that the Administrative Agent and the Payee shall have all rights and
remedies set forth in the Credit Agreement, including without limitation the
rights of acceleration set forth in the Credit Agreement. In addition, the
Administrative Agent and the Payee shall have the right to recover all costs of
collection and enforcement of this Note as provided in the Credit Agreement.
Maker and any endorser, guarantor, surety or assignor hereby waives
presentment for payment, demand, protest, notice of protest, and notice of
dishonor and nonpayment of this Note, and all defenses on the ground of delay,
suretyship, impairment of collateral, or of extension of time at or after
maturity for the payment of this Note.
This Note shall be governed in all respects by the law of the State of
Colorado.
Maker:
CENEX HARVEST STATES COOPERATIVES
a Minnesota corporation
By: _____________________________
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT 3.4
to Credit Agreement
5-YEAR FACILITY NOTE
$____________.00 Effective Date: _____ __, 199_
FOR VALUE RECEIVED, CENEX HARVEST STATES COOPERATIVES, a Minnesota
cooperative corporation ("Maker"), promises to pay to the order of
_______________ ("Payee") at the office of the Administrative Agent (as defined
in the Credit Agreement), %CoBank, ACB at 5500 South Quebec Street, Englewood,
Colorado 80111, or such other place as the Administrative Agent shall direct in
writing, the principal sum of ______________ Dollars ($__________.00) or, if
less, the amount outstanding under this Note for (a) 5-Year Pro Rata Advances,
and (b) 5-Year Bid Advances made pursuant to the Credit Agreement dated as of
June 1, 1998, by and between CoBank (for its own benefit as a Syndication Party,
and as the Administrative Agent for the benefit of the present and future
Syndication Parties as named or defined therein, and as the Bid Agent) and Maker
(as it may be amended from time to time in the future, the "Credit Agreement")
and any Bank Debt related thereto. This Note is issued and delivered to Payee
pursuant to the Credit Agreement. All capitalized terms used in this Note and
not otherwise defined herein shall have the same meanings as set forth in the
Credit Agreement.
The unpaid balance of this Note from time to time outstanding shall
bear interest as set forth in the Credit Agreement. Interest shall be payable as
provided in the Credit Agreement. Principal shall be payable on the 5-Year
Maturity Date and as otherwise provided in the Credit Agreement. This Note has
been issued by Maker to Payee pursuant to the Credit Agreement and reference is
made thereto for specific terms and conditions under which this Note is made and
to which this Note is subject.
This Note is subject to voluntary and mandatory prepayments as set
forth in the Credit Agreement. Amounts repaid may be reborrowed during the
5-Year Availability Period. Upon the occurrence of an Event of Default, Maker
agrees that the Administrative Agent and the Payee shall have all rights and
remedies set forth in the Credit Agreement, including without limitation the
rights of acceleration set forth in the Credit Agreement. In addition, the
Administrative Agent and the Payee shall have the right to recover all costs of
collection and enforcement of this Note as provided in the Credit Agreement.
Maker and any endorser, guarantor, surety or assignor hereby waives
presentment for payment, demand, protest, notice of protest, and notice of
dishonor and nonpayment of this Note, and all defenses on the ground of delay,
suretyship, impairment of collateral, or of extension of time at or after
maturity for the payment of this Note.
This Note shall be governed in all respects by the law of the State of
Colorado.
Maker:
CENEX HARVEST STATES COOPERATIVES
a Minnesota corporation
By: _____________________________
Name:_____________________________
Title:____________________________
EXHIBIT 10.24
CREDIT AGREEMENT
(TERM LOAN)
BY AND BETWEEN
COBANK, ACB,
AS CO-SYNDICATION AGENT AND AS A SYNDICATION PARTY,
ST. PAUL BANK FOR COOPERATIVES,
AS CO-SYNDICATION AGENT, ADMINISTRATIVE AGENT, AND AS A SYNDICATION
PARTY,
AND
CENEX HARVEST STATES COOPERATIVES,
AS BORROWER
DATED AS OF JUNE 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINED TERMS.....................................................1
1.1 Additional Costs ....................................................1
1.2 Adjusted Consolidated Funded Debt ...................................1
1.3 Administrative Agent ................................................1
1.4 Administrative Agent's Office .......................................1
1.5 Advance .............................................................1
1.6 Advance Date ........................................................1
1.7 Advance Payment .....................................................1
1.8 Aggregate Commitment ................................................2
1.9 Amortization ........................................................2
1.10 Annual Operating Budget ............................................2
1.11 Applicable Lending Office ..........................................2
1.12 Authorized Officer .................................................2
1.13 Availability Period ................................................2
1.14 Bank Debt ..........................................................2
1.15 Banking Day ........................................................2
1.16 Bank Equity Interests ..............................................2
1.17 Base Rate ..........................................................2
1.18 Base Rate Loans ....................................................2
1.19 Borrower's Account .................................................2
1.20 Borrowing Notice ...................................................2
1.21 Capital Leases .....................................................3
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1.22 Closing Date .......................................................3
1.23 Code ...............................................................3
1.24 Compliance Certificate .............................................3
1.25 Consolidated Cash Flow .............................................3
1.26 Consolidated Current Assets ........................................3
1.27 Consolidated Current Liabilities ...................................3
1.28 Consolidated Funded Debt ...........................................3
1.29 Consolidated Interest Expense ......................................3
1.30 Consolidated Members' and Patrons' Equity ..........................3
1.31 Consolidated Subsidiary ............................................4
1.32 Contributing Syndication Parties ...................................4
1.33 Debt ...............................................................4
1.34 Default Interest Rate ..............................................4
1.35 Delinquency Interest ...............................................4
1.36 Delinquent Amount ..................................................4
1.37 Delinquent Syndication Party .......................................4
1.38 Depreciation .......................................................4
1.39 Environmental Laws .................................................4
1.40 Environmental Regulations ..........................................4
1.41 ERISA ..............................................................4
1.42 ERISA Affiliate ....................................................4
1.43 Event of Default ...................................................5
1.44 Event of Syndication Default .......................................5
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1.45 Existing Credit Agreement ..........................................5
1.46 Facility Letters of Credit .........................................5
1.47 Fiscal Quarter .....................................................5
1.48 Fiscal Year ........................................................5
1.49 Funded Debt ........................................................5
1.50 Funding Losses .....................................................5
1.51 Funding Loss Notice ................................................5
1.52 Funding Share ......................................................6
1.53 GAAP ...............................................................6
1.54 Good Faith Contest .................................................6
1.55 Governmental Authority .............................................6
1.56 Hazardous Substances ...............................................6
1.57 Indemnified Agency Parties .........................................6
1.58 Indemnified Parties ................................................6
1.59 Individual Commitment ..............................................6
1.60 Individual Lending Capacity ........................................6
1.61 Individual Outstanding Obligations .................................6
1.62 Individual Pro Rata Share ..........................................7
1.63 Investment .........................................................7
1.64 Licensing Laws .....................................................7
1.65 Lien ...............................................................7
1.66 Loan Documents .....................................................7
1.67 Material Adverse Effect ............................................7
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1.68 Material Agreements ................................................7
1.69 Maturity Date ......................................................7
1.70 Merger .............................................................7
1.71 Multiemployer Plan .................................................8
1.72 Note or Notes ......................................................8
1.73 Operating Lease ....................................................8
1.74 Organization Documents .............................................8
1.75 Payment Account ....................................................8
1.76 Payment Distribution ...............................................8
1.77 PBGC ...............................................................8
1.78 Permitted Encumbrance ..............................................8
1.79 Person .............................................................8
1.80 Plan ...............................................................8
1.81 Potential Default ..................................................8
1.82 Predecessor Companies ..............................................8
1.83 Prohibited Transaction .............................................8
1.84 Quarter ............................................................9
1.85 Quoted Rate ........................................................9
1.86 Quoted Rate Loan ...................................................9
1.87 Quoted Rate Period .................................................9
1.88 Quoted Rate Request ................................................9
1.89 Regulatory Change ..................................................9
1.90 Reportable Event ...................................................9
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1.91 Required Lenders ....................................................9
1.92 Required License ....................................................9
1.93 Restricted Subsidiary ...............................................9
1.94 Revolving Loan Credit Agreement .....................................9
1.95 Subsidiary ..........................................................9
1.96 Successor Agent .....................................................9
1.97 Syndication Acquisition Agreement ..................................10
1.98 Syndication Interest ...............................................10
1.99 Syndication Parties ................................................10
1.100 Syndication Party Advance Date ....................................10
1.101 Transfer ..........................................................10
1.102 Treasury Rate .....................................................10
1.103 Treasury Rate Loan ................................................10
1.104 Treasury Rate Period ..............................................10
1.105 Treasury Rate Request .............................................10
1.106 Wire Instructions .................................................10
ARTICLE 2. TERM LOAN.........................................................11
2.1 Term Loan ...........................................................11
2.1.1 Individual Commitment ..............................11
2.1.2 Individual Pro Rata Share ..........................11
2.2 Aggregate Commitment ................................................11
2.3 Borrowing Notice ....................................................11
2.4 Promissory Notes ....................................................11
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2.5 Syndication Party Records ...........................................12
2.6 Use of Proceeds .....................................................12
2.7 Syndication Party Funding Failure ...................................12
2.8 Reduction of Aggregate Commitment ...................................12
ARTICLE 3. INTEREST AND FEES.................................................12
3.1 Interest ............................................................12
3.1.1 Base Rate Option ...................................12
3.1.2 Treasury Rate Option ...............................13
3.1.3 Quoted Rate Option .................................13
3.2 Default Interest Rate ...............................................14
3.3 Interest Calculation ................................................14
3.4 Fees ................................................................14
3.4.1 Unused Commitment Fee ..............................14
ARTICLE 4.PAYMENTS; FUNDING LOSSES............................................14
4.1 Principal Payments ..................................................14
4.2 Interest Payments ...................................................14
4.3 Application of Principal Payments ...................................14
4.4 Manner of Payment ...................................................15
4.5 Voluntary Prepayments ...............................................15
ARTICLE 5. BANK EQUITY INTERESTS.............................................15
ARTICLE 6. SECURITY..........................................................16
ARTICLE 7. REPRESENTATIONS AND WARRANTIES....................................16
7.1 Organization, Good Standing, Etc. ...................................16
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7.2 Corporate Authority, Due Authorization; Consents ....................16
7.3 Litigation ..........................................................16
7.4 No Violations .......................................................16
7.5 Binding Agreement ...................................................17
7.6 Compliance with Laws ................................................17
7.7 Principal Place of Business .........................................17
7.8 Payment of Taxes ....................................................17
7.9 Licenses and Approvals ..............................................17
7.10 Employee Benefit Plans .............................................18
7.11 Equity Investments .................................................18
7.12 Title to Real and Personal Property ................................18
7.13 Financial Statements ...............................................18
7.14 Environmental Compliance ...........................................19
7.15 Fiscal Year ........................................................19
7.16 Material Agreements ................................................19
7.17 Regulations U and X ................................................19
7.18 Trademarks, Tradenames, etc. .......................................19
7.19 No Default on Outstanding Judgments or Orders ......................19
7.20 No Default in Other Agreements .....................................19
7.21 Labor Disputes and Acts of God .....................................20
7.22 Governmental Regulation ............................................20
7.23 Disclosure .........................................................20
ARTICLE 8. CONDITIONS TO ADVANCES............................................20
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8.1 Conditions to Closing ...............................................20
8.1.1 Loan Documents .....................................20
8.1.2 Approvals ..........................................20
8.1.3 Organizational Documents ...........................20
8.1.4 Evidence of Insurance ..............................21
8.1.5 Appointment of Agent for Service ...................21
8.1.6 No Material Change .................................21
8.1.7 Fees and Expenses ..................................21
8.1.8 Bank Equity Interest Purchase Obligation ...........21
8.1.9 Opinion of Counsel .................................21
8.1.10 Further Assurances ................................21
8.2 Conditions to Advance ...............................................21
8.2.1 Evidence of Corporate Action .......................21
8.2.2 Consummation of Merger; Amendment of Articles of
Incorporation ......................................22
8.2.3 Cancellation of Existing Credit Agreements .........22
8.2.4 Default ............................................22
8.2.5 Representations and Warranties .....................22
ARTICLE 9. AFFIRMATIVE COVENANTS.............................................22
9.1 Books and Records ...................................................22
9.2 Reports and Notices .................................................22
9.2.1 Annual Financial Statements ........................22
9.2.2 Quarterly Financial Statements .....................23
9.2.3 Notice of Default ..................................23
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9.2.4 ERISA Reports ......................................23
9.2.5 Notice of Litigation ...............................23
9.2.6 Notice of Material Adverse Effect ..................24
9.2.7 Notice of Environmental Proceedings ................24
9.2.8 Regulatory and Other Notices .......................24
9.2.9 Adverse Action Regarding Required Licenses .........24
9.2.10 Budget ............................................24
9.2.11 Additional Information ............................24
9.3 Eligibility .........................................................24
9.4 Maintenance of Existence and Qualification ..........................25
9.5 Compliance with Legal Requirements and Agreements ...................25
9.6 Compliance with Environmental Laws ..................................25
9.7 Taxes ...............................................................25
9.8 Insurance ...........................................................25
9.9 Maintenance of Properties ...........................................26
9.10 Payment of Liabilities .............................................26
9.11 Inspection .........................................................26
9.12 Required Licenses; Permits; Etc ....................................26
9.13 ERISA ..............................................................26
9.14 Maintenance of Commodity Position ..................................26
9.15 Financial Covenants ................................................26
9.15.1 Working Capital ...................................27
9.15.2 Consolidated Funded Debt to Consolidated Cash Flow 27
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9.15.3 Adjusted Consolidated Funded Debt to Consolidated
Members' and Patrons' Equity .....................27
ARTICLE 10. NEGATIVE COVENANTS...............................................27
10.1 Borrowing ..........................................................27
10.2 No Other Businesses ................................................27
10.3 Liens ..............................................................27
10.4 Sale of Assets .....................................................29
10.5 Liabilities of Others ..............................................29
10.6 Loans ..............................................................30
10.7 Merger; Acquisitions; Business Form; Etc ...........................30
10.8 Investments ........................................................30
10.9 Transactions With Related Parties ..................................31
10.10 Patronage Refunds, etc. ...........................................31
10.11 Change in Fiscal Year .............................................31
ARTICLE 11. INDEMNIFICATION..................................................32
11.1 General; Stamp Taxes; Intangibles Tax ..............................32
11.2 Indemnification Relating to Hazardous Substances ...................32
ARTICLE 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...........................33
12.1 Events of Default ..................................................33
12.2 No Advance .........................................................35
12.3 Rights and Remedies ................................................35
ARTICLE 13. AGENCY AGREEMENT.................................................35
13.1 Funding of Syndication Interest ....................................35
13.2 Syndication Parties' Obligations to Remit Funds ....................35
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13.3 Syndication Party's Failure to Remit Funds .........................36
13.4 Agency Appointment .................................................36
13.5 Power and Authority of the Administrative Agent ....................37
13.5.1 Advice ............................................37
13.5.2 Documents .........................................37
13.5.3 Proceedings .......................................37
13.5.4 Retain Professionals ..............................37
13.5.5 Incidental Powers .................................37
13.6 Duties of the Administrative Agent .................................37
13.6.1 Possession of Documents ...........................37
13.6.2 Distribute Payments ...............................37
13.6.3 Loan Administration ...............................38
13.6.4 Action Upon Default ...............................38
13.7 Indemnification as Condition to Action ..............39
13.8 Consent Required for Certain Actions ...............................39
13.8.1 Unanimous .........................................39
13.8.2 Required Lenders ..................................39
13.8.3 Action Without Vote ...............................39
13.9 Distribution of Principal and Interest .............................40
13.10 Distribution of Certain Amounts ...................................40
13.10.1 Funding Losses ...................................40
13.11 Possession of Loan Documents ......................................40
13.12 Collateral Application ............................................40
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13.13 Amounts Required to be Returned ...................................41
13.14 Reports and Information to Syndication Parties ....................41
13.15 Standard of Care ..................................................42
13.16 No Trust Relationship .............................................42
13.17 Sharing of Costs and Expenses .....................................42
13.18 Syndication Parties' Indemnification of the Administrative Agent ..43
13.19 Books and Records .................................................43
13.20 Administrative Agent Fee ..........................................43
13.21 The Administrative Agent's Resignation or Removal .................43
13.22 Representations and Warranties of All Parties .....................44
13.23 Representations and Warranties of St. Paul Bank ...................44
13.24 Syndication Parties' Independent Credit Analysis ..................44
13.25 No Joint Venture or Partnership ...................................45
13.26 Purchase for Own Account; Restrictions on Transfer; Participations 45
13.27 Certain Participants' Voting Rights ...............................46
13.28 Method of Making Payments .........................................46
13.29 Events of Syndication Default/Remedies ............................46
13.29.1 Syndication Party Default ........................46
13.29.2 Remedies .........................................47
13.30 Withholding Taxes .................................................47
13.31 Amendments Concerning Agency Function .............................47
13.32 Further Assurances ................................................47
ARTICLE 14. MISCELLANEOUS....................................................47
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14.1 Costs and Expenses .................................................47
14.2 Service of Process and Consent to Jurisdiction .....................48
14.3 Jury Waiver ........................................................48
14.4 Notices ............................................................48
14.4.1 Borrower ..........................................49
14.4.2 Administrative Agent ..............................49
14.4.3 Syndication Parties ...............................49
14.5 Liability of Administrative Agent ..................................49
14.6 Successors and Assigns .............................................49
14.7 Severability .......................................................49
14.8 Entire Agreement ...................................................49
14.9 Applicable Law .....................................................50
14.10 Captions ..........................................................50
14.11 Complete Agreement; Amendments ....................................50
14.12 Additional Costs of Maintaining Loan ..............................50
14.13 Capital Requirements ..............................................51
14.14 Replacement Notes .................................................51
14.15 Patronage Payments ................................................52
14.16 Mutual Release ....................................................52
14.17 Liberal Construction ..............................................52
14.18 Counterparts ......................................................52
14.19 Confidentiality ...................................................52
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EXHIBITS
Exhibit 1.24 Compliance Certificate
Exhibit 1.93 Restricted Subsidiary
Exhibit 2.3 Borrowing Notice
Exhibit 2.4 Promissory Note Form
Exhibit 4.1 Principal Payments
Exhibit 7.3 Litigation
Exhibit 7.8 Payment of Taxes
Exhibit 7.11 Equity Investments
Exhibit 7.12 Permitted Encumbrances
Exhibit 7.14 Environmental Compliance
Exhibit 10.1 Existing Indebtedness
Exhibit 13.26 Syndication Acquisition Agreement
Exhibit 13.28 Wire Instructions
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<PAGE>
CREDIT AGREEMENT
(TERM LOAN)
Cenex Harvest States Cooperatives
Loan No. T-39610
THIS AGREEMENT ("CREDIT AGREEMENT") is entered into as of the 1st day
of June 1998, by and between COBANK, ACB ("COBANK") for its own benefit as a
Syndication Party and as Co-Syndication Agent, and ST. PAUL BANK FOR
COOPERATIVES ("ST. PAUL BANK"), for its own benefit as a Syndication Party, as
Co-Syndication Agent, and as the Administrative Agent for the benefit of the
present and future Syndication Parties (in that capacity "ADMINISTRATIVE
AGENT"), the other Syndication Parties identified on Schedule 2 hereto, and
CENEX HARVEST STATES COOPERATIVES (formerly known as Harvest States
Cooperatives), a cooperative corporation formed under the laws of the State of
Minnesota, whose address is 5500 Cenex Drive, Inver Grove Heights, Minnesota
55077 ("BORROWER").
ARTICLE 1. DEFINED TERMS
As used in this Credit Agreement, the following terms shall have the
meanings set forth below (and such meaning shall be equally applicable to both
the singular and plural form of the terms defined, as the context may require):
1.1 ADDITIONAL COSTS: shall have the meaning set forth in Section
14.12.
1.2 ADJUSTED CONSOLIDATED FUNDED DEBT: All indebtedness for borrowed
money of the Borrower and its Subsidiaries, in each case maturing by its terms
more than one year after, or which is renewable or extendible for a period
ending one year or more after the date of determination, and shall include Debt
of such maturity created or assumed by the Borrower or any Subsidiary either
directly or indirectly, including obligations of such maturity secured by liens
upon property of the Borrower or its Subsidiaries and upon which such entity
customarily pays the interest, and all rental payments under Capital Leases of
such maturity, and the net present value of operating leases as discounted by a
rate which is 1.5% less than the National Prime Rate as stated in the WALL
STREET JOURNAL.
1.3 ADMINISTRATIVE AGENT: shall mean St. Paul Bank.
1.4 ADMINISTRATIVE AGENT'S OFFICE: that address set forth for the
Administrative Agent in Section 14.4 as it may change from time to time by
notice to all parties to this Credit Agreement.
1.5 ADVANCE: a disbursement of the proceeds of the Term Loan.
<PAGE>
1.6 ADVANCE DATE: a day (which shall be a Banking Day) on which an
Advance is made.
1.7 ADVANCE PAYMENT: shall have the meaning set forth in Section 13.1.
1.8 AGGREGATE COMMITMENT: shall be $200,000,000.00, subject to
reduction as provided in Section 2.8 hereof.
1.9 AMORTIZATION: the total amortization of Borrower and its
Consolidated Subsidiaries as measured in accordance with GAAP.
1.10 ANNUAL OPERATING BUDGET: means the annual operating budget for
Borrower and its Subsidiaries in substantially the form of, and containing
substantially the same or similar information as set forth in, the Annual
Operating Budget (Business Plan) for Borrower and its Subsidiaries included in
the Confidential Information Memorandum dated April 1998 delivered to the
Syndication Parties prior to the Closing Date.
1.11 APPLICABLE LENDING OFFICE: means, for each Syndication Party, the
lending office of such Syndication Party designated as such on its signature
page hereof or in the applicable Syndication Acquisition Agreement or such other
office of such Syndication Party as such Syndication Party may from time to time
specify to the Administrative Agent and Borrower as the office by which its
Advances are to be made and maintained.
1.12 AUTHORIZED OFFICER: shall have the meaning set forth in Subsection
8.1.6.
1.13 AVAILABILITY PERIOD: shall mean the period commencing on the
Closing Date and expiring on May 31, 1999.
1.14 BANK DEBT: all amounts owing under the Notes, fees, Borrower's
obligations to purchase Bank Equity Interests, Funding Losses and all interest,
expenses, charges and other amounts payable by Borrower pursuant to the Loan
Documents.
1.15 BANKING DAY: any day other than a Saturday or Sunday and other
than a day which is a Federal legal holiday or a legal holiday for banks in the
States of Colorado, Minnesota or New York.
1.16 BANK EQUITY INTERESTS: shall have the meaning set forth in Article
5 hereof.
1.17 BASE RATE: a rate of interest per annum equal to the "prime rate"
as published from time to time in the Eastern Edition of the WALL STREET JOURNAL
as the average prime lending rate for seventy-five percent (75%) of the United
States' thirty (30) largest commercial banks, or if the WALL STREET JOURNAL
shall cease publication or
2
<PAGE>
cease publishing the "prime rate" on a regular basis, such other regularly
published average prime rate applicable to such commercial banks as is
acceptable to the Administrative Agent in its reasonable discretion.
1.18 BASE RATE LOANS: shall have the meaning set forth in Subsection
3.1.1.
1.19 BORROWER'S ACCOUNT: shall mean Borrower's account #44070 at
Norwest Bank Minnesota, N.A., Minneapolis, Minnesota (ABA #091000019).
1.20 BORROWING NOTICE: shall have the meaning set forth in Section 2.3.
1.21 CAPITAL LEASES: means any lease of property (whether real,
personal or mixed) by a Person which has been or should be, in accordance with
GAAP, reflected on the balance sheet of such Person as a capital lease.
1.22 CLOSING DATE: that date, which must occur on or before June 1,
1998, on which the Administrative Agent, the Syndication Parties, and Borrower
have executed all Loan Documents to which they are parties and on which the
conditions set forth in Section 8.1 of this Credit Agreement have been met.
1.23 CODE: means the Internal Revenue Code of 1986.
1.24 COMPLIANCE CERTIFICATE: a certificate of the chief financial
officer of Borrower acceptable to the Administrative Agent and in the form
attached hereto as Exhibit 1.24.
1.25 CONSOLIDATED CASH FLOW: the sum of (i) earnings before income
taxes of the Borrower and its Consolidated Subsidiaries calculated in accordance
with GAAP plus (ii) amounts in determination of consolidated earnings before
income taxes for such period, that have been deducted for (a) Consolidated
Interest Expense for such period, (b) Depreciation and (c) Amortization minus
the sum of (d) one-time gains, (e) extraordinary income, (f) non-cash patronage
income, and (g) non-cash equity earnings in joint ventures.
1.26 CONSOLIDATED CURRENT ASSETS: the total current assets of Borrower
and its Subsidiaries as measured in accordance with GAAP.
1.27 CONSOLIDATED CURRENT LIABILITIES: the total current liabilities of
Borrower and its Subsidiaries as measured in accordance with GAAP.
1.28 CONSOLIDATED FUNDED DEBT: all indebtedness for borrowed money of
the Borrower and its Subsidiaries, in each case maturing by its terms more than
one year after, or which is renewable or extendible for a period ending one year
or more after, the date of determination, and shall include Debt of such
maturity created or assumed by the Borrower or any Subsidiary either directly or
indirectly, including obligations of such maturity secured by liens upon
property of the Borrower or its Subsidiaries and upon
3
<PAGE>
which such entity customarily pays the interest, and all rental payments under
capitalized leases of such maturity.
1.29 CONSOLIDATED INTEREST EXPENSE: all interest expense of Borrower
and its Consolidated Subsidiaries, as determined in accordance with GAAP.
1.30 CONSOLIDATED MEMBERS' AND PATRONS' EQUITY: the amount of equity
accounts plus (or minus in the case of a deficit) the amount of surplus and
retained earnings accounts of the Borrower and its Consolidated Subsidiaries and
the minority interest in Subsidiaries, provided that the total amount of
intangible assets of the Borrower and its Consolidated Subsidiaries (including,
without limitation, unamortized debt discount and expense, deferred charges and
goodwill) included therein shall not exceed $30,000,000 (and to the extent such
intangible assets exceed $30,000,000.00, they will not be included in the
calculation of Consolidated Members' and Patrons' Equity); all as determined in
accordance with GAAP consistently applied, but excluding therefrom any minority
interests in any Consolidated Subsidiaries without duplication of deduction if
already deducted in determining retained earnings and surplus.
1.31 CONSOLIDATED SUBSIDIARY: any Subsidiary whose accounts are
consolidated with those of Borrower in accordance with GAAP.
1.32 CONTRIBUTING SYNDICATION PARTIES: shall have the meaning set forth
in Section 13.3.
1.33 DEBT: means as to any Person: (a) indebtedness or liability of
such Person for borrowed money, or for the deferred purchase price of property
or services (including trade obligations); (b) obligations of such Person as
lessee under Capital Leases; (c) obligations of such Person arising under
bankers' or trade acceptance facilities; (d) all obligations secured by a lien
on property owned by such Person, whether or not the obligations have been
assumed; and (e) all obligations of such Person under any agreement providing
for an interest rate swap, cap, cap and floor, contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described in this definition.
1.34 DEFAULT INTEREST RATE: a rate of interest equal to 200 basis
points in excess of the Base Rate which would otherwise be applicable on the
Loan.
1.35 DELINQUENCY INTEREST: shall have the meaning set forth in Section
13.3.
1.36 DELINQUENT AMOUNT: shall have the meaning set forth in Section
13.3.
1.37 DELINQUENT SYNDICATION PARTY: shall have the meaning set forth in
Section 13.3.
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1.38 DEPRECIATION: the total depreciation of Borrower and its
Consolidated Subsidiaries as measured in accordance with GAAP.
1.39 ENVIRONMENTAL LAWS: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended, 42 U.S.C. 9601-9657
("CERCLA") and the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
6901-6987 ("RCRA").
1.40 ENVIRONMENTAL REGULATIONS: as defined in the definition of
Hazardous Substances.
1.41 ERISA: shall have the meaning set forth in Section 7.10.
1.42 ERISA AFFILIATE: means any corporation or trade or business which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Borrower or is under common control (within the
meaning of Section 414(c) of the Code) with Borrower, provided, however, that
for purposes of provisions herein concerning minimum funding obligations
(imposed under Section 412 of the Code or Section 302 of ERISA), the term "ERISA
Affiliate" shall also include any entity required to be aggregated with Borrower
under Section 414(m) or 414(o) of the Code.
1.43 EVENT OF DEFAULT: shall have the meaning set forth in Section
12.1.
1.44 EVENT OF SYNDICATION DEFAULT: shall have the meaning set forth in
Subsection 13.29.1.
1.45 EXISTING CREDIT AGREEMENTS: shall mean (a) the Revolving Credit
Agreement dated as of November 1, 1996 among Harvest States Cooperatives as
borrower, St. Paul Bank as syndication agent and bank, and CoBank as syndication
agent, administrative agent, bid agent, and bank and the other banks signatory
thereto, as amended by the First Amendment to Revolving Credit Agreement dated
as of October 31, 1997, (b) the Loan Agreement dated as of March 14, 1997 by and
between St. Paul Bank and Cenex, Inc., as amended by the Amendment to Loan
Agreement dated as of September 23, 1997, the Amendment to Loan Agreement dated
as of December 31, 1997, and the Amendment to Loan Agreement dated as of March
18, 1998; (c) the Master Syndicated Loan Agreement dated as of August 28, 1995,
by and between CoBank, St. Paul Bank, and Harvest States Cooperatives, as
amended and restated by the Amended and Restated Master Syndicated Loan
Agreement dated as of October 28, 1996 by and between CoBank, St. Paul Bank, and
Harvest States Cooperatives, and as the foregoing shall have been supplemented
by the First Supplement dated as of August 28, 1995, by the St. Paul Supplement
dated as of October 13, 1995 (by and between St. Paul Bank and Harvest States
Cooperatives only), by the Third Supplement dated as of December 15, 1995, and
by the Fourth Supplement dated as of July 25, 1997; and (d) the
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promissory notes, security documents, and other loan documents executed in
connection with (a), (b) and (c).
1.46 FACILITY LETTERS OF CREDIT: shall mean those letters of credit
issued pursuant to the terms of the Revolving Loan Credit Agreement.
1.47 FISCAL QUARTER: each three (3) month period beginning on the first
day of each of the following months: September, December, March and June.
1.48 FISCAL YEAR: a year commencing on September 1 and ending on August
31.
1.49 FUNDED DEBT: means, with respect to any Person, at any time, all
Debt of such Person in each case maturing by its terms more than one year after
the date of creation thereof, or which is renewable or extendible at the option
of such Person for a period ending more than one (1) year after the date of
creation thereof, and shall include Debt of such maturity created or assumed by
such Person either directly or indirectly, including obligations of such
maturity secured by liens upon property of such Person and upon which such
Person customarily pays the interest, and all obligations of such Person under
Capital Leases of such maturity, and the net present value of obligations under
Operating Leases as discounted by a rate which is 1.5% less than the Base Rate
in effect at such time, and all obligations to reimburse financial institutions
issuing letters of credit for the account of such Person with respect to all
letters of credit which support long-term debt, with expiration dates in excess
of one year from the date of issuance thereof.
1.50 FUNDING LOSSES: shall have the meaning set forth in Section 4.5.
1.51 FUNDING LOSS NOTICE: shall have the meaning set forth in Section
4.5.
1.52 FUNDING SHARE: shall mean the amount of any Advance which each
Syndication Party is required to fund, which shall be determined as follows: the
amount of such Advance multiplied by such Syndication Party's Individual Pro
Rata Share as of, but without giving effect to, such Advance.
1.53 GAAP: generally accepted accounting principles in the United
States of America, applied consistently, as in effect from time to time.
1.54 GOOD FAITH CONTEST: means the contest of an item if (a) the item
is diligently contested in good faith by appropriate proceedings timely
instituted, (b) either the item is (i) bonded or (ii) adequate reserves are
established with respect to the contested item if and to the extent required in
accordance with GAAP, (c) during the period of such contest, the enforcement of
any contested item is effectively stayed, and (d) the failure to pay or comply
with the contested item could not reasonably be expected to result in a Material
Adverse Effect.
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1.55 GOVERNMENTAL AUTHORITY: means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
1.56 HAZARDOUS SUBSTANCES: dangerous, toxic or hazardous pollutants,
contaminants, chemicals, wastes, materials or substances, as defined in or
governed by the provisions of any Environmental Laws or any other federal, state
or local law, statute, code, ordinance, regulation, requirement or rule relating
thereto ("ENVIRONMENTAL REGULATIONS"), and also including urea formaldehyde,
polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear fuel
or waste, and petroleum products, or any other waste, material, substances,
pollutant or contaminant which would subject an owner of property to any
damages, penalties or liabilities under any applicable Environmental
Regulations.
1.57 INDEMNIFIED AGENCY PARTIES: shall have the meaning set forth in
Section 13.18.
1.58 INDEMNIFIED PARTIES: shall have the meaning set forth in Section
11.1.
1.59 INDIVIDUAL COMMITMENT: shall mean with respect to any Syndication
Party, the amount shown as its Individual Commitment on Schedule 1 hereto,
subject to adjustment in the event of the sale of all or a portion of a
Syndication Interest in accordance with Section 13.26 hereof, or a reduction in
the Aggregate Commitment in accordance with Section 2.8 hereof.
1.60 INDIVIDUAL LENDING CAPACITY: shall mean with respect to any
Syndication Party the amount at any time of its Individual Commitment less its
Individual Outstanding Obligations.
1.61 INDIVIDUAL OUTSTANDING OBLIGATIONS: shall mean, with respect to
any Syndication Party, the aggregate outstanding principal amount of all
Advances made by such Syndication Party.
1.62 INDIVIDUAL PRO RATA SHARE: shall mean with respect to any
Syndication Party a fraction, expressed as a percentage, where the numerator is
such Syndication Party's Individual Commitment and the denominator is the
Aggregate Commitment, determined at 12:00 noon (Central time) on the Banking Day
Borrower delivers a Borrowing Notice.
1.63 INVESTMENT: means, with respect to any Person, (a) any loan or
advance by such Person to any other Person, (b) the purchase or other
acquisition by such Person of any capital stock, obligations or securities of,
or any capital contribution to, or investment in, or the acquisition by such
Person of all or substantially all of the assets of, or any interest in, any
other Person, (c) any performance or standby letter of credit where (i) that
Person has the reimbursement obligation to the issuer, and (ii) the
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proceeds of such letter of credit are to be used for the benefit of any other
Person, (d) the agreement by such Person to make funds available for the benefit
of another Person to either cover cost overruns incurred in connection with the
construction of a project or facility, or to fund a debt service reserve
account, (e) the agreement by such Person to assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable for the
obligations or Debts of any other Person (other than by endorsement for
collection in the ordinary course of business), (f) an agreement to purchase any
obligations, stocks, assets, goods or services but excluding an agreement to
purchase any assets, goods or services entered into in the ordinary course of
business, (g) an agreement to supply or advance any funds, assets, goods or
services, or (h) an agreement to maintain or cause such Person to maintain a
minimum working capital or net worth or otherwise to assure the creditors of any
Person against loss.
1.64 LICENSING LAWS: shall have the meaning set forth in Section 7.4.
1.65 LIEN: means with respect to any asset any mortgage, deed of trust,
pledge, security interest, hypothecation, assignment for security purposes,
encumbrance, lien (statutory or other), or other security agreement or charge,
or encumbrance of any kind or nature whatsoever (including, without limitation,
any conditional sale, Capital Lease or other title retention agreement related
to such asset).
1.66 LOAN DOCUMENTS: this Credit Agreement and the Notes.
1.67 MATERIAL ADVERSE EFFECT: means: (a) a material adverse effect on
the financial condition, results of operation, business or property of Borrower;
or (b) a material adverse effect on the ability of Borrower to perform its
obligations under this Credit Agreement and the other Loan Documents.
1.68 MATERIAL AGREEMENTS: all agreements of Borrower, the termination
or breach of which, based upon Borrower's knowledge as of the date of making any
representation with respect thereto, would have a Material Adverse Effect.
1.69 MATURITY DATE: May 31, 2009.
1.70 MERGER: means the combination, by merger, of the two Predecessor
Companies in accordance with (a) the Transaction Agreement between them dated as
of January 29, 1998, (b) the Plan of Combination dated as of February 2, 1998,
and (c) the Articles of Merger adopted and executed by each of the Predecessor
Companies, with Borrower being the surviving corporation.
1.71 MULTIEMPLOYER PLAN: means a Plan defined as such in Section 3(37)
of ERISA.
1.72 NOTE OR NOTES: the promissory notes executed by Borrower pursuant
to Section 2.4 hereof, and all amendments, renewals, substitutions and
extensions thereof.
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1.73 OPERATING LEASE: means any lease of property (whether real,
personal or mixed) by a Person under which such Person is lessee, other than a
Capital Lease.
1.74 ORGANIZATION DOCUMENTS: in the case of a corporation, its articles
or certificate of incorporation and bylaws; in the case of a partnership, its
partnership agreement and certificate of limited partnership, if applicable; in
the case of a limited liability company, its articles of organization and its
operating agreement.
1.75 PAYMENT ACCOUNT: shall have the meaning set forth in Section 13.9.
1.76 PAYMENT DISTRIBUTION: shall have the meaning set forth in Section
13.9.
1.77 PBGC: shall have the meaning set forth in Section 7.10.
1.78 PERMITTED ENCUMBRANCE: shall have the meaning set forth in Section
7.12.
1.79 PERSON: any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, cooperative association, institution, or government or
governmental agency (whether national, federal, state, provincial, country,
city, municipal or otherwise, including without limitation, and instrumentality,
division, agency, body or department thereof), or other entity.
1.80 PLAN: means any plan, agreement, arrangement or commitment which
is an employee benefit plan, as defined in Section 3(3) of ERISA, maintained by
Borrower or any Subsidiary or any ERISA Affiliate or with respect to which
Borrower or any Subsidiary or any ERISA Affiliate at any relevant time has any
liability or obligation to contribute.
1.81 POTENTIAL DEFAULT: any event, other than an event described in
Section 12.1(a) hereof, which with the giving of notice or lapse of time, or
both, would become an Event of Default.
1.82 PREDECESSOR COMPANIES: shall mean Harvest States Cooperatives and
Cenex, Inc.
1.83 PROHIBITED TRANSACTION: means any transaction prohibited under
Section 406 of ERISA or Section 4975 of the Code.
1.84 QUARTER: the quarters of the calendar year commencing as of
January 1, April 1, July 1 and October 1.
1.85 QUOTED RATE: shall mean a fixed rate of interest determined and
quoted by the Administrative Agent in its sole and absolute discretion from time
to time at the
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request of Borrower, which may not necessarily be the lowest rate at which the
Administrative Agent or any of the Syndication Parties loans funds at that time.
1.86 QUOTED RATE LOAN: shall have the meaning set forth in Subsection
3.1.3.
1.87 QUOTED RATE PERIOD: shall have the meaning set forth in Subsection
3.1.3.
1.88 QUOTED RATE REQUEST: shall have the meaning set forth in
Subsection 3.1.3.
1.89 REGULATORY CHANGE: shall have the meaning set forth in Section
14.12.
1.90 REPORTABLE EVENT: means any of the events set forth in Section
4043(b) of ERISA or in the regulations thereunder.
1.91 REQUIRED LENDERS: shall mean Syndication Parties whose Individual
Commitments constitute sixty-six and two-thirds percent (66 2/3%) of the
Aggregate Commitment; provided that the number of Syndication Parties which
constitute the Required Lenders must be no fewer than two (2) even if fewer than
two (2) would constitute sixty-six and two-thirds percent (66 2/3%) of the
Aggregate Commitment.
1.92 REQUIRED LICENSE: shall have the meaning set forth in Section 7.9.
1.93 RESTRICTED SUBSIDIARY: shall mean those Subsidiaries identified on
Exhibit 1.93 hereto, as it may be amended from time to time with the prior
written consent of Borrower, the Administrative Agent and the Required Lenders.
1.94 REVOLVING LOAN CREDIT AGREEMENT: shall mean that certain Credit
Agreement (Revolving Loan) dated as of June 1, 1998 by and between Borrower and
CoBank, as administrative agent for all syndication parties thereunder, and as a
syndication party thereunder, St. Paul Bank, and the other syndication parties
set forth on the signature pages thereto.
1.95 SUBSIDIARY: means with respect to any Person: (a) any corporation
in which such Person, directly or indirectly, (i) owns fifty percent (50%) or
more of the outstanding stock thereof, or (ii) has the power under ordinary
circumstances to elect at least a majority of the directors thereof, or (b) any
partnership, association, joint venture, limited liability company, or other
unincorporated organization or entity with respect to which such Person,
directly or indirectly, owns an equity interest in an amount sufficient to
control the management thereof.
1.96 SUCCESSOR AGENT: such Person as may be appointed as successor to
the rights and duties of the Administrative Agent as provided in Section 13.21
of this Credit Agreement.
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1.97 SYNDICATION ACQUISITION AGREEMENT: shall have the meaning set
forth in Section 13.26.
1.98 SYNDICATION INTEREST: shall have the meaning set forth in Section
13.1.
1.99 SYNDICATION PARTIES: shall mean those entities listed on Schedule
1 hereto, including CoBank and St. Paul Bank in their roles as Syndication
Parties hereunder, but not in their roles as Co-Syndication Agents, or the
Administrative Agent, as applicable, hereunder, and such Persons as shall from
time to time execute a Syndication Acquisition Agreement substantially in the
form of Exhibit 13.26 hereto signifying their election to purchase all or a
portion of the Syndication Interest of any Syndication Party, in accordance with
Section 13.26 hereof, and to become a Syndication Party hereunder.
1.100 SYNDICATION PARTY ADVANCE DATE: shall have the meaning set forth
in Section 13.2.
1.101 TRANSFER: shall have the meaning set forth in Section 13.26.
1.102 TREASURY RATE: shall mean (a) the yield to maturity on U.S.
Treasury instruments having the same maturity date as the last day of the
Treasury Rate Period selected by the Borrower pursuant to Subsection 3.1.2, as
indicated by Bloomberg (page GGR 30) at approximately 9:30 A.M. (Central time)
on the date the rate is fixed under the Treasury Rate Loan, plus (b) 110 basis
points. If no yield is available for the period selected as provided in clause
(a) above, then the rate shall be interpolated based on the rates quoted for the
next longest and shortest periods of time. In the event Bloomberg ceases to
provide such quotations or materially changes the form or substance of page GGR
30 (as determined by the Administrative Agent), the Administrative Agent will
notify the Borrower and the Syndication Parties, and then the Borrower and the
Syndication Parties will agree upon a substitute basis for obtaining such
quotations. If no mutual agreement can be reached, the Treasury Rate option will
not be available until agreement is reached. If the spread between the
Syndication Parties' cost of funds (as reasonably determined by the
Administrative Agent solely on the basis of calculations provided to it by the
Syndication Parties) and the Treasury Rate should widen (or lessen) from the
spread in effect for the same period of time on the date hereof, then the
Administrative Agent shall adjust the Treasury Rate upward (or downward) in an
amount determined by the Administrative Agent in its sole discretion, to reflect
any such change. The first such adjustment may not be made until ninety (90)
days after the Closing Date, and no adjustment shall be applied retroactively to
any existing Treasury Rate Loan.
1.103 TREASURY RATE LOAN: shall have the meaning set forth in
Subsection 3.1.2.
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1.104 TREASURY RATE PERIOD: shall have the meaning set forth in
Subsection 3.1.2.
1.105 TREASURY RATE REQUEST: shall have the meaning set forth in
Subsection 3.1.2.
1.106 WIRE INSTRUCTIONS: shall have the meaning set forth in Section
13.28.
ARTICLE 2. TERM LOAN
2.1 TERM LOAN. On the terms and conditions set forth in this Credit
Agreement, and so long as no Event of Default or Potential Default has occurred
(or if an Event of Default has occurred, it has been waived in writing by the
Administrative Agent), each of the Syndication Parties severally agrees, to make
Advances to Borrower during the Availability Period in an aggregate principal
amount up to the Aggregate Commitment ("TERM LOAN"), subject to the following:
2.1.1 INDIVIDUAL COMMITMENT. No Syndication Party shall be
required or permitted to make Advances under the Term Loan which would exceed
its Individual Lending Capacity as in effect at the time of the Administrative
Agent's receipt of the Borrowing Notice requesting such Advance.
2.1.2 INDIVIDUAL PRO RATA SHARE. No Syndication Party shall be
required or permitted to make Advances under the Term Loan in excess of an
amount equal to its Individual Pro Rata Share multiplied by the amount of the
requested Advance. Each Syndication Party severally agrees to fund its
Individual Pro Rata Share of each Advance.
2.2 AGGREGATE COMMITMENT. Borrower shall not be entitled to request an
Advance in an amount which, when added to all previous Advances would exceed the
Aggregate Commitment.
2.3 BORROWING NOTICE. Borrower shall give the Administrative Agent
prior written notice by facsimile (effective upon receipt) of each request for
an Advance on or before 11:00 A.M. (Central time) at least one (1) Banking Day
prior to the date of making such Advance. Each notice must be in substantially
the form of Exhibit 2.3 hereto ("BORROWING NOTICE") and must specify (w) the
amount of such Advance, (x) the proposed date of making such Advance, (y)
whether Borrower requests that the Advance will bear interest at (i) the Base
Rate, (ii) the Treasury Rate, or (iii) the Quoted Rate, and (z) in the case of
either a Treasury Rate Loan or a Quoted Rate Loan, the initial Treasury Rate
Period or Quoted Rate Period applicable thereto. The Administrative Agent shall,
on or before 12:00 noon (Central time) of the same Banking Day, notify each
Syndication Party ("FUNDING NOTICE") of its receipt of each such Borrowing
Notice and the amount of such Syndication Party's Funding Share thereunder. Not
later than 2:00 P.M. (Central time) on the date of an Advance, each Syndication
Party will make
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available to the Administrative Agent at the Administrative Agent's Office, in
immediately available funds, such Syndication Party's Funding Share of such
Advance. After the Administrative Agent's receipt of such funds, but not later
than 3:00 P.M. (Central time), and upon fulfillment of the applicable conditions
set forth in Article 8, the Administrative Agent will make such Advance
available to Borrower, in immediately available funds, and will transmit such
funds by wire transfer to Borrower's Account.
2.4 PROMISSORY NOTES. Borrower's obligations to each Syndication Party
under the Term Loan, including Borrower's payment obligations with respect to
all Advances made by each Syndication Party shall be evidenced by, and repaid
with interest in accordance with, a single promissory note of Borrower, in
substantially the form of Exhibit 2.4 hereto, duly completed, in the stated
maximum principal amount equal to such Syndication Party's Individual
Commitment, dated the date such Syndication Party becomes a Syndication Party,
payable to such Syndication Party for the account of its Applicable Lending
Office, and maturing as to principal on the Maturity Date (each a "NOTE" and
collectively, the "NOTES").
2.5 SYNDICATION PARTY RECORDS. Each Syndication Party shall record on
its books and records the amount of each Advance, the rate and interest period
applicable thereto, all payments of principal and interest, and the principal
balance from time to time outstanding. The Syndication Party's record thereof
shall be prima facie evidence as to all such amounts and shall be binding on
Borrower absent manifest error. Notwithstanding the foregoing, Borrower will
never be required to pay as principal more than the principal amount of the
Advances made by the Syndication Parties.
2.6 USE OF PROCEEDS. The proceeds of the Term Loan will be used by
Borrower for refinancing the term loan indebtedness owed by the Predecessor
Companies under the Existing Credit Agreements and existing on the Closing Date,
to fund the payment of all or a portion of the principal and interest owing on
Borrower's promissory note in the principal amount of $35,000,000.00 payable to
CoBank and dated as of June 1, 1998, and to fund Borrower's capital
expenditures. Borrower agrees not to request or use such proceeds for any other
purpose. Borrower will not, directly or indirectly, use any part of such
proceeds for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock.
2.7 SYNDICATION PARTY FUNDING FAILURE. The failure of any Syndication
Party to make its Funding Share of any requested Advance on the date specified
for such Advance shall not relieve any other Syndication Party of its obligation
to make its Funding Share of any Advance on such date. No Syndication Party
shall be responsible for the failure of any other Syndication Party to make any
Advance to be made by such other Syndication Party.
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2.8 REDUCTION OF AGGREGATE COMMITMENT. During the Availability Period,
Borrower may, by written facsimile notice to the Administrative Agent on or
before 10:00 A.M. (Central time) on any Banking Day, irrevocably reduce the
Aggregate Commitment; provided that (a) such reduction must be in multiples of
$1,000,000.00, and (b) Borrower must simultaneously make any principal payment
necessary (along with any applicable Funding Losses on account of such principal
payment) so that the principal amount outstanding under the Term Loan does not
exceed the reduced Aggregate Commitment on the date of such reduction. In the
event the Aggregate Commitment is reduced as provided in the preceding sentence,
then the Individual Commitment of each Syndication Party shall be reduced in the
same proportion as the Individual Commitment of such Syndication Party bears to
the Aggregate Commitment before such reduction.
ARTICLE 3. INTEREST AND FEES
3.1 INTEREST. Interest on Advances under the Term Loan shall be
calculated as follows:
3.1.1 BASE RATE OPTION. Unless Borrower requests and receives a
Treasury Rate Loan pursuant to Subsection 3.1.2 hereof or a Quoted Rate Loan
pursuant to Subsection 3.1.3 hereof, the outstanding principal balance under the
Notes shall bear interest at the Base Rate (each a "BASE RATE LOAN").
3.1.2 TREASURY RATE OPTION. During the Availability Period and so
long as no Event of Default has occurred and is continuing, Borrower may request
in a Borrowing Notice that all or any part of the outstanding principal balance
under the Notes bear interest at the Treasury Rate (each, a "TREASURY RATE
LOAN"). To effect this option, the Borrowing Notice containing such request must
specify (a) the principal amount that is to bear interest at the Treasury Rate,
which must be a minimum of $10,000,000.00 and in incremental multiples of
$5,000,000.00 and (b) the period selected by Borrower during which the Treasury
Rate is to be applied which may be any period equal to or longer than 1 year but
must expire no later than the Maturity Date ("TREASURY RATE PERIOD"). In
addition, during the Availability Period, Borrower may convert any Base Rate
Loan to a Treasury Rate Loan by making a written request therefor ("TREASURY
RATE REQUEST") to the Administrative Agent by facsimile, specifying (y) the
principal amount that is to bear interest at the Treasury Rate, which must be a
minimum of $10,000,000.00 and in incremental multiples of $5,000,000.00 and (z)
the Treasury Rate Period selected by Borrower during which the Treasury Rate is
to be applied. Borrower may not have more than 10 Treasury Rate Loans
outstanding at any time. Each Borrower Notice or Treasury Rate Request which
requests a Treasury Rate Loan shall be effective as of the Banking Day after it
is received if received by the Administrative Agent no later than 11:30 A.M.
(Central time) or as of the second Banking Day if received later than 11:30 A.M.
(Central time). The Administrative Agent shall incur no liability in acting upon
a request which it believed in good faith had been made by a properly authorized
employee of Borrower. Following the
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expiration of the Treasury Rate Period for any Treasury Rate Loan, interest
shall automatically accrue at the Base Rate unless Borrower requests and
receives a Quoted Rate Loan pursuant to Subsection 3.1.3.
3.1.3 QUOTED RATE OPTION. Commencing on the Closing Date and
until the Maturity Date, and so long as no Event of Default has occurred and is
continuing, Borrower may request in a Borrowing Notice that all or any part of
the outstanding principal balance under the Notes bear interest at the Quoted
Rate (each, a "QUOTED RATE LOAN"). To effect this option, the Borrowing Notice
containing such request must specify (a) the principal amount that is to bear
interest at the Quoted Rate, which must be a minimum of $1,000,000.00 and in
incremental multiples of $1,000,000.00 and (b) the period selected by Borrower
during which the Quoted Rate is to be applied, which may be any period equal to
or longer than 30-days but must expire no later than the Maturity Date ("QUOTED
RATE Period"). In addition, Borrower may convert any Base Rate Loan to a Quoted
Rate Loan, may convert any Treasury Rate Loan to a Quoted Rate Loan upon
expiration of the Treasury Rate Period for such Treasury Rate Loan, or may
continue a Quoted Rate Loan, by making a written request therefore ("QUOTED RATE
REQUEST") to the Administrative Agent by facsimile, specifying (y) the principal
amount that is to bear interest at the Quoted Rate, which must be a minimum of
$1,000,000.00 and in incremental multiples of $1,000,000.00 and (z) the Quoted
Rate Period selected by Borrower during which the Quoted Rate is to be applied.
Each Borrower Notice or Quoted Rate Request which requests a Quoted Rate Loan
shall be effective as of the Banking Day after the Banking Day on which it is
received if received by the Administrative Agent no later than 11:30 A.M.
(Central time) or as of the second Banking Day if received later than 11:30 A.M.
(Central time). The Administrative Agent shall incur no liability in acting upon
a request which it believed in good faith had been made by a properly authorized
employee of Borrower. Following the expiration of the Quoted Rate Period for any
Quoted Rate Loan, interest shall automatically accrue at the Base Rate unless
Borrower requests and receives another Quoted Rate Loan pursuant to this
Subsection.
3.2 DEFAULT INTEREST RATE. All past due payments on the Notes or of any
other Bank Debt (whether as a result of nonpayment by Borrower when due, at
maturity, or upon acceleration) shall bear interest at the Default Interest Rate
from and after the due date for the payment, or on the date of maturity or
acceleration, as the case may be.
3.3 INTEREST CALCULATION. Interest on Treasury Rate Loans and Quoted
Rate Loans shall be calculated on the actual number of days that the principal
owing thereunder is outstanding with the daily rate calculated on the basis of a
year consisting of 360 days. Interest on Base Rate Loans shall be calculated on
the actual number of days that the principal owing thereunder is outstanding on
the basis of a year consisting of 365 days. In calculating interest, the Advance
Date shall be included and the date each payment is received shall be excluded.
3.4 FEES. Borrower shall pay or cause to be paid the following fees:
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3.4.1 UNUSED COMMITMENT FEE. A non-refundable fee equal to 0.20%
per annum multiplied by the average daily undrawn amount of the Aggregate
Commitment in each Quarter ending during the Availability Period, payable to the
Administrative Agent, for distribution to each Syndication Party based on its
respective Individual Pro Rata Share, in arrears on the Banking Day coinciding
with, or immediately preceding the three (3) month anniversary of the Closing
Date and every third month thereafter during the Availability Period.
ARTICLE 4. PAYMENTS; FUNDING LOSSES
4.1 PRINCIPAL PAYMENTS. Principal shall be payable (a) on such dates
set forth on Exhibit 4.1 hereto and (b) in the amount shown in the "Principal
Repayment" column on Exhibit 4.1 with respect to each such date, multiplied by a
fraction the numerator of which is the principal owing on the Notes as of May
31, 1999 and the denominator of which is $200,000,000.00.
4.2 INTEREST PAYMENTS. Interest on Base Rate Loans, Treasury Rate Loans
and Quoted Rate Loans shall be payable monthly in arrears on the fifth Banking
Day of the next month.
4.3 APPLICATION OF PRINCIPAL PAYMENTS. Provided no Event of Default or
Potential Default has occurred, scheduled principal payments shall be applied
first to outstanding Base Rate Loans and then to outstanding amounts owing under
Treasury Rate Loans or Quoted Rate Loans as Borrower directs in writing, but if
Borrower provides no specific direction, then to principal amounts owing under
Treasury Rate Loans and to Quoted Rate Loans in the ratio of the amount of the
outstanding principal balance owed under all Treasury Rate Loans or Quoted Rate
Loans, as applicable, to the principal balance owed under the aggregate of all
Treasury Rate Loans and all Quoted Rate Loans. However, upon the occurrence and
during the continuance of an Event of Default or Potential Default, all
principal payments shall be applied, as the Administrative Agent in its sole
discretion shall determine, to fees, interest or principal indebtedness under
the Notes, or to any other Bank Debt.
4.4 MANNER OF PAYMENT. All payments, including prepayments, that
Borrower is required or permitted to make under the terms of this Credit
Agreement shall be made to the Administrative Agent (a) in immediately available
federal funds, to be received no later than 2:00 P.M. (Central time) of the
Banking Day on which such payment is due by wire transfer through Federal
Reserve Bank, # 296090471, Routing Number: ST PAUL BK COOPS, Account Number
271998 (or to such other account as the Administrative Agent may designate by
notice); and (b) without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, impost, duties, charges, fees,
deductions, withholding, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless Borrower is
required by law to make such deduction or withholding.
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4.5 VOLUNTARY PREPAYMENTS. Borrower shall have the right to prepay all
or any part of the outstanding principal balance under the Term Loan at any time
provided that any such prepayment must be in a minimum amount of $5,000,000 and
in integral multiples of $1,000,000 (or the entire outstanding balance, if
less), on any Banking Day; provided that (a) in the event of prepayment of any
Treasury Rate Loan or any Quoted Rate Loan, whether voluntary or on account of
acceleration (i) Borrower must provide three (3) Banking Days notice to the
Administrative Agent prior to making such prepayment and (ii) Borrower must, at
the time of making such prepayment, pay all Funding Losses applicable to such
prepayment. "FUNDING LOSSES" shall be determined on an individual Syndication
Party basis as the amount which would result in such Syndication Party being
made whole (on a present value basis) for the actual or imputed funding losses
(including, without limitation, any loss, cost or expense incurred by reason of
obtaining, liquidating or employing deposits or other funds acquired by such
Syndication Party to fund or maintain such Treasury Rate Loan or Quoted Rate
Loan) incurred by such Syndication Party as a result of such prepayment. In the
event of any such prepayment, each Syndication Party shall, promptly after being
notified of such prepayment, send written notice ("FUNDING LOSS NOTICE") to the
Administrative Agent by facsimile setting forth the amount of attributable
Funding Losses and the method of calculating the same. The Administrative Agent
shall notify Borrower orally or in writing of the amount of such Funding Losses.
A determination by a Syndication Party as to the amounts payable pursuant to
this Section shall be conclusive absent manifest error.
ARTICLE 5. BANK EQUITY INTERESTS
Borrower agrees to purchase such equity interests in CoBank and St.
Paul Bank ("BANK EQUITY INTERESTS") as CoBank and St. Paul Bank may from time to
time require in accordance with their bylaws and capital plans as applicable to
cooperative borrowers generally. In connection with the foregoing, Borrower
hereby acknowledges receipt, prior to the execution of this Credit Agreement, of
the following with respect to CoBank and St. Paul Bank (a) the bylaws, (b) a
written description of the terms and conditions under which the Bank Equity
Interests are issued, (c) the most recent annual report, and (d) if more recent
than the latest annual report, the latest quarterly report. CoBank and St. Paul
Bank reserve the right to sell participations under the provisions of Section
13.26 on a non-patronage basis.
ARTICLE 6. SECURITY
The obligations of Borrower under this Credit Agreement shall be
unsecured.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
To induce the Syndication Parties to make the Term Loan, and
recognizing that the Syndication Parties and the Administrative Agent are
relying thereon, Borrower represents and warrants as follows:
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7.1 ORGANIZATION, GOOD STANDING, ETC. Borrower: (a) is duly organized,
validly existing, and in good standing under the laws of its state of
incorporation; (b) qualifies as a cooperative association under the laws of its
state of incorporation; (c) is duly qualified to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
such qualification necessary, except to the extent that the failure to so
qualify has not resulted in, and could not reasonably be expected to cause, a
Material Adverse Effect; and (d) has all requisite corporate and legal power to
own and operate its assets and to carry on its business, and to enter into and
perform the Loan Documents to which it is a party. Each Subsidiary: (a) is duly
organized, validly existing, and in good standing under the laws of its state of
incorporation; (b) is duly qualified to do business and is in good standing in
each jurisdiction in which the transaction of its business makes such
qualification necessary, except to the extent that the failure to so qualify has
not resulted in, and could not reasonably be expected to cause, a Material
Adverse Effect; and (c) has all requisite corporate and legal power to own and
operate its assets and to carry on its business.
7.2 CORPORATE AUTHORITY, DUE AUTHORIZATION; CONSENTS. Borrower has full
power and authority to conduct its business, and has taken, or on or before June
4, 1998 will take, all corporate action necessary to execute, deliver and
perform its obligations under the Loan Documents to which it is a party. All
consents or approvals of any Person which are necessary for, or are required as
a condition of Borrower's execution, delivery and performance of and under the
Loan Documents, have been obtained or will be obtained on or before June 4,
1998.
7.3 LITIGATION. Except as described on Exhibit 7.3 hereto, there are no
pending legal or governmental actions, proceedings or investigations to which
Borrower or any Subsidiary is a party or to which any property of Borrower or
any Subsidiary is subject which might reasonably be expected to result in any
Material Adverse Effect and, to Borrower's knowledge, no such actions or
proceedings are threatened or contemplated by any federal, state, county, or
city (or similar unit) governmental agency or any other Person.
7.4 NO VIOLATIONS. The execution, delivery and performance of the Loan
Documents will not: (a) violate any provision of Borrower's articles of
incorporation or bylaws, or any law, rule, regulation (including, without
limitation, Regulations T, U, and X of the Board of Governors of the Federal
Reserve System), or any judgment, order or ruling of any court or governmental
agency; (b) violate, require consent under (except such consent as has been
obtained), conflict with, result in a breach of, constitute a default under, or
with the giving of notice or the expiration of time or both, constitute a
default under, any existing real estate mortgage, indenture, lease, security
agreement, contract, note, instrument or any other agreements or documents
binding on Borrower or affecting its property; or (c) violate, conflict with,
result in a breach of, constitute a default under, or result in the loss of, or
restriction of rights under, any Required License or any order, law, rule, or
regulation under or pursuant to which any Required License was issued or is
maintained ("LICENSING LAWS").
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7.5 BINDING AGREEMENT. Each of the Loan Documents to which Borrower is
a party is, or when executed and delivered, will be, the legal, valid and
binding obligation of Borrower, enforceable in accordance with its terms,
subject only to limitations on enforceability imposed by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally and by general principles of equity.
7.6 COMPLIANCE WITH LAWS. Borrower and each Subsidiary are in
compliance with all federal, state, and local laws, rules, regulations,
ordinances, codes and orders, including without limitation all Environmental
Laws and all Licensing Laws, with respect to which noncompliance would result in
a Material Adverse Effect.
7.7 PRINCIPAL PLACE OF BUSINESS. Borrower's place of business, or chief
executive office if it has more than one place of business, and the place where
the records required by Section 9.1 hereof are kept, are located at 5500 Cenex
Drive, Inver Grove Heights, Minnesota 55077.
7.8 PAYMENT OF TAXES. Except as shown on Exhibit 7.8 hereto, Borrower
and each Subsidiary have filed all required federal, state and local tax returns
and have paid all taxes as shown on such returns as they have become due, and
have paid when due all other taxes, assessments or impositions levied or
assessed against Borrower, any Subsidiary, or their business or properties,
except where the failure to make such filing or payment could not reasonably be
expected to result in a Material Adverse Effect. Exhibit 7.8 specifically
indicates all such taxes which are subject to a Good Faith Contest.
7.9 LICENSES AND APPROVALS. Borrower and each Subsidiary have ownership
of, or license to use, or have been issued, all trademarks, patents, copyrights,
franchises, certificates, approvals, permits, authorities, agreements, and
licenses which are used or necessary to permit it to own its properties and to
conduct the business as presently being conducted as to which the termination or
revocation thereof could reasonably be expected to have a Material Adverse
Effect ("REQUIRED LICENSES"). Each Required License is in full force and effect,
and there is no outstanding notice of cancellation or termination or, to
Borrower's knowledge, any threatened cancellation or termination in connection
therewith, nor has an event occurred with respect to any Required License which,
with the giving of notice or passage of time or both, could result in the
revocation or termination thereof or otherwise in any impairment of Borrower's
rights with respect thereto, which impairment could reasonably be expected to
have a Material Adverse Effect. No consent, permission, authorization, order, or
license of any governmental authority, is necessary in connection with the
execution, delivery, performance, or enforcement of and under the Loan Documents
to which Borrower is a party except such as have been obtained and are in full
force and effect.
7.10 EMPLOYEE BENEFIT PLANS. Borrower and its Subsidiaries are in
compliance in all material respects with the Employee Retirement Income Security
Act
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of 1974, as amended, and the regulations thereunder ("ERISA"), to the extent
applicable to them, and have not received any notice to the contrary from the
Pension Benefit Guaranty Corporation ("PBGC").
7.11 EQUITY INVESTMENTS. Borrower does not now own any stock or other
voting or equity interest, directly or indirectly, in any Person valued at the
greater of book value or market value at $5,000,000 or more, other than: (a) the
Bank Equity Interests, and (b) as set forth on Exhibit 7.11.
7.12 TITLE TO REAL AND PERSONAL PROPERTY. Borrower and each Subsidiary
have good and marketable title to, or valid leasehold interests in, all of their
material properties and assets, real and personal, including the properties and
assets and leasehold interests reflected in the financial statements of the
Borrower and its Subsidiaries referred to in Section 7.13 hereof, except (a) any
properties or assets disposed of in the ordinary course of business, and (b) for
defects in title and encumbrances which could not reasonably be expected to
result in a Material Adverse Effect; and none of the properties of Borrower or
any Restricted Subsidiary are subject to any Lien, except as permitted by
Section 10.3 hereof ("PERMITTED ENCUMBRANCES"). All such property is in good
operating condition and repair, reasonable wear and tear excepted, and suitable
in all material respects for the purposes for which it is being utilized except
where their failure to be in good operating condition could not reasonably be
expected to result in a Material Adverse Effect. All of the leases of Borrower
and each Subsidiary which constitute Material Agreements are in full force and
effect and afford Borrower or such Subsidiary peaceful and undisturbed
possession of the subject matter thereof.
7.13 FINANCIAL STATEMENTS. The consolidated balance sheet of the
Predecessor Companies and their Subsidiaries as of May 31, 1997 and September
30, 1997 (respectively for Harvest States Cooperatives and Cenex, Inc.), and the
related consolidated statements of operations, cash flows and consolidated
statements of capital shares and equities for the Fiscal Year then ended, and
the accompanying footnotes, together with the unqualified opinion thereon, dated
August 15, 1997 and October 27, 1997 (respectively for Harvest States
Cooperatives and Cenex, Inc.) of Deloitte & Touche LLP, independent certified
public accountants, copies of which have been furnished to the Syndication
Parties, fairly present in all material respects the consolidated financial
condition of Borrower and its Subsidiaries as at such dates and the results of
the consolidated operations of Borrower and its Subsidiaries for the periods
covered by such statements, all in accordance with GAAP consistently applied.
Since May 31, 1997 and September 30, 1997 (respectively for Harvest States
Cooperatives and Cenex, Inc.), there has been no material adverse change in the
financial condition, results of operations, business or prospects of the
Predecessor Companies or any of their Subsidiaries. As of the Closing Date,
there are no liabilities of the Predecessor Companies or any of their
Subsidiaries, fixed or contingent, which are material but are not reflected in
the financial statements of the Predecessor Companies and their Subsidiaries
referred to above or referred to in the notes thereto,
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other than liabilities arising in the ordinary course of business since May 31,
1997 and September 30, 1997 (respectively for Harvest States Cooperatives and
Cenex, Inc.). No information, exhibit, or report furnished by Borrower or any of
its Subsidiaries to the Syndication Parties in connection with the negotiation
of this Credit Agreement contained any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the statements contained
therein not materially misleading in light of the circumstances in which they
were made and taken together with the other information, exhibits and reports
furnished to the Syndication Parties.
7.14 ENVIRONMENTAL COMPLIANCE. Except as set forth on Exhibit 7.14
hereto, Borrower and each Subsidiary have obtained all permits, licenses and
other authorizations which are required under all applicable Environmental Laws,
except to the extent failure to have any such permit, license or authorization
could not reasonably be expected to result in a Material Adverse Effect. Except
as set forth on Exhibit 7.14 hereto, Borrower and each Subsidiary are in
compliance with all Environmental Laws and the terms and conditions of the
required permits, licenses and authorizations, and are also in compliance with
all other limitations, restrictions, obligations, schedules and timetables
contained in those Laws or contained in any plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent, in each case, failure to comply has not
resulted in, and could not reasonably be expected to result in, a Material
Adverse Effect.
7.15 FISCAL YEAR. Each fiscal year of Borrower begins on September 1 of
each calendar year and ends on August 31 of each calendar year.
7.16 MATERIAL AGREEMENTS. Neither Borrower nor, to Borrower's
knowledge, any other party to any Material Agreement, is in default thereunder,
and no facts exist which with the giving of notice or the passage of time, or
both, would constitute such a default.
7.17 REGULATIONS U AND X. No portion of any Advance will be used for
the purpose of purchasing, carrying, or making loans to finance the purchase of,
any "margin security" or "margin stock" as such terms are used in Regulations U
or X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224.
7.18 TRADEMARKS, TRADENAMES, ETC. Borrower has ownership or the lawful
right to use all tradenames, trademarks, and other intellectual property which
it utilizes in its business as presently being conducted and as anticipated to
be conducted, except where the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.
7.19 NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Borrower and each
Subsidiary have satisfied all judgments and Borrower and each Subsidiary are not
in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
Governmental Authority,
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commission, board, bureau, agency or instrumentality, domestic or foreign,
except to the extent such failure to satisfy any or all such judgments or to be
in such a default has not resulted in, and could not reasonably be expected to
result in, a Material Adverse Effect.
7.20 NO DEFAULT IN OTHER AGREEMENTS. Neither Borrower nor any
Subsidiary is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any certificate of incorporation or
corporate restriction which has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect. Neither Borrower nor any Subsidiary is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument where such failure to perform, observe or fulfill has resulted in, or
could reasonably be expected to result in, a Material Adverse Effect.
7.21 LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
properties of Borrower or any Subsidiary are currently affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) which has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
7.22 GOVERNMENTAL REGULATION. Neither Borrower nor any Subsidiary is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Investment Company Act of 1940, the Interstate Commerce Act, the Federal Power
Act or any statute or regulation, in each case, limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
7.23 DISCLOSURE. The representations and warranties contained in this
Article 7 and in the other Loan Documents or in any financial statements
provided to the Administrative Agent do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
representations or warranties not misleading; and all projections provided to
the Administrative Agent were prepared in good faith based on reasonable
assumptions.
ARTICLE 8. CONDITIONS TO ADVANCES
8.1 CONDITIONS TO CLOSING. The obligation of the Syndication Parties to
make any Advances hereunder is subject to satisfaction, in the sole discretion
of the Administrative Agent and the Syndication Parties (except that
satisfaction of Subsection 8.1.6 shall be determined in the reasonable
discretion of the Administrative Agent and the Syndication Parties), of each of
the following conditions precedent:
8.1.1 LOAN DOCUMENTS. The Administrative Agent shall have
received duly executed originals of the Loan Documents.
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8.1.2 APPROVALS. The Administrative Agent shall have received
evidence satisfactory to it that all consents and approvals of governmental
authorities and third parties which are with respect to Borrower, necessary for,
or required as a condition of: (a) the validity and enforceability of the Loan
Documents to which it is a party; and (b) the Merger.
8.1.3 ORGANIZATIONAL DOCUMENTS. The Administrative Agent shall
have received: (a) good standing certificate, dated no more than thirty (30)
days prior to the Closing Date, for Borrower for its state of incorporation; (b)
a copy of the articles of incorporation of Borrower certified by the Secretary
of State of its state of organization; and (c) a copy of the bylaws of Borrower,
certified as true and complete by the Secretary or Assistant Secretary of
Borrower.
8.1.4 EVIDENCE OF INSURANCE. Borrower shall have provided the
Administrative Agent with insurance certificates and such other evidence, in
form and substance satisfactory to the Administrative Agent, of all insurance
required to be maintained by it under the Loan Documents.
8.1.5 APPOINTMENT OF AGENT FOR SERVICE. The Administrative Agent
shall have received evidence satisfactory to the Administrative Agent that
Borrower has appointed The Corporation Company to serve as its agent for service
of process at their Denver, Colorado office (presently at 1675 Broadway), and
that The Corporation Company has accepted such appointment by Borrower.
8.1.6 NO MATERIAL CHANGE. No change shall have occurred in the
condition or operations of the Predecessor Companies since May 31, 1997 and
September 30, 1997 (respectively for Harvest States Cooperatives and Cenex,
Inc.) which could reasonably be expected to result in a Material Adverse Effect.
8.1.7 FEES AND EXPENSES. Borrower shall have paid the
Administrative Agent, by wire transfer of immediately available federal funds
all fees set forth in Section 3.4 hereof and any other fees owing to the
Administrative Agent which are due on the Closing Date, and all expenses owing
pursuant to Section 14.1 hereof.
8.1.8 BANK EQUITY INTEREST PURCHASE OBLIGATION. Borrower shall
have purchased such Bank Equity Interests as CoBank and/or St. Paul Bank may
require pursuant to Article 5 hereof.
8.1.9 OPINION OF COUNSEL. Borrower shall have provided a
favorable opinion of its counsel addressed to the Administrative Agent and each
of the present and future Syndication Parties, covering such matters as the
Administrative Agent may reasonably require.
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8.1.10 FURTHER ASSURANCES. Borrower shall have provided and/or
executed and delivered to the Administrative Agent such further assignments,
documents or financing statements, in form and substance satisfactory to the
Administrative Agent, that Borrower is to execute and/or deliver pursuant to the
terms of the Loan Documents or as the Administrative Agent may reasonably
request.
8.2 CONDITIONS TO ADVANCE. The Syndication Parties' obligation to fund
each Advance is subject to the satisfaction, in the sole discretion of the
Administrative Agent, of each of the following conditions precedent, as well as
those set forth in Section 8.1 hereof:
8.2.1 EVIDENCE OF CORPORATE ACTION. The Administrative Agent
shall have received in form and substance satisfactory to the Administrative
Agent: (a) documents evidencing all corporate action taken by Borrower to
authorize (including the specific names and titles of the persons authorized to
so act (each an "AUTHORIZED OFFICER")) the execution, delivery and performance
of the Loan Documents to which it is a party, certified to be true and correct
by the Secretary or Assistant Secretary of Borrower; (b) a certificate of the
Secretary or Assistant Secretary of Borrower, dated the Closing Date, certifying
the names and true signatures of the Authorized Officers; and (c) documents
evidencing all corporate action taken by the Predecessor Companies to effect the
Merger.
8.2.2 CONSUMMATION OF MERGER; AMENDMENT OF ARTICLES OF
INCORPORATION. Borrower shall have provided proof satisfactory to the
Administrative Agent that (a) the Plan of Combination has been executed by the
Predecessor Companies and filed with the Minnesota Secretary of State, (b) the
Merger has been consummated in accordance with the Plan of Combination effective
as of 11:59 P.M. May 31, 1998, and (c) Borrower has properly amended its
Articles of Incorporation (as in effect for Harvest States Cooperatives) and
changed its name to be "Cenex Harvest States Cooperatives" and filed such
amendment with the Minnesota Secretary of State.
8.2.3 CANCELLATION OF EXISTING CREDIT AGREEMENTS. All amounts
owing under the Existing Credit Agreements shall be paid in full and the
Existing Credit Agreements canceled and terminated by all parties thereto and
all liens in connection therewith released or terminated.
8.2.4 DEFAULT. As of the Advance Date no Event of Default or
Potential Default shall have occurred and be continuing, and the disbursing of
the amount of the Advance requested shall not result in an Event of Default or
Potential Default.
8.2.5 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Borrower herein shall be true and correct in all material respects
on and as of the date on which the Advance is to be made as though made on such
date. Borrower shall have paid the Administrative Agent, by wire transfer of
immediately available U.S.
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funds all fees set forth in Section 3.4 hereof which are then due and payable,
including all expenses owing pursuant to Section 14.1 hereof.
ARTICLE 9. AFFIRMATIVE COVENANTS
From and after the date of this Credit Agreement and until the Bank
Debt is indefeasibly paid in full and the Syndication Parties have no obligation
to make any Advance, Borrower agrees that it will observe and comply with the
following covenants for the benefit of the Administrative Agent and the
Syndication Parties:
9.1 BOOKS AND RECORDS. Borrower shall at all times keep, and cause each
Subsidiary to keep, proper books of record and account, in which correct and
complete entries shall be made of all its dealings, in accordance with GAAP.
9.2 REPORTS AND NOTICES. Borrower shall provide to the Administrative
Agent the following reports, information and notices:
9.2.1 ANNUAL FINANCIAL STATEMENTS. As soon as available, but in
no event later than one hundred and twenty (120) days after the end of any
Fiscal Year of Borrower occurring during the term hereof, one copy of the audit
report for such year and accompanying consolidated financial statements
(including all footnotes thereto), including a consolidated balance sheet, a
consolidated statement of earnings, a consolidated statement of capital, and a
consolidated statement of cash flow for Borrower and its Subsidiaries, showing
in comparative form the figures for the previous Fiscal Year, all in reasonable
detail, prepared in conformance with GAAP consistently applied and certified
without qualification by Deloitte & Touche LLP, or other independent public
accountants of nationally recognized standing selected by the Borrower and
satisfactory to the Administrative Agent, and to be accompanied by a copy of the
management letter of such accountants addressed to the board of directors of
Borrower related to such annual audit. Such annual financial statements required
pursuant to this Subsection shall be accompanied by a Compliance Certificate
signed by Borrower's Vice President-Finance or other officer of Borrower
acceptable to the Administrative Agent.
9.2.2 QUARTERLY FINANCIAL STATEMENTS. As soon as available but in
no event more than forty-five (45) days after the end of each Fiscal Quarter
(except the last Fiscal Quarter of Borrower's Fiscal Year) the following
financial statements or other information concerning the operations of Borrower
and its Subsidiaries for such Fiscal Quarter, the Fiscal Year to date, and for
the corresponding periods of the preceding Fiscal Year, all prepared in
accordance with GAAP consistently applied: (a) a consolidated balance sheet, (b)
a consolidated summary of earnings, (c) a consolidated statement of cash flows,
and (d) such other statements as the Administrative Agent may reasonably
request. Such quarterly financial statements required pursuant to this
Subsection shall be accompanied by a Compliance Certificate signed by Borrower's
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Vice President-Finance or other officer of Borrower acceptable to the
Administrative Agent (subject to normal year end adjustments).
9.2.3 NOTICE OF DEFAULT. As soon as the existence of any Event of
Default or Potential Default becomes known to any officer of Borrower, prompt
written notice of such Event of Default or Potential Default, the nature and
status thereof, and the action being taken or proposed to be taken with respect
thereto.
9.2.4 ERISA REPORTS. As soon as possible and in any event within
twenty (20) days after Borrower or any Subsidiary knows or has reason to know
that any Reportable Event or Prohibited Transaction has occurred with respect to
any Plan or that the PBGC or Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, or that
Borrower, any Subsidiary or any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan, or that a Plan which is a Multiemployer
Plan is in reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA) or is terminating, a
certificate of the Group Vice President-Finance of Borrower or such Subsidiary
setting forth details as to such Reportable Event or Prohibited Transaction or
Plan termination or withdrawal or reorganization or insolvency and the action
Borrower or such Subsidiary proposes to take with respect thereto, provided,
however, that notwithstanding the foregoing, no reporting is required under this
subsection unless the matter(s), individually or in the aggregate, result, or
could be reasonably expected to result, in aggregate obligations or liabilities
of Borrower and/or the Subsidiaries in excess of five million dollars
($5,000,000).
9.2.5 NOTICE OF LITIGATION. Promptly after the commencement
thereof, notice of all actions, suits, arbitration and any other proceedings
before any Governmental Authority, affecting Borrower or any Subsidiary which,
if determined adversely to Borrower or any Subsidiary, could reasonably be
expected to require Borrower or any Subsidiary to have to pay or deliver assets
having a value of five million dollars ($5,000,000) or more (whether or not the
claim is covered by insurance) or could reasonably be expected to result in a
Material Adverse Effect.
9.2.6 NOTICE OF MATERIAL ADVERSE EFFECT. Promptly after Borrower
obtains knowledge thereof, notice of any matter which, alone or when considered
together with other matters, has resulted or could reasonably be expected to
result, in a Material Adverse Effect.
9.2.7 NOTICE OF ENVIRONMENTAL PROCEEDINGS. Without limiting the
provisions of Subsection 9.2.5 hereof, promptly after Borrower's receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or other communication alleging a condition that may require
Borrower or any Subsidiary to undertake or to contribute to a cleanup or other
response under Environmental Regulations, or which seeks penalties, damages,
injunctive relief, or criminal sanctions related to alleged violations of such
laws, or which claims personal injury or property damage to any
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person as a result of environmental factors or conditions or which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
9.2.8 REGULATORY AND OTHER NOTICES. Promptly after Borrower's
receipt thereof, copies of any notices or other communications received from any
Governmental Authority with respect to any matter or proceeding the effect of
which could reasonably be expected to have a Material Adverse Effect.
9.2.9 ADVERSE ACTION REGARDING REQUIRED LICENSES. As soon as
Borrower learns that any petition, action, investigation, notice of violation or
apparent liability, notice of forfeiture, order to show cause, complaint or
proceeding is pending, or, to the best of Borrower's knowledge, threatened, to
seek to revoke, cancel, suspend, modify, or limit any of the Required Licenses,
prompt written notice thereof. Borrower shall contest any such action in a Good
Faith Contest.
9.2.10 BUDGET. Promptly upon becoming available and in any event
within thirty (30) days after the beginning of each Fiscal Year, a copy of the
Annual Operating Budget for the next succeeding Fiscal Year approved by
Borrower's board of directors, together with the assumptions and projections on
which such budget is based and a copy of forecasts of operations and capital
expenditures (including investments) for each Fiscal Year; provided that the
first such Annual Operating Budget shall not be required until September 30,
1998. In addition, if any material changes are made to such budget or
projections or forecasts during the year, then Borrower will furnish copies to
the Administrative Agent of any such changes promptly after such changes have
been approved.
9.2.11 ADDITIONAL INFORMATION. With reasonable promptness, such
other information respecting the condition or operations, financial or
otherwise, of Borrower or any Subsidiary as any Syndication Party may from time
to time reasonably request.
9.3 ELIGIBILITY. Borrower shall preserve and maintain its status as an
entity eligible to borrow from CoBank and St. Paul Bank.
9.4 MAINTENANCE OF EXISTENCE AND QUALIFICATION. Borrower shall, and
shall cause each Subsidiary to, maintain its corporate existence in good
standing under the laws of its state of organization. Borrower will, and will
cause each Subsidiary to, qualify and remain qualified as a foreign corporation
in each jurisdiction in which such qualification is necessary in view of its
business, operations and properties except where the failure to so qualify has
not and could not reasonably be expected to result in a Material Adverse Effect.
9.5 COMPLIANCE WITH LEGAL REQUIREMENTS AND AGREEMENTS. Borrower shall,
and shall cause each Subsidiary to: (a) comply with all laws, rules, regulations
and orders applicable to Borrower (or such Subsidiary, as applicable) or its
business unless
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such failure to comply is the subject of a Good Faith Contest; and (b) comply
with all agreements, indentures, mortgages, and other instruments to which it
(or any Subsidiary, as applicable) is a party or by which it or any of its (or
any Subsidiary, or any of such Subsidiary's, as applicable) property is bound;
provided, however, that the failure of Borrower to comply with this sentence in
any instance not directly involving the Administrative Agent or a Syndication
Party shall not constitute an Event of Default unless such failure would have a
Material Adverse Effect.
9.6 COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limiting the provisions
of Section 9.5 of this Credit Agreement, Borrower shall, and shall cause
Subsidiary to, comply in all material respects with, and take all reasonable
steps necessary to cause all persons occupying or present on any properties
owned or leased by Borrower (or any Subsidiary, as applicable) to comply with,
all Environmental Regulations, the failure to comply with which would have a
Material Adverse Effect or unless such failure to comply is the subject of a
Good Faith Contest.
9.7 TAXES. Borrower shall cause to be paid, and shall cause each
Subsidiary to pay, when due all taxes, assessments, and other governmental
charges upon it, its income, its sales, its properties (or upon Subsidiary and
its income, sales, and properties, as applicable), and federal and state taxes
withheld from its (or Subsidiary's, as applicable) employees' earnings, unless
(a) the failure to pay such taxes, assessments, or other governmental charges
could not reasonably be expected to result in a Material Adverse Effect, or (b)
such taxes, assessments, or other governmental charges are the subject of a Good
Faith Contest and Borrower has established adequate reserves therefor in
accordance with GAAP.
9.8 INSURANCE. Borrower shall maintain, and cause each Subsidiary to
maintain, insurance with one or more financially sound and reputable insurance
carrier or carriers reasonably acceptable to the Administrative Agent, in such
amounts (including deductibles) and covering such risks (including fidelity
coverage) as are usually carried by companies engaged in the same or a similar
business and similarly situated, provided, however, that Borrower may, to the
extent permitted by Law, provide for appropriate self-insurance with respect to
workers' compensation. At the request of Administrative Agent, copies of all
policies (or such other proof of compliance with this Section as may be
reasonably satisfactory) shall be delivered to the Administrative Agent.
Borrower agrees to pay all premiums on such insurance as they become due
(including grace periods).
9.9 MAINTENANCE OF PROPERTIES. Borrower shall maintain, keep and
preserve, and cause each Subsidiary to maintain, keep and preserve, all of its
material properties (tangible and intangible) necessary or used in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and shall cause to be made all repairs, renewals, replacements,
betterments and improvements thereof, all as in the sole judgment of Borrower
may be reasonably necessary so that the business
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carried on in connection therewith may be properly and advantageously conducted
at all times.
9.10 PAYMENT OF LIABILITIES. Borrower shall pay all liabilities
(including, without limitation: (a) any indebtedness for borrowed money or for
the deferred purchase price of property or services; (b) any obligations under
leases which have or should have been characterized as Capital Leases; and (c)
any contingent liabilities, such as guaranties, for the obligations of others
relating to indebtedness for borrowed money or for the deferred purchase price
of property or services or relating to obligations under leases which have or
should have been characterized as Capital Leases) as they become due beyond any
period of grace under the instrument creating such liabilities, unless (with the
exception of the Bank Debt) (x) the failure to pay such liabilities within such
time period could not reasonably be expected to result in a Material Adverse
Effect, or (y) they are contested in good faith by appropriate actions or legal
proceedings, Borrower establishes adequate reserves therefor in accordance with
GAAP, and such contesting will not result in a Material Adverse Effect.
9.11 INSPECTION. Borrower shall permit, and cause its Subsidiaries to
permit, the Administrative Agent or any Syndication Party or their agents,
during normal business hours or at such other times as the parties may agree, to
examine, and make copies of or abstracts from, Borrower's properties, books, and
records, and to discuss Borrower's affairs, finances, operations, and accounts
with its respective officers, directors, employees, and independent certified
public accountants; provided, that, in the case of each meeting with the
independent accountants Borrower is given an opportunity to have a
representative present at such meeting.
9.12 REQUIRED LICENSES; PERMITS; ETC. Borrower shall duly and lawfully
obtain and maintain in full force and effect all Required Licenses as
appropriate for the business being conducted and properties owned by Borrower at
any given time.
9.13 ERISA. Borrower shall make or cause to be made, and cause each
Subsidiary to make or cause to be made, all payments or contributions to all
Plans covered by Title IV of ERISA, which are necessary to enable those Plans to
continuously meet all minimum funding standards or requirements.
9.14 MAINTENANCE OF COMMODITY POSITION. Borrower shall protect its
commodity inventory holdings or commitments to buy or sell commodities against
adverse price movements, including the taking of equal and opposite positions in
the cash and futures markets, to minimize losses and protect margins in
commodity production, storage, processing and marketing as is recognized as
financially sound and reputable by prudent business persons in the commodity
business.
9.15 FINANCIAL COVENANTS. Borrower shall maintain the following
financial covenants, measured as an aggregation of the results of the
Predecessor Companies (to the extent Borrower has not been in operation for four
(4) full Fiscal Quarters) and
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current financial results of Borrower through the first four Fiscal Quarters,
for example measurement at the end of the first Fiscal Quarter ending after the
Closing Date will incorporate the financial results of the Borrower for such
Fiscal Quarter(or portion thereof) and the financial results of the Predecessor
Companies for the three previous Fiscal Quarters (and, if applicable, for a
portion of the Fiscal Quarter during which the Closing Date occurred):
9.15.1 WORKING CAPITAL. Borrower shall have at all times
Consolidated Current Assets minus Consolidated Current Liabilities of not less
than $150,000,000.
9.15.2 CONSOLIDATED FUNDED DEBT TO CONSOLIDATED CASH FLOW.
Borrower shall have at all times and measured as of the end of each Fiscal
Quarter, a ratio of Consolidated Funded Debt divided by Consolidated Cash Flow
of no greater than 3.00 to 1.00 as measured on the previous consecutive four
Fiscal Quarters.
9.15.3 ADJUSTED CONSOLIDATED FUNDED DEBT TO CONSOLIDATED MEMBERS'
AND PATRONS' EQUITY. Borrower shall not permit the ratio of Adjusted
Consolidated Funded Debt to Consolidated Members' and Patrons' Equity to exceed
at any time .80 to 1.00.
ARTICLE 10. NEGATIVE COVENANTS
From and after the date of this Credit Agreement until the Bank Debt is
indefeasibly paid in full and the Syndication Parties have no obligation to make
any Advance, Borrower agrees that it will observe and comply with the following
covenants:
10.1 BORROWING. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) create, incur, assume or permit to exist, directly
or indirectly, any Debt, except for: (a) indebtedness of Borrower arising under
this Credit Agreement and the other Loan Documents; (b) trade payables arising
in the ordinary course of business; (c) Capital Leases in existence from time to
time; (d) current operating liabilities (other than for borrowed money) incurred
in the ordinary course of business; (e) unsecured indebtedness arising under
uncommitted lines of credit; provided that the maximum principal amount that may
be outstanding at any one time shall not exceed $15,000,000; (f) indebtedness on
the date hereof as set forth in Exhibit 10.1 attached hereto; (g) unsecured
long-term indebtedness; (h) Debt of Borrower incurred pursuant to the Revolving
Loan Credit Agreement; (i) documentary and standby letters of credit issued at
the request of Borrower or any Subsidiary; provided, however, that the undrawn
face amount under all such letters of credit shall not exceed $75,000,000; and
(j) such other indebtedness agreed upon in writing between Borrower and the
Syndication Parties.
10.2 NO OTHER BUSINESSES. Borrower shall not engage in any material
respects in any business activity or operations other than operations or
activities (a) in the
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agriculture industry, (b) in the food industry, or (c) which are not
substantially different from or are related to its present business activities
or operations.
10.3 LIENS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) create, incur, assume or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance on, or any security interest
in, any of its real or personal properties (including, without limitation,
leasehold interests, leasehold improvements and any other interest in real
property or fixtures), now owned or hereafter acquired, except:
(a) Liens for taxes or assessments or other charges or levies
of any Governmental Authority, that are not delinquent or if delinquent (i) are
the subject of a Good Faith Contest but in no event past the time when a penalty
would be incurred, and (ii) the aggregate amount of liabilities so secured
(including interest and penalties) does not exceed $10,000,000 at any one time
outstanding;
(b) Liens imposed by Law, such as mechanic's, worker's,
repairman's, miner's, agister's, attorney's, materialmen's, landlord's,
warehousemen's and carrier's Liens and other similar Liens which are securing
obligations incurred in the ordinary course of business for sums not yet due and
payable or if due and payable which are the subject of a Good Faith Contest;
(c) Liens under workers' compensation, unemployment
insurance, social security or similar legislation (other than ERISA), or to
secure payments of premiums for insurance purchased in the ordinary course of
business, or to secure the performance of tenders, statutory obligations, surety
and appearance bonds and bids, bonds for release of an attachment, stay of
execution or injunction, leases, government contracts, performance and
return-of-money bonds and other similar obligations, all of which are incurred
in the ordinary course of business and not in connection with the borrowing of
money;
(d) Any attachment or judgment Lien, the time for appeal or
petition for rehearing of which shall not have expired or in respect of which
Borrower or the Subsidiary is protected in all material respects by insurance or
for the payment of which adequate reserves have been provided, provided that the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are the subject of a Good Faith Contest, and provided
further that the aggregate amount of liabilities of Borrower and its
Subsidiaries so secured (including interest and penalties) shall not be in
excess of $5,000,000 at any one time outstanding;
(e) Easements, rights-of-way, restrictions, encroachments,
covenants, servitudes, zoning and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use and enjoyment by
Borrower or any Restricted Subsidiary of the property or assets encumbered
thereby in the normal course of its business or materially impair the value of
the property subject thereto;
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(f) Liens arising in the ordinary course of business and
created in connection with amounts on deposit in charge card and like accounts
(such as Visa or MasterCard);
(g) Liens on land, buildings and equipment existing at the
time of their acquisition or Liens to secure the payment of all or any part of
the purchase price of such land, buildings or equipment or to secure Funded Debt
incurred prior to, at the time of, or within one-hundred eighty (180) days after
the acquisition of such property for the purpose of financing all or any part of
the purchase price thereof, provided that any such Liens shall not encumber any
other property of Borrower or its Restricted Subsidiaries;
(h) Liens assumed in connection with permitted mergers and
acquisitions, but only to the extent that such Liens shall secure only Funded
Debt and shall not encumber any other property of Borrower or any Restricted
Subsidiary;
(i) Liens on financed property created or incurred in
connection with leases, mortgages, conditional sales contracts, security
interests or arrangements for the retention of title entered into by Borrower or
any of its Restricted Subsidiaries to secure "industrial revenue bonds" as
defined in Section 103(b)(2) of the Code and treated as obligations described in
legislation similar to the provisions of said Sections of the Code enacted in
any State of the United States or Puerto Rico, which are issued to finance
property useful and intended to be used in carrying on the business of Borrower
or any of its Restricted Subsidiaries, provided that upon creation of any such
Lien Borrower or such Restricted Subsidiary shall incur Funded Debt secured
thereby in conformity with the provisions of Section 10.1 hereof;
(j) Liens on property or assets of a Restricted Subsidiary to
secure Debt of such Restricted Subsidiary to Borrower;
(k) Liens of CoBank, St. Paul Bank and other cooperatives,
respectively, on Investments by Borrower in the stock, participation
certificates, or allocated reserves of CoBank, St. Paul Bank or other
cooperatives, respectively, owned by Borrower;
(l) All precautionary filings of financing statements under
the Uniform Commercial Code which cover property that is made available to or
used by Borrower or any Restricted Subsidiary pursuant to the terms of an
Operating Lease or Capital Lease; and
(m) Liens securing its reimbursement obligations under any
letter of credit issued in connection with the acquisition of an asset; provided
that (i) the lien attaches only to such asset, and (ii) the lien is released
upon satisfaction of such reimbursement obligation.
10.4 SALE OF ASSETS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) sell, convey, assign, lease or otherwise transfer or
dispose of, voluntarily, by operation of law or otherwise, any material part of
its now owned or
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hereafter acquired assets during any twelve (12) month period commencing June 1,
1998 and each June 1 thereafter, except: (a) the sale of inventory, equipment
and fixtures disposed of in the ordinary course of business, (b) the sale or
other disposition of assets no longer necessary or useful for the conduct of its
business, and (c) leases of assets to an entity in which Borrower has at least a
fifty-percent (50%) interest in ownership, profits, and governance. For purposes
of this Section, "material part" shall mean ten percent (10%) or more of the
lesser of the book value or the market value of the assets of Borrower or such
Restricted Subsidiary as shown on the balance sheets thereof as of the May 31
immediately preceding each such twelve (12) month measurement period.
10.5 LIABILITIES OF OTHERS. Borrower shall not (nor shall it permit any
of its Restricted Subsidiaries to) assume, guarantee, become liable as a surety,
endorse, contingently agree to purchase, or otherwise be or become liable,
directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed
to ensure any creditor against loss), for or on account of the obligation of any
Person, except (a) by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of the Borrower's or
any Restricted Subsidiary's business, and (b) guarantees made from time to time
by Borrower and its Restricted Subsidiaries in the ordinary course of their
respective businesses; provided, however, that the aggregate amount of all
indebtedness guaranteed under clause (b) above shall not exceed $100,000,000 in
the aggregate.
10.6 LOANS. Borrower shall not (nor shall it permit any of its
Restricted Subsidiaries to) lend or advance money, credit, or property to any
Person, except for (a) loans to Restricted Subsidiaries, (b) trade credit
extended in the ordinary course of business, (c) loans made by Borrower to its
members on open account maintained by such members with Borrower or made by
Borrower to its members pursuant to its Affiliate Financing CoBank Participation
Program; provided that the aggregate principal amount of all such loans
outstanding at any time shall not exceed $150,000,000 and (d) loans made by
Fin-Ag, Inc. to agricultural producers, provided that the aggregate principal
amount of all such loans outstanding at any time shall not exceed $50,000,000.
10.7 MERGER; ACQUISITIONS; BUSINESS FORM; ETC. Borrower shall not (nor
shall it permit any of its Restricted Subsidiaries to) merge or consolidate with
any entity, or acquire all or substantially all of the assets of any person or
entity, or form or create any new subsidiary (other than a Restricted Subsidiary
formed by Borrower) or affiliate, change its business form from a cooperative
corporation, or commence operations under any other name, organization, or
entity, including any joint venture; provided, however, that the foregoing shall
not prevent any consolidation or merger if after giving effect thereto:
(a) The book value of Borrower and its Subsidiaries does not
increase due to all such mergers, consolidations or acquisitions by an aggregate
amount in excess of $50,000,000 in any fiscal year of Borrower;
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(b) Borrower is the surviving entity; and
(c) No Event of Default or Potential Default shall have
occurred and be continuing.
10.8 INVESTMENTS. Except for the purchase of Bank Equity Interests,
Borrower shall not (nor shall it permit any of its Restricted Subsidiaries to)
own, purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person, except that
Borrower and the Restricted Subsidiaries may own, purchase or acquire:
(a) commercial paper maturing not in excess of one year from
the date of acquisition and rated P1 by Moody's Investors Service, Inc. or A1 by
Standard & Poor's Corporation on the date of acquisition;
(b) certificates of deposit in North American commercial
banks rated C or better by Keefe, Bruyette & Woods, Inc. or 3 or better by Cates
Consulting Analysts, maturing not in excess of one year from the date of
acquisition;
(c) obligations of the United States government or any agency
thereof, the obligations of which are guaranteed by the United States
government, maturing, in each case, not in excess of one year from the date of
acquisition;
(d) repurchase agreements of any bank or trust company
incorporated under the laws of the United States of America or any state thereof
and fully secured by a pledge of obligations issued or fully and unconditionally
guaranteed by the United States government;
(e) Investments permitted under Sections 10.5, 10.6, and
10.9;
(f) Investments made prior to the Closing Date in Persons,
which are not Restricted Subsidiaries, identified on Exhibit 10.8 hereto as it
may be supplemented (by adding or removing Persons) from time to time by
Borrower;
(g) Investments (by Borrower) in the Restricted Subsidiaries;
and
(h) Investments (by Borrower) in Subsidiaries, other than
Restricted Subsidiaries, in an aggregate amount not exceeding $75,000,000.00;
(i) Investments in the form of non-cash patronage dividends
in any Person; and
(j) Investments, in addition to those permitted by clauses
(a) through (i) above, in an aggregate amount not exceeding $75,000,000.00.
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10.9 TRANSACTIONS WITH RELATED PARTIES. Borrower shall not purchase,
acquire, provide, or sell any equipment, other personal property, real property
or services from or to any Subsidiary of Borrower (other than a Restricted
Subsidiary), except in the ordinary course and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable than would be obtained by Borrower in a comparable arm's-length
transaction with an unrelated Person.
10.10 PATRONAGE REFUNDS, ETC. Borrower shall not, directly or
indirectly, in any Fiscal Year (a) declare or pay any cash patronage refunds to
patrons or members which in the aggregate exceed 20% of Borrower's consolidated
net patronage income for the Fiscal Year of Borrower preceding the Fiscal Year
in which such patronage refunds are to be paid, (b) directly or indirectly
redeem or otherwise retire its equity, or (c) make any cash distributions of any
kind or character in respect of its equity, unless, in the case of (a), (b), or
(c), (i) at the time of taking such action no Event of Default or Potential
Default exists hereunder and (ii) after giving effect thereto no Event of
Default or Potential Default would exist hereunder.
10.11 CHANGE IN FISCAL YEAR. Borrower shall not change its Fiscal Year
from a year ending on August 31 unless required to do so by the Internal Revnue
Service, in which case Borrower agrees to such amendment of the terms Fiscal
Quarter and Fiscal Year, as used herein, as the Administrative Agent reasonably
deems necessary.
ARTICLE 11. INDEMNIFICATION
11.1 GENERAL; STAMP TAXES; INTANGIBLES TAX. Borrower agrees to
indemnify and hold the Administrative Agent and each Syndication Party and their
directors, officers, employees, agents, professional advisers and
representatives ("INDEMNIFIED PARTIES") harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which the
Administrative Agent or any other Indemnified Party may incur (or which may be
claimed against any such Indemnified Party by any Person), including attorneys'
fees incurred by any Indemnified Party, arising out of or resulting from: (a)
the material inaccuracy of any representation or warranty of or with respect to
Borrower in this Credit Agreement or the other Loan Documents; (b) the material
failure of Borrower to perform or comply with any covenant or obligation of
Borrower under this Credit Agreement or the other Loan Documents; or (c) the
exercise by the Administrative Agent of any right or remedy set forth in this
Credit Agreement or the other Loan Documents, provided that Borrower shall have
no obligation to indemnify any Indemnified Party against claims, damages,
losses, liabilities, costs or expenses to the extent that a court of competent
jurisdiction renders a final non-appealable determination that the foregoing are
solely the result of the willful misconduct or gross negligence of such
Indemnified Party. In addition, Borrower agrees to indemnify and hold the
Indemnified Parties harmless from and against any and all claims, damages,
losses, liabilities, costs or expenses whatsoever which the Administrative Agent
or any other Indemnified Party may incur (or which may be claimed against any
such Indemnified Party by any Person), including attorneys' fees
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incurred by any Indemnified Party, arising out of or resulting from the
imposition or nonpayment by Borrower of any stamp tax, intangibles tax, or
similar tax imposed by any state, including any amounts owing by virtue of the
assertion that the property valuation used to calculate any such tax was
understated. Borrower shall have the right to assume the defense of any claim as
would give rise to Borrower's indemnification obligation under this Section with
counsel of Borrower's choosing so long as such defense is being diligently and
properly conducted and Borrower shall establish to the Indemnified Party's
satisfaction that the amount of such claims are not, and will not be, material
in comparison to the liquid and unrestricted assets of Borrower available to
respond to any award which may be granted on account of such claim. So long as
the conditions of the preceding sentence are met, Indemnified Party shall have
no further right to reimbursement of attorneys' fees incurred thereafter. The
obligation to indemnify set forth in this Section shall survive the termination
of this Credit Agreement and other covenants.
11.2 INDEMNIFICATION RELATING TO HAZARDOUS SUBSTANCES. Borrower shall
not locate, produce, treat, transport, incorporate, discharge, emit, release,
deposit or dispose of any Hazardous Substance in, upon, under, over or from any
property owned or held by Borrower, except in accordance with all Environmental
Regulations; Borrower shall not permit any Hazardous Substance to be located,
produced, treated, transported, incorporated, discharged, emitted, released,
deposited, disposed of or to escape in, upon, under, over or from any property
owned or held by Borrower, except in accordance with Environmental Regulations;
and Borrower shall comply with all Environmental Regulations which are
applicable to such property. Borrower shall indemnify the Indemnified Parties
against, and shall reimburse the Indemnified Parties for, any and all claims,
demands, judgments, penalties, liabilities, costs, damages and expenses,
including court costs and attorneys' fees incurred by the Indemnified Parties
(prior to trial, at trial and on appeal) in any action against or involving the
Indemnified Parties, resulting from any breach of the foregoing covenants in
this Section or the covenants in Section 9.6 hereof, or from the discovery of
any Hazardous Substance in, upon, under or over, or emanating from, such
property, it being the intent of Borrower and the Indemnified Parties that the
Indemnified Parties shall have no liability or responsibility for damage or
injury to human health, the environmental or natural resources caused by, for
abatement and/or clean-up of, or otherwise with respect to, Hazardous Substances
as the result of the Administrative Agent or any Syndication Party exercising
any of its rights or remedies with respect thereto, including but not limited to
becoming the owner thereof by foreclosure or conveyance in lieu of foreclosure
of a judgment lien; provided that such indemnification as it applies to the
exercise by the Administrative Agent or any Syndication Party of its rights or
remedies with respect to the Loan Documents shall not apply to claims arising
solely with respect to Hazardous Substances brought onto such property by the
Administrative Agent or such Syndication Party while engaged in activities other
than operations substantially the same as the operations previously conducted on
such property by Borrower. The foregoing covenants of this Section shall be
deemed continuing covenants for the benefit of the Indemnified Parties, and any
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successors and assigns of the Indemnified Parties, including but not limited to
any transferee of the title of the Administrative Agent or any Syndication Party
or any subsequent owner of the property, and shall survive the satisfaction or
release of any lien, any foreclosure of any lien and/or any acquisition of title
to the property or any part thereof by the Administrative Agent or any
Syndication Party, or anyone claiming by, through or under the Administrative
Agent or any Syndication Party or Borrower by deed in lieu of foreclosure or
otherwise. Any amounts covered by the foregoing indemnification shall bear
interest from the date incurred at the Default Interest Rate, shall be payable
on demand, and shall be secured by the Security Documents. The indemnification
and covenants of this Section shall survive the termination of this Credit
Agreement and other covenants.
ARTICLE 12. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.1 EVENTS OF DEFAULT. The occurrence of any of the following events
(each an "EVENT OF DEFAULT") shall, at the option of the Administrative Agent,
make the entire Bank Debt immediately due and payable (provided, that in the
case of an Event of Default under Subsection 12.1(f) all amounts owing under the
Notes and the other Loan Documents shall automatically and immediately become
due and payable without any action by or on behalf of the Administrative Agent),
and the Administrative Agent may exercise all rights and remedies for the
collection of any amounts outstanding hereunder and take whatever action it
deems necessary to secure itself, all without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other
notices or demands of any kind or character:
(a) Failure of Borrower to pay within five (5) days of the
date when due, whether by acceleration or otherwise, any of the Bank Debt in
accordance with this Credit Agreement or the other Loan Documents.
(b) Any representation or warranty set forth in any Loan
Document, any Borrowing Notice, any financial statements or reports or
projections or forecasts, or in connection with any transaction contemplated by
any such document, shall prove in any material respect to have been false or
misleading when made or furnished by Borrower.
(c) Any default by Borrower in the performance or compliance
with the covenants, promises, conditions or provisions of Sections 9.3, 9.8,
9.11, 9.15, 10.1, 10.3, 10.4, 10.5, 10.7, or 10.10 of this Credit Agreement;
provided that a default under Subsection 9.15.1 hereof shall not constitute an
Event of Default nor a Potential Default if Borrower is in compliance with such
Subsection within five (5) Banking Days after the earlier of (i) the date on
which Borrower discovers that it is not in compliance with such test, or (ii)
the date by which Borrower is required by Subsections 9.2.1 or 9.2.2 hereof to
provide quarterly or year-end financial statements and/or Compliance
Certificates to the Administrative Agent.
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(d) Any default by Borrower in the performance or compliance
with the covenants, promises, conditions or provisions of Sections 9.2, 9.5,
9.6, 9.7, 9.9, 9.10, (except as provided in Section 12.1(e)), 9.12, 9.13, 9.14,
10.6, 10.8, 10.9, or 10.11 of this Credit Agreement, and such failure continues
for fifteen (15) days after Borrower learns of such failure to comply, whether
by Borrower's own discovery or through notice from the Administrative Agent.
(e) The failure of Borrower to pay when due, or failure to
perform or observe any other obligation or condition with respect to any of the
following obligations to any Person, beyond any period of grace under the
instrument creating such obligation: (i) any indebtedness for borrowed money or
for the deferred purchase price of property or services, (ii) any obligations
under leases which have or should have been characterized as Capital Leases, or
(iii) any contingent liabilities, such as guaranties, for the obligations of
others relating to indebtedness for borrowed money or for the deferred purchase
price of property or services or relating to obligations under leases which have
or should have been characterized as Capital Leases; provided that no such
failure will be deemed to be an Event of Default hereunder unless and until the
aggregate amount owing under obligations with respect to which such failures
have occurred and are continuing is at least $1,000,000.00.
(f) Borrower applies for or consents to the appointment of a
trustee or receiver for any part of its properties; any bankruptcy,
reorganization, debt arrangement, dissolution or liquidation proceeding is
commenced or consented to by Borrower; or any application for appointment of a
receiver or a trustee, or any proceeding for bankruptcy, reorganization, debt
management or liquidation is filed for or commenced against Borrower, and is not
withdrawn or dismissed within sixty (60) days thereafter.
(g) Failure of Borrower to comply with any other provision of
this Credit Agreement or the other Loan Documents not constituting an Event of
Default under any of the preceding subparagraphs of this Section 12.1, and such
failure continues for thirty (30) days after Borrower learns of such failure to
comply, whether by Borrower's own discovery or through notice from the
Administrative Agent.
(h) The occurrence of an "Event of Default" under the
Revolving Loan Credit Agreement.
(i) The entry of one or more judgments in an aggregate amount
in excess of $5,000,000.00 against Borrower not stayed, discharged or paid
within thirty (30) days after entry.
12.2 NO ADVANCE. The Syndication Parties shall have no obligation to
make any Advance if a Potential Default or an Event of Default shall occur and
be continuing.
12.3 RIGHTS AND REMEDIES. In addition to the remedies set forth in
Section 12.1 and 12.2 hereof, upon the occurrence of an Event of Default, the
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Administrative Agent shall be entitled to exercise all the rights and remedies
provided in the Loan Documents and by any applicable law. Each and every right
or remedy granted to the Administrative Agent pursuant to this Credit Agreement
and the other Loan Documents, or allowed the Administrative Agent by law or
equity, shall be cumulative. Failure or delay on the part of the Administrative
Agent to exercise any such right or remedy shall not operate as a waiver
thereof. Any single or partial exercise by the Administrative Agent of any such
right or remedy shall not preclude any future exercise thereof or the exercise
of any other right or remedy.
ARTICLE 13. AGENCY AGREEMENT
13.1 FUNDING OF SYNDICATION INTEREST. Each Syndication Party, severally
but not jointly, hereby irrevocably agrees to fund its Funding Share of the
Advances ("ADVANCE PAYMENT") as determined pursuant to the terms and conditions
contained herein and in particular, Article 2, hereof. Each Syndication Party's
interest ("SYNDICATION INTEREST") in each Advance hereunder shall be without
recourse to the Administrative Agent or any other Syndication Party and shall
not be construed as a loan from any Syndication Party to the Administrative
Agent or any other Syndication Party.
13.2 SYNDICATION PARTIES' OBLIGATIONS TO REMIT FUNDS. Each Syndication
Party agrees to remit its Funding Share to the Administrative Agent as, and
within the time deadlines ("SYNDICATION PARTY ADVANCE DATE"), required in this
Credit Agreement. Unless the Administrative Agent shall have received notice
from a Syndication Party prior to the date on which such Syndication Party is to
provide funds to the Administrative Agent for an Advance to be made by such
Syndication Party that such Syndication Party will not make available to the
Administrative Agent such funds, the Administrative Agent may assume that such
Syndication Party has made such funds available to the Administrative Agent on
the date of such Advance in accordance with the terms of this Credit Agreement
and the Administrative Agent in its sole discretion may, but shall not be
obligated to, in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If and to the extent such Syndication Party
shall not have made such funds available to the Administrative Agent by 2:00
P.M. (Central time) on the Banking Day due, such Syndication Party agrees to
repay the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to Borrower until the Banking Day such amount is repaid to the
Administrative Agent (assuming payment is received by the Administrative Agent
at or prior to 2:00 P.M. (Central time), and until the next Banking Day if
payment is not received until after 2:00 P.M.), at the customary rate set by the
Administrative Agent for the correction of errors among banks for three (3)
Banking Days and thereafter at the Base Rate. If such Syndication Party shall
repay to the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Syndication Party's Advance for purposes of this
Credit Agreement. If such Syndication Party does not pay such corresponding
amount forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent
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shall promptly notify Borrower, and Borrower shall immediately pay such
corresponding amount to the Administrative Agent with the interest thereon, for
each day from the date such amount is made available to Borrower until the date
such amount is repaid to the Administrative Agent, at the rate of interest
applicable at the time to such Advance.
13.3 SYNDICATION PARTY'S FAILURE TO REMIT FUNDS. If a Syndication Party
("DELINQUENT SYNDICATION PARTY") fails to remit its Funding Share in full by the
date and time required (the unpaid amount of any such payment being hereinafter
referred to as the "DELINQUENT AMOUNT"), in addition to any other remedies
available hereunder, any other Syndication Party or Syndication Parties may, but
shall not be obligated to, advance the Delinquent Amount (the Syndication Party
or Syndication Parties which advance such Delinquent Amount are referred to as
the "CONTRIBUTING SYNDICATION PARTIES"), in which case (a) the Delinquent Amount
which any Contributing Syndication Party advances shall be treated as a loan to
the Delinquent Syndication Party and shall not be counted in determining the
Individual Outstanding Obligations, as applicable, of any Contributing
Syndication Party, and (b) the Delinquent Syndication Party shall be obligated
to pay to the Administrative Agent, for the account of the Contributing
Syndication Parties, interest on the Delinquent Amount at a rate of interest
equal to the rate of interest which Borrower is obligated to pay on the
Delinquent Amount plus 200 basis points ("DELINQUENCY Interest") until the
Delinquent Syndication Party remits the full Delinquent Amount and remits all
Delinquency Interest to the Administrative Agent, which will distribute such
payments to the Contributing Syndication Parties (pro rata based on the amount
of the Delinquent Amount which each of them (if more than one) advanced) on the
same Banking Day as such payments are received by the Administrative Agent if
received no later than 11:00 A.M. (Central time) or the next Banking Day if
received by the Administrative Agent thereafter. In addition, the Contributing
Syndication Parties shall be entitled to share, on the same pro rata basis, and
the Administrative Agent shall pay over to them, for application against
Delinquency Interest and the Delinquent Amount, the Delinquent Syndication
Party's Payment Distribution and any fee distributions or distributions made
under Section 13.10 hereof until the Delinquent Amount and all Delinquency
Interest have been paid in full. For voting purposes the Administrative Agent
shall readjust the Individual Commitments of such Delinquent Syndication Party
and the Contributing Syndication Parties from time to time first to reflect the
advance of the Delinquent Amount by the Contributing Syndication Parties, and
then to reflect the full or partial reimbursement to the Contributing
Syndication Parties of such Delinquent Amount. As between the Delinquent
Syndication Party and the Contributing Syndication Parties, the Delinquent
Syndication Party's interest in its Note shall be deemed to have been partially
assigned to the Contributing Syndication Parties in the amount of the Delinquent
Amount and Delinquency Interest owing to the Contributing Syndication Parties
from time to time. For the purposes of calculating interest owed by a Delinquent
Syndication Party, payments received on other than a Banking Day shall be deemed
to
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have been received on the next Banking Day, and payments received after 2:00
P.M. (Central time) shall be deemed to have been received on the next Banking
Day.
13.4 AGENCY APPOINTMENT. Each of the Syndication Parties hereby
designates and appoints the Administrative Agent to act as agent to service and
collect the Term Loan and its respective Note and to take such action on behalf
of such Syndication Party with respect to the Term Loan and such Note, and to
execute such powers and to perform such duties, as specifically delegated or
required herein, as well as to exercise such powers and to perform such duties
as are reasonably incident thereto, and to receive and benefit from such fees
and indemnifications as are provided for or set forth herein, until such time as
a successor is appointed and qualified to act as the Administrative Agent.
13.5 POWER AND AUTHORITY OF THE ADMINISTRATIVE AGENT. Without limiting
the generality of the power and authority vested in the Administrative Agent
pursuant to Section 13.4 hereof, the power and authority vested in the
Administrative Agent includes, but is not limited to, the following:
13.5.1 ADVICE. To solicit the advice and assistance of each of
the Syndication Parties concerning the administration of the Term Loan and the
exercise by the Administrative Agent of its various rights, remedies, powers,
and discretions with respect thereto. As to any matters not expressly provided
for by this Credit Agreement or any other Loan Document, the Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by all of the
Syndication Parties, the Required Lenders, or Super Majority Lenders, as the
case may be, and any action taken or failure to act pursuant thereto shall be
binding on all of the Syndication Parties and the Administrative Agent.
13.5.2 DOCUMENTS. To execute, seal, acknowledge, and deliver as
the Administrative Agent, all such instruments as may be appropriate in
connection with the administration of the Term Loan and the exercise by the
Administrative Agent of its various rights with respect thereto.
13.5.3 PROCEEDINGS. To initiate, prosecute, defend, and to
participate in, actions and proceedings in its name as the Administrative Agent
for the ratable benefit of the Syndication Parties.
13.5.4 RETAIN PROFESSIONALS. To retain attorneys, accountants,
and other professionals to provide advice and professional services to the
Administrative Agent, with their fees and expenses reimbursable to the
Administrative Agent by Syndication Parties pursuant to Section 13.17 hereof.
13.5.5 INCIDENTAL POWERS. To exercise powers reasonably incident
to the Administrative Agent's discharge of its duties enumerated in Section 13.6
hereof.
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13.6 DUTIES OF THE ADMINISTRATIVE AGENT. The duties of the
Administrative Agent hereunder shall consist of the following:
13.6.1 POSSESSION OF DOCUMENTS. To safekeep one original of each
of the Loan Documents other than the Notes (which will be in the possession of
the Syndication Party named as payee therein).
13.6.2 DISTRIBUTE PAYMENTS. To receive and distribute to the
Syndication Parties payments made by Borrower pursuant to the Loan Documents, as
provided in Article 4 hereof. Unless the Administrative Agent shall have
received notice from Borrower prior to the date on which any payment is due to
any Syndication Party hereunder that Borrower will not make such payment in
full, the Administrative Agent may assume that Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent in
its sole discretion may, but shall not be obligated to, in reliance upon such
assumption, cause to be distributed to each Syndication Party on such due date
an amount equal to the amount then due such Syndication Party. If and to the
extent Borrower shall not have so made such payment in full to the
Administrative Agent, each Syndication Party shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Syndication Party
together with interest thereon, for each day from the date such amount is
distributed to such Syndication Party until the date such Syndication Party
repays such amount to the Administrative Agent at the customary rate set by the
Administrative Agent for the correction of errors among banks for three (3)
Banking Days and thereafter at the Base Rate.
13.6.3 LOAN ADMINISTRATION. Subject to the provisions of Section
13.8 hereof, to, on behalf of and for the ratable benefit of all Syndication
Parties, in accordance with customary banking practices, exercise all rights,
powers, privileges, and discretion to which the Administrative Agent is entitled
to administer the Term Loan, including, without limitation: (a) monitor all
borrowing activity, Individual Commitment balances, and maturity dates of all
Treasury Rate Loans and Quoted Rate Loans; (b) monitor and report Credit
Agreement and covenant compliance, and coordinate required credit actions by the
Syndication Parties; (c) manage the process for future waivers and amendments if
modifications to the Credit Agreement are required; and (d) administer, record,
and process all assignments to be made for the current and future Syndication
Parties.
13.6.4 ACTION UPON DEFAULT. Each Syndication Party agrees that
upon its learning of any facts which would constitute a Potential Default or
Event of Default, it shall promptly notify the Administrative Agent by a writing
designated as a notice of default specifying in detail the nature of such facts
and default, and the Administrative Agent shall promptly send a copy of such
notice to all other Syndication Parties. The Administrative Agent shall be
entitled to assume that no Event of Default or Potential Default has occurred or
is continuing unless an officer thereof primarily responsible for the
Administrative Agent's duties as such with respect to the Term Loan or primarily
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responsible for the credit relationship between the Administrative Agent and
Borrower has actual knowledge of facts which would result in or constitute a
Potential Default or Event of Default, or has received written notice from
Borrower of such fact, or has received written notice of default from a
Syndication Party. In the event the Administrative Agent has obtained actual
knowledge (in the manner described above) or received written notice of the
occurrence of a Potential Default or Event of Default as provided in the
preceding sentences, the Administrative Agent may, but is not required to
exercise or refrain from exercising any rights which may be available under the
Loan Documents or at law on account of such occurrence and shall be entitled to
use its discretion with respect to exercising or refraining from exercising any
such rights, unless and until the Administrative Agent has received specific
written instruction from the Required Lenders to refrain from exercising such
rights or to take specific designated action, in which case it shall follow such
instruction; provided that the Administrative Agent shall not be required to
take any action which will subject it to personal liability, or which is or may
be contrary to any provision of the Loan Documents or applicable law. The
Administrative Agent shall not be subject to any liability by reason of its
acting or refraining from acting pursuant to any such instruction.
13.7 INDEMNIFICATION AS CONDITION TO ACTION. Except for action
expressly required of the Administrative Agent hereunder, the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Syndication Parties
under Section 13.18 hereof in respect of any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
13.8 CONSENT REQUIRED FOR CERTAIN ACTIONS. Except as provided in
Section 13.3 hereof, and notwithstanding the fact that this Credit Agreement may
otherwise provide that the Administrative Agent may act at its discretion, the
Administrative Agent may not take any of the following actions (nor may the
Syndication Parties take the action described in Subsection 13.8.1(c)) with
respect to, or under, the Loan Documents without the prior written consent,
given after notification by the Administrative Agent of its intention to take
any such action (or notification by such Syndication Parties as are proposing
the action described in Subsection 13.8.1(c) of their intention to do so), of:
13.8.1 UNANIMOUS. Each of the Syndication Parties before:
(a) Agreeing to an increase in the Aggregate Commitment or an
extension of the Availability Period or the Maturity Date;
(b) Agreeing to a reduction in the amount, or to a delay in
the due date, of any payment by Borrower of interest, principal, or fees with
respect to the Term Loan; provided, however, this restriction shall not apply to
a delay in payment
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granted by the Administrative Agent in the ordinary course of administration of
the Term Loan and the exercise of reasonable judgment, so long as such payment
delay does not exceed five (5) days;
(c) Reducing the voting rights percentage set forth in this
Subsection 13.8.1; or
(d) Agreeing to waive any material provisions of this Credit
Agreement relating to the Term Loan.
13.8.2 REQUIRED LENDERS. The Required Lenders before:
(a) Consenting to any action, amendment, or granting any
waiver with respect to the Term Loan not covered in Subsection 13.8.1; or
(b) Agreeing to amend Article 13 of this Credit Agreement
(other than Subsection 13.8.1(c)).
13.8.3 ACTION WITHOUT VOTE. Notwithstanding any other provisions
of this Section, the Administrative Agent may take the following action without
obtaining the consent of the Syndication Parties:
(a) Determining (i) whether the conditions to an Advance have
been met, and (ii) the amount of such Advance.
If no written consent or denial is received from a Syndication Party within five
(5) Banking Days after written notice of any proposed action as described in
this Section is delivered to such Syndication Party by the Administrative Agent,
such Syndication Party shall be conclusively deemed to have consented thereto
for the purposes of this Section.
13.9 DISTRIBUTION OF PRINCIPAL AND INTEREST. The Administrative Agent
will receive and accept all payments (including prepayments) of principal and
interest made by Borrower on the Term Loan and the Notes and will hold all such
payments in trust for the benefit of all present and future Syndication Parties,
and, if requested in writing by the Required Lenders, in an account segregated
from the Administrative Agent's other funds and accounts ("PAYMENT ACCOUNT").
After the receipt by the Administrative Agent of any payment representing
interest or principal on the Term Loan, the Administrative Agent shall remit to
each Syndication Party its share of such payment as provided in Article 4
hereof, ("PAYMENT DISTRIBUTION") no later than the same Banking Day as such
payment is received by the Administrative Agent if received no later than 11:00
A.M. (Central time) or the next Banking Day if received by the Administrative
Agent thereafter. Any Syndication Party's rights to its Payment Distribution
shall be subject to the rights of any Contributing Syndication Parties to such
amounts as set forth in Section 13.3 hereof.
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13.10 DISTRIBUTION OF CERTAIN AMOUNTS. The Administrative Agent shall
(a) receive and hold in trust for the benefit of all present and future
Syndication Parties, in the Payment Account and, if requested in writing by the
Required Lenders, segregated from the Administrative Agent's other funds and
accounts and (b) shall remit to the Syndication Parties, as indicated, the
amounts described below:
13.10.1 FUNDING LOSSES. To each Syndication Party, the amount of
any Funding Losses paid by Borrower to the Administrative Agent in connection
with a prepayment of any portion of a Treasury Rate Loan or a Quoted Rate Loan,
in accordance with the Funding Loss Notice such Syndication Party provided to
the Administrative Agent, no later than the same Banking Day that payment of
such Funding Losses is received by the Administrative Agent, if received no
later than 11:00 A.M. (Central time), or the next Banking Day if received by the
Administrative Agent thereafter.
13.11 POSSESSION OF LOAN DOCUMENTS. The Loan Documents (other than the
Notes) shall be held by the Administrative Agent in its name, for the ratable
benefit of itself and the other Syndication Parties without preference or
priority.
13.12 COLLATERAL APPLICATION. The Syndication Parties shall have no
interest in any other loans made to Borrower by any other Syndication Party
other than the Term Loan, or in any property taken as security for any other
loan or loans made to Borrower by any other Syndication Party, or in any
property now or hereinafter in the possession or control of any other
Syndication Party, which may be or become security for the Term Loan solely by
reason of the provisions of a security instrument that would cause such security
instrument and the property covered thereby to secure generally all indebtedness
owing by Borrower to such other Syndication Party. Notwithstanding the
foregoing, to the extent such other Syndication Party applies such funds or the
proceeds of such property to reduction of the Term Loan, such other Syndication
Party shall share such funds or proceeds with all Syndication Parties according
to their respective Individual Commitments. In the event that any Syndication
Party shall obtain payment, whether partial or full, from any source in respect
of the Term Loan, including without limitation payment by reason of the exercise
of a right of offset, banker's lien, general lien, or counterclaim, such
Syndication Party shall promptly make such adjustments (which may include
payment in cash or the purchase of further syndications or participations in the
Term Loan) to the end that such excess payment shall be shared with all other
Syndication Parties in accordance with their respective Individual Commitments.
Notwithstanding any of the foregoing provisions of this Section or Article 6
hereof: (a) no Syndication Party other than CoBank shall have any right to, or
to the proceeds of, or any right to the application to any amount owing to such
Syndication Party hereunder of any the proceeds of, any Bank Equity Interests
issued to Borrower by CoBank or on account of any statutory lien held by CoBank
on such Bank Equity Interests, and (b) no Syndication Party other than St. Paul
Bank shall have any right to, or to the proceeds of, or any right to the
application to any amount owing to such Syndication Party hereunder of any the
proceeds of, any Bank Equity Interests
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issued to Borrower by St. Paul Bank or on account of any statutory lien held by
St. Paul Bank on such Bank Equity Interests.
13.13 AMOUNTS REQUIRED TO BE RETURNED. If the Administrative Agent
makes any payment to a Syndication Party in anticipation of the receipt of final
funds from Borrower, and such funds are not received from Borrower, or if excess
funds are paid by the Administrative Agent to any Syndication Party as the
result of a miscalculation by the Administrative Agent, then Syndication Party
shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent any such amounts, plus interest thereon (from the day such
amounts were transferred by the Administrative Agent to the Syndication Party
to, but not including, the day such amounts are returned by Syndication Party)
at a rate per annum equal to the customary rate set by the Administrative Agent
for the correction of errors among banks for three (3) Banking Days and
thereafter at the Base Rate. If the Administrative Agent is required at any time
to return to Borrower or a trustee, receiver, liquidator, custodian, or similar
official any portion of the payments made by Borrower to the Administrative
Agent, whether pursuant to any bankruptcy or insolvency law or otherwise, then
each Syndication Party shall, on demand of the Administrative Agent, forthwith
return to the Administrative Agent any such payments transferred to such
Syndication Party by the Administrative Agent but without interest or penalty
(unless the Administrative Agent is required to pay interest or penalty on such
amounts to the person recovering such payments).
13.14 REPORTS AND INFORMATION TO SYNDICATION PARTIES. The
Administrative Agent shall use reasonable efforts to provide to Syndication
Parties, as soon as practicable after actual knowledge thereof is acquired by an
officer thereof primarily responsible for the Administrative Agent's duties as
such with respect to the Term Loan or primarily responsible for the credit
relationship between the Administrative Agent and Borrower, any material factual
information which has a material adverse effect on the creditworthiness of
Borrower, and Borrower hereby authorizes such disclosure by the Administrative
Agent to the Syndication Parties (and by the Syndication Parties to any of their
participants). Failure of the Administrative Agent to provide the information
referred to in this Section or in Subsection 13.6.4 hereof shall not result in
any liability upon, or right to make a claim against, the Administrative Agent
except where a court of competent jurisdiction renders a final non-appealable
determination that such failure is a result of the willful misconduct or gross
negligence of the Administrative Agent. Syndication Parties acknowledge and
agree that all information and reports received pursuant to this Credit
Agreement will be received in confidence in connection with their Syndication
Interest, and that such information and reports constitute confidential
information and shall not, without the prior written consent of the
Administrative Agent or Borrower, as applicable, be (x) disclosed to any third
party (other than the Administrative Agent, another Syndication Party or
potential Syndication Party, or a participant or potential participant in the
interest of a Syndication Party, which disclosure is hereby approved by
Borrower), except pursuant
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to appropriate legal or regulatory process, or (y) used by the Syndication Party
except in connection with the Term Loan and its Syndication Interest.
13.15 STANDARD OF CARE. the Administrative Agent shall not be liable to
Syndication Parties for any error in judgment or for any action taken or not
taken by the Administrative Agent or its agents, except for its gross negligence
or willful misconduct. Subject to the preceding sentence, the Administrative
Agent will exercise the same care in administering the Term Loan and the Loan
Documents as it exercises for similar loans which it holds for its own account
and risk, and the Administrative Agent shall not have any further responsibility
to the Syndication Parties. Without limiting the foregoing, the Administrative
Agent may rely on the advice of counsel concerning legal matters and on any
written document it believes to be genuine and correct and to have been signed
or sent by the proper Person or Persons.
13.16 NO TRUST RELATIONSHIP. Neither the execution of this Credit
Agreement, nor the sharing in the Term Loan, nor the holding of the Loan
Documents in its name by the Administrative Agent, nor the management and
administration of the Term Loan and Loan Documents by the Administrative Agent
(including the obligation to hold certain payments and proceeds in the Payment
Account in trust for the Syndication Parties), nor any other right, duty or
obligation of the Administrative Agent under or pursuant to this Credit
Agreement is intended to be or create, and none of the foregoing shall be
construed to be or create, any express, implied or constructive trust
relationship between the Administrative Agent and any Syndication Party. Each
Syndication Party hereby agrees and stipulates that the Administrative Agent is
not acting as trustee for such Syndication Party with respect to the Term Loan,
this Credit Agreement, or any aspect of either, or in any other respect.
13.17 SHARING OF COSTS AND EXPENSES. To the extent not paid by
Borrower, each Syndication Party will promptly upon demand reimburse the
Administrative Agent for its proportionate share (based on its Individual Pro
Rata Share), for all reasonable costs, disbursements, and expenses incurred by
the Administrative Agent on or after the date of this Credit Agreement for
legal, accounting, consulting, and other services rendered to the Administrative
Agent in its role as the Administrative Agent in the administration of the Term
Loan, interpreting the Loan Documents, and protecting, enforcing, or otherwise
exercising any rights, both before and after default by Borrower under the Loan
Documents, and including, without limitation, all costs and expenses incurred in
connection with any bankruptcy proceedings; provided, however, that the costs
and expenses to be shared in accordance with this Section shall not include any
costs or expenses incurred by the Administrative Agent solely as a Syndication
Party in connection with the Term Loan, nor to the Administrative Agent's
internal costs and expenses.
13.18 SYNDICATION PARTIES' INDEMNIFICATION OF THE ADMINISTRATIVE AGENT.
Each of the Syndication Parties agree to indemnify the Administrative Agent,
including any Successor Agent, and their respective directors, officers,
employees, agents,
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professional advisers and representatives ("INDEMNIFIED AGENCY PARTIES"), (to
the extent not reimbursed by Borrower, and without in any way limiting the
obligation of Borrower to do so), ratably (based on the ratio of the total of
its Individual Commitment to the Aggregate Commitment), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Term Loan and/or the expiration or termination of this Credit Agreement) be
imposed on, incurred by or asserted against the Administrative Agent (or any of
the Indemnified Agency Parties while acting for the Administrative Agent or for
any Successor Agent) in any way relating to or arising out of this Credit
Agreement or the Loan Documents, or the performance of the duties of the
Administrative Agent hereunder or thereunder or any action taken or omitted
while acting in the capacity of the Administrative Agent under or in connection
with any of the foregoing; provided that the Syndication Parties shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of an Indemnified Agency Party to the extent that any of the forgoing result
from the gross negligence or willful misconduct of that Indemnified Agency Party
as determined by a court of competent jurisdiction. The agreements and
obligations in this Section shall survive the payment of the Term Loan and the
expiration or termination of this Credit Agreement.
13.19 BOOKS AND RECORDS. The Administrative Agent shall maintain such
books of account and records relating to the Term Loan as it maintains with
respect to other loans of similar type and amount, and which shall clearly and
accurately reflect the Syndication Interest of each Syndication Party.
Syndication Parties, or their agents, may inspect such books of account and
records at all reasonable times during the Administrative Agent's regular
business hours.
13.20 ADMINISTRATIVE AGENT FEE. St. Paul Bank and any Successor Agent
shall be entitled to the Administrative Agent Fee for acting as the
Administrative Agent. In the event the Successor Agent is contractually entitled
to an additional fee, each Syndication Party will be responsible for its
proportionate share (based on its Individual Pro Rata Share) thereof.
13.21 THE ADMINISTRATIVE AGENT'S RESIGNATION OR REMOVAL. The
Administrative Agent may resign at any time by giving at least sixty (60) days'
prior written notice of its intention to do so to each of the Syndication
Parties and Borrower. After the receipt of such notice, the Required Lenders
shall appoint a successor ("SUCCESSOR AGENT"). If (a) no Successor Agent shall
have been so appointed which is either (i) a Syndication Party, or (ii) if not a
Syndication Party, which is a Person approved by Borrower, or (b) if such
Successor Agent has not accepted such appointment, in either case within
forty-five (45) days after the retiring Administrative Agent's giving of such
notice of resignation, then the retiring Administrative Agent may, after
consulting with, but without requiring the approval of, Borrower, appoint a
Successor Agent which shall be a bank or a trust company organized under the
laws of
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the United States of America or any state thereof and having a combined capital,
surplus and undivided profit of at least $250,000,000. Any Administrative Agent
may be removed upon the written demand of the Required Lenders, which demand
shall also appoint a Successor Agent. Upon the appointment of a Successor Agent
hereunder, (a) the term "Administrative Agent" shall for all purposes of this
Credit Agreement thereafter mean such Successor Agent, and (b) the Successor
Agent shall notify Borrower of its identity and of the information called for in
Subsection 14.4.2 hereof. After any retiring Administrative Agent's resignation
hereunder as the Administrative Agent, or the removal hereunder of any
Administrative Agent, the provisions of this Credit Agreement shall continue to
inure to the benefit of such Administrative Agent as to any actions taken or
omitted to be taken by it while it was the Administrative Agent under this
Credit Agreement.
13.22 REPRESENTATIONS AND WARRANTIES OF ALL PARTIES. The Administrative
Agent and each Syndication Party represents and warrants that: (a) the execution
and delivery of, and performance of its obligations under, this Credit Agreement
is within its power and has been duly authorized by all necessary corporate and
other action by it; (b) this Credit Agreement is in compliance with all
applicable laws and regulations promulgated under such laws and does not
conflict with nor constitute a breach of its charter or by-laws nor any
agreements by which it is bound, and does not violate any judgment, decree or
governmental or administrative order, rule or regulation applicable to it; (c)
no approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by it in connection with the execution and delivery of, and
performance of its obligations under, this Credit Agreement; and (d) this Credit
Agreement has been duly executed by it, and constitutes the legal, valid, and
binding obligation of such Person, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and general equitable principles (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
Each Syndication Party that is a state or national bank represents and warrants
that the act of entering into and performing its obligations under this Credit
Agreement has been approved by its board of directors or its loan committee and
such action was duly noted in the written minutes of the meeting of such board
or committee, and that it will furnish the Administrative Agent with a certified
copy of such minutes or an excerpt therefrom reflecting such approval.
13.23 REPRESENTATIONS AND WARRANTIES OF ST. PAUL BANK. St. Paul Bank,
in its role as a Syndication Party and as the Administrative Agent, makes no
express or implied representation or warranty and assumes no responsibilities
with respect to the due authorization, execution, or delivery of the Loan
Documents; the accuracy of any information, statements, or certificates provided
by Borrower, the legality, validity, or enforceability of the Loan Documents;
the filing or recording of any document; the collectibility of the Term Loan;
the performance by Borrower of any of its obligations
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under the Loan Documents; or the financial condition or solvency of Borrower or
any other party obligated with respect to the Term Loan or the Loan Documents.
13.24 SYNDICATION PARTIES' INDEPENDENT CREDIT ANALYSIS. Each
Syndication Party acknowledges receipt of true and correct copies of all Loan
Documents (other than any Note payable to another Syndication Party) from the
Administrative Agent. Each Syndication Party agrees and represents that it has
relied upon its independent review (a) of the Loan Documents, and (b) any
information independently acquired by such Syndication Party from Borrower or
otherwise in making its decision to acquire an interest in the Term Loan
independently and without reliance on the Administrative Agent. Each Syndication
Party represents and warrants that it has obtained such information as it deems
necessary (including any information such Syndication Party independently
obtained from Borrower or others) prior to making its decision to acquire an
interest in the Term Loan. Each Syndication Party further agrees and represents
that it has made its own independent analysis and appraisal of and investigation
into each Borrower's authority, business, operations, financial and other
condition, creditworthiness, and ability to perform its obligations under the
Loan Documents and has relied on such review in making its decision to acquire
an interest in the Term Loan. Each Syndication Party agrees that it will
continue to rely solely upon its independent review of the facts and
circumstances related to Borrower, and without reliance upon the Administrative
Agent, in making future decisions with respect to all matters under or in
connection with the Loan Documents and the Term Loan. The Administrative Agent
assumes no responsibility for the financial condition of Borrower or for the
performance of Borrower's obligations under the Loan Documents. Except as
otherwise expressly provided herein, no Syndication Party shall have any duty or
responsibility to furnish to any other Syndication Parties any credit or other
information concerning Borrower which may come into its possession.
13.25 NO JOINT VENTURE OR PARTNERSHIP. Neither the execution of this
Credit Agreement, the sharing in the Term Loan, nor any agreement to share in
payments or losses arising as a result of this transaction is intended to be or
to create, and the foregoing shall not be construed to be, any partnership,
joint venture or other joint enterprise between the Administrative Agent and any
Syndication Party, nor between or among any of the Syndication Parties.
13.26 PURCHASE FOR OWN ACCOUNT; RESTRICTIONS ON TRANSFER;
PARTICIPATIONS. Each Syndication Party other than CoBank or St. Paul Bank
represents that it has acquired and is retaining its interest in the Term Loan
for its own account in the ordinary course of its banking or financing business
and not with a view toward the sale, distribution, further participation, or
transfer thereof. Each Syndication Party agrees that it will not sell, assign,
convey or otherwise dispose of ("TRANSFER"), or create or permit to exist any
lien or security interest on all or any part of its interest in the Term Loan,
without the prior written consent of the Administrative Agent and Borrower
(which consent will not be unreasonably withheld); provided that: (a) any such
Transfer (except a Transfer to another Syndication Party) or a Transfer by
CoBank or St. Paul
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Bank must be in a minimum amount of $10,000,000.00; (b) each Syndication Party
must maintain an Individual Commitment of no less than $15,000,000.00, unless it
Transfers its entire interest in the Term Loan; (c) the transferee must execute
an agreement substantially in the form of Exhibit 13.26 hereto ("SYNDICATION
ACQUISITION AGREEMENT") and assume all of the transferor's obligations hereunder
and execute such documents as the Administrative Agent may reasonably require;
and (d) the Syndication Party making such Transfer must pay the Administrative
Agent an assignment fee of $3,500.00. Any Syndication Party may participate any
part of its interest in the Term Loan to any Person with the prior written
consent of the Administrative Agent and Borrower (which consent will not be
unreasonably withheld), and each Syndication Party understands and agrees that
it must maintain a hold position in the Term Loan not subject to participation
of no less than $15,000,000.00 and further agrees that in the event of any such
participation: (x) its obligations hereunder will not change on account of such
participation; (y) except as provided in Section 13.27 hereof, the participant
will have no rights under this Credit Agreement, including, without limitation,
voting rights or the right to receive payments or distributions; and (z) the
Administrative Agent shall continue to deal directly with the Syndication Party
with respect to the Term Loan (including with respect to voting rights) as
though no participation had been granted and will not be obligated to deal
directly with any participant. Notwithstanding any provision contained herein to
the contrary, any Syndication Party may at any time pledge or assign all or any
portion of its interest in the Term Loan to any Federal Reserve Bank in
accordance with applicable law. CoBank and St. Paul Bank reserve the right to
sell participations on a non-patronage basis.
13.27 CERTAIN PARTICIPANTS' VOTING RIGHTS. All Persons which purchase a
participation interest in the interest of CoBank or St. Paul Bank as a
Syndication Party hereunder may, in the sole discretion of CoBank or St. Paul
Bank, respectively (or as required in any agreement under which such purchase is
made and governed), be allowed by CoBank or St. Paul Bank to vote, on a dollar
basis, on any matter requiring or allowing CoBank or St. Paul Bank, as
applicable, in its capacity as a Syndication Party, to provide or withhold its
consent, or to otherwise vote on any proposed action.
13.28 METHOD OF MAKING PAYMENTS. Payment and transfer of all amounts
owing or to be paid or remitted hereunder, including, without limitation,
payment of the Advance Payment by Syndication Parties, and distribution of
principal or interest payments or fees or other amounts by the Administrative
Agent, shall be by wire transfer in accordance with the instructions contained
on Exhibit 13.28 hereto ("WIRE INSTRUCTIONS").
13.29 EVENTS OF SYNDICATION DEFAULT/REMEDIES.
13.29.1 SYNDICATION PARTY DEFAULT. Any of the following
occurrences, failures or acts, with respect to any of the Syndication Parties
shall constitute an "EVENT OF SYNDICATION DEFAULT" hereunder by such party: (a)
if any representation or warranty made by such party in this Credit Agreement
shall be found to have been untrue in any
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material respect; (b) if such party fails to make any distributions or payments
required under this Credit Agreement within five (5) days of the date required;
(c) if such party breaches any other covenant, agreement, or provision of this
Credit Agreement which breach shall have continued uncured for a period of
thirty (30) consecutive days after such breach first occurs, unless a shorter
period is required to avoid prejudicing the rights and position of the other
Syndication Parties; (d) if any agency having supervisory authority over such
party, or any creditors thereof, shall file a petition to reorganize or
liquidate such party pursuant to any applicable federal or state law or
regulation and such petition shall not be discharged or denied within fifteen
(15) days after the date on which it is filed; (e) if by the order of a court of
competent jurisdiction or by any appropriate supervisory agency, a receiver,
trustee or liquidator shall be appointed for such party or for all or any
material part of its property or if such party shall be declared insolvent; or
(f) if such party shall be dissolved, or shall make an assignment for the
benefit of its creditors, or shall file a petition seeking to take advantage of
any debtors' act, including the bankruptcy act, or shall admit in writing its
inability to pay its debts generally as they become due, or shall consent to the
appointment of a receiver or liquidator of all or any material part of its
property.
13.29.2 REMEDIES. Upon the occurrence of an Event of Syndication
Default, the non-defaulting parties, acting by, or through the direction of, a
simple majority (determined based on the ratio of their Individual Commitments
to the Aggregate Commitment) of the non-defaulting parties, may, in addition to
any other remedy specifically set forth in this Credit Agreement, have and
exercise any and all remedies available generally at law or equity, including
the right to damages and to specific performance.
13.30 WITHHOLDING TAXES. Each Syndication Party represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Administrative Agent and to
Borrower such forms, certifications, statements and other documents as the
Administrative Agent or Borrower may request from time to time to evidence such
Syndication Party's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Administrative Agent or Borrower, as the case may
be, to comply with any applicable laws or regulations relating thereto. Without
limiting the effect of the foregoing, if any Syndication Party is not created or
organized under the laws of the United States of America or any state thereof,
such Syndication Party will furnish to the Administrative Agent and Borrower IRS
Form 4224 or Form 1001, or such other forms, certifications, statements or
documents, duly executed and completed by such Syndication Party, as evidence of
such Syndication Party's exemption from the withholding of United States tax
with respect thereto. Notwithstanding anything herein to the contrary, Borrower
shall not be obligated to make any payments hereunder to such Syndication Party
until such Syndication Party shall have furnished to the Administrative Agent
and Borrower the requested form, certification, statement or document.
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13.31 AMENDMENTS CONCERNING AGENCY FUNCTION. The Administrative Agent
shall not be bound by any waiver, amendment, supplement or modification of this
Credit Agreement or any other Loan Document which affects its duties hereunder
or thereunder unless it shall have given its prior written consent thereto.
13.32 FURTHER ASSURANCES. The Administrative Agent and each Syndication
Party agree to take whatever steps and execute such documents as may be
reasonable and necessary to implement this Article 13 and to carry out fully the
intent thereof.
ARTICLE 14. MISCELLANEOUS
14.1 COSTS AND EXPENSES. To the extent permitted by law, Borrower
agrees to pay to the Administrative Agent and the Syndication Parties, on
demand, all out-of-pocket costs and expenses (a) incurred by the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
counsel retained by the Administrative Agent, and including fees and expenses
incurred for consulting, appraisal, engineering, inspection, and environmental
assessment services) in connection with the preparation, negotiation, and
execution of the Loan Documents and the transactions contemplated thereby, and
processing the Borrowing Notices; and (b) incurred by the Administrative Agent
or any Syndication Party (including, without limitation, the reasonable fees and
expenses of counsel retained by the Administrative Agent and the Syndication
Parties) in connection with the enforcement or protection of the Syndication
Parties' rights under the Loan Documents upon the occurrence of an Event of
Default or upon the commencement of an action by Borrower against the
Administrative Agent or any Syndication Party, including without limitation
collection of the Term Loan (regardless of whether such enforcement or
collection is by court action or otherwise). Borrower shall not be obligated to
pay the costs or expenses of any Person whose only interest in the Term Loan is
as a holder of a participation interest.
14.2 SERVICE OF PROCESS AND CONSENT TO JURISDICTION. Borrower hereby
agrees that any litigation with respect to this Credit Agreement or to enforce
any judgment obtained against Borrower for breach of this Credit Agreement or
under the Notes or other Loan Documents may be brought in the courts of the
State of Colorado and in the United States District Court for the District of
Colorado (if applicable subject matter jurisdictional requirements are present),
as the Administrative Agent may elect; and, by execution and delivery of this
Credit Agreement, Borrower irrevocably submits to such jurisdiction. With
respect to litigation concerning this Credit Agreement or under the Notes or
other Loan Documents within the jurisdiction of the courts of the State of
Colorado or the United States District Court for the District of Colorado,
Borrower hereby irrevocably appoints, until January 15, 2010, The Corporation
Company to serve as the agent of Borrower to receive for and on behalf of
Borrower at such agent's Denver, Colorado office (presently at 1675 Broadway),
service of process, which service may be made by mailing a copy of any summons
or other legal process to Borrower in care of such agent. Borrower agrees that
Borrower shall maintain a duly appointed agent in Colorado for service of
summons and other legal process as long as Borrower
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remains obligated under this Credit Agreement and shall keep the Administrative
Agent advised in writing of the identity and location of such agent. The receipt
by such agent and/or by Borrower of such summons or other legal process in any
such litigation shall be deemed personal service and acceptance by Borrower for
all purposes of such litigation.
14.3 JURY WAIVER. IT IS MUTUALLY AGREED BY AND BETWEEN THE
ADMINISTRATIVE AGENT, EACH SYNDICATION PARTY, AND BORROWER THAT THEY EACH WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY OF THEM
AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS CREDIT AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS.
14.4 NOTICES. All notices, requests and demands required or permitted
under the terms of this Credit Agreement shall be in writing and (a) shall be
addressed as set forth below or at such other address as either party shall
designate in writing, (b) shall be deemed to have been given or made: (i) if
delivered personally, immediately upon delivery, (ii) if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt, (iii) if by nationally recognized overnight courier service with
instructions to deliver the next Banking Day, one (1) Banking Day after sending,
and (iv) if by United States Mail, certified mail, return receipt requested,
five (5) days after mailing.
14.4.1 BORROWER:
Cenex Harvest States Cooperatives
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
FAX: (612) 451-4554
Attention: Vice President Finance
with a copy to:
Cenex Harvest States Cooperatives
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
FAX: (612) 451-4554
Attention: General Counsel
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14.4.2 ADMINISTRATIVE AGENT:
St. Paul Bank for Cooperatives
375 Jackson Street
St. Paul, Minnesota 55101-1849
FAX: (612) 282-8201
Attention: Jeff Swanhorst
14.4.3 SYNDICATION PARTIES:
See Schedule 1 to this Credit Agreement
14.5 LIABILITY OF ADMINISTRATIVE AGENT. The Administrative Agent shall
not have any liabilities or responsibilities to Borrower or any Subsidiary on
account of the failure of any Syndication Party to perform its obligations
hereunder or to any Syndication Party on account of the failure of Borrower or
any Subsidiary to perform their respective obligations hereunder or under any
other Loan Document.
14.6 SUCCESSORS AND ASSIGNS. This Credit Agreement shall be binding
upon and inure to the benefit of Borrower, the Administrative Agent, and the
Syndication Parties, and their respective successors and assigns, except that
Borrower may not assign or transfer its rights or obligations hereunder without
the prior written consent of all of the Syndication Parties.
14.7 SEVERABILITY. The invalidity or unenforceability of any provision
of this Credit Agreement or the other Loan Documents shall not affect the
remaining portions of such documents or instruments; in case of such invalidity
or unenforceability, such documents or instruments shall be construed as if such
invalid or unenforceable provisions had not been included therein.
14.8 ENTIRE AGREEMENT. This Credit Agreement (together with all
exhibits hereto, which are incorporated herein by this reference) and the other
Loan Documents represent the entire understanding of the Administrative Agent,
each Syndication Party, and Borrower with respect to the subject matter hereof
and shall replace and supersede any previous agreements of the parties with
respect to the subject matter hereof.
14.9 APPLICABLE LAW. To the extent not governed by federal law, this
Credit Agreement and the other Loan Documents, and the rights and obligations of
the parties hereto and thereto shall be governed by and interpreted in
accordance with the internal laws of the State of Colorado, without giving
effect to any otherwise applicable rules concerning conflicts of law.
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14.10 CAPTIONS. The captions or headings in this Credit Agreement and
any table of contents hereof are for convenience only and in no way define,
limit or describe the scope or intent of any provision of this Credit Agreement.
14.11 COMPLETE AGREEMENT; AMENDMENTS. THIS CREDIT AGREEMENT, THE NOTES,
AND THE OTHER LOAN DOCUMENTS ARE INTENDED BY THE PARTIES HERETO TO BE A COMPLETE
AND FINAL EXPRESSION OF THEIR AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT. BY INITIALING IN THE MARGIN, THE
ADMINISTRATIVE AGENT, EACH SYNDICATION PARTY, AND BORROWER ACKNOWLEDGE AND AGREE
THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT. This Credit Agreement may not be modified or amended
unless such modification or amendment is in writing and is signed by Borrower,
the Administrative Agent, and all Syndication Parties (and each Syndication
Party hereby agrees to execute any such amendment approved pursuant to Section
13.8 hereof). Borrower agrees that it shall reimburse the Administrative Agent
for all fees and expenses incurred by the Administrative Agent in retaining
outside legal counsel in connection with any amendment or modification to this
Credit Agreement requested by Borrower.
14.12 ADDITIONAL COSTS OF MAINTAINING LOAN. Borrower shall pay to the
Administrative Agent from time to time such amounts as the Administrative Agent
may determine to be necessary to compensate any Syndication Party for any
increase in costs to such Syndication Party which the Administrative Agent
determines, based on information presented to it by such Syndication Party, are
attributable to such Syndication Party's making or maintaining an Advance
hereunder or its obligation to make such Advance, or any reduction in any amount
receivable by such Syndication Party under this Credit Agreement or the Notes
payable to it in respect to such Advance or such obligation (such increases in
costs and reductions in amounts receivable being herein called "ADDITIONAL
COSTS"), resulting from any change after the date of this Credit Agreement in
United States federal, state, municipal, or foreign laws or regulations
(including Regulation D of the Federal Reserve Board), or the adoption or making
after such date of any interpretations, directives, or requirements applying to
a class of banks including such Syndication Party of or under any United States
federal, state, municipal, or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof ("REGULATORY CHANGE"), which:
(a) changes the basis of taxation of any amounts payable to such Syndication
Party under this Credit Agreement or the Notes payable to such Syndication Party
in respect of such Advance (other than taxes imposed on the overall net income
of such Syndication Party); or (b) imposes or modifies any reserve, special
deposit, or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Syndication Party;
or (c) imposes any other condition affecting this Credit Agreement or the Notes
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payable to such Syndication Party (or any of such extensions of credit or
liabilities). The Administrative Agent will notify Borrower of any event
occurring after the date of this Credit Agreement which will entitle such
Syndication Party to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. the Administrative Agent shall include with such notice, a
certificate from such Syndication Party setting forth in reasonable detail the
calculation of the amount of such compensation. Determinations by the
Administrative Agent for purposes of this Section of the effect of any
Regulatory Change on the costs of such Syndication Party of making or
maintaining an Advance or on amounts receivable by such Syndication Party in
respect of Advances, and of the additional amounts required to compensate such
Syndication Party in respect of any Additional Costs, shall be conclusive absent
manifest error, provided that such determinations are made on a reasonable
basis.
14.13 CAPITAL REQUIREMENTS. In the event that the introduction of or
any change in: (a) any law or regulation; or (b) the judicial, administrative,
or other governmental interpretation of any law or regulation; or (c) compliance
by any Syndication Party or any corporation controlling any such Syndication
Party with any guideline or request from any governmental authority (whether or
not having the force of law) has the effect of requiring an increase in the
amount of capital required or expected to be maintained by such Syndication
Party or any corporation controlling such Syndication Party, and such
Syndication Party certifies that such increase is based in any part upon such
Syndication Party's obligations hereunder with respect to the Term Loan, and
other similar obligations, Borrower shall pay to such Syndication Party such
additional amount as shall be certified by such Syndication Party to the
Administrative Agent and to Borrower to be the net present value (discounted at
the Base Rate) of (x) the amount by which such increase in capital reduces the
rate of return on capital which such Syndication Party could have achieved over
the period remaining until the Maturity Date, but for such introduction or
change, (y) multiplied by the product of such Syndication Party's Individual Pro
Rata Share times the Aggregate Commitment. The Administrative Agent will notify
Borrower of any event occurring after the date of this Credit Agreement that
will entitle any such Syndication Party to compensation pursuant to this Section
as promptly as practicable after it obtains knowledge thereof and of such
Syndication Party's determination to request such compensation. The
Administrative Agent shall include with such notice, a certificate from such
Syndication Party setting forth in reasonable detail the calculation of the
amount of such compensation. Determinations by any Syndication Party for
purposes of this Section of the effect of any increase in the amount of capital
required to be maintained by any such Syndication Party and of the amount of
compensation owed to any such Syndication Party under this Section shall be
conclusive absent manifest error, provided that such determinations are made on
a reasonable basis.
14.14 REPLACEMENT NOTES. Upon receipt by Borrower of evidence
satisfactory to it of: (a) the loss, theft, destruction or mutilation of any
Note, and (in case of loss,
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theft or destruction) of the agreement of the Syndication Party to which the
Note was payable to indemnify Borrower, and upon surrender and cancellation of
such Note, if mutilated; or (b) the assignment by any Syndication Party of its
interest hereunder and the Note relating thereto, or any portion thereof,
pursuant to this Credit Agreement, then Borrower will pay any unpaid principal
and interest (and Funding Losses, if applicable) then or previously due and
payable on such Note and will (upon delivery of such Note for cancellation,
unless covered by subparagraph (a) of this Section) deliver in lieu of such Note
a new Note or, in the case of an assignment of a portion of any such Syndication
Party's Interest, new Notes, for any remaining balance.
14.15 PATRONAGE PAYMENTS. Borrower acknowledges and agrees that: (a)
only that portion of the Term Loan represented by CoBank's Individual Pro Rata
Share which is retained by CoBank for its own account is entitled to patronage
distributions in accordance with CoBank's bylaws and its practices and
procedures related to patronage distribution; (b) any patronage, or similar,
payments to which Borrower is entitled on account its ownership of Bank Equity
Interests or otherwise will not be based on any portion of CoBank's interest in
the Term Loan in which CoBank has at any time granted a participation interest;
and (c) St. Paul Bank may, at its sole discretion, pay Borrower patronage or
similar payments on St. Paul Bank's entire Individual Pro Rata Share (without
regard to the amount thereof as to which St. Paul Bank may grant participations
to other Persons) in accordance with St. Paul Bank's bylaws and its practices
and procedures related to patronage distribution.
14.16 MUTUAL RELEASE. Upon full indefeasible payment and satisfaction
of the Bank Debt and Notes and the other obligations contained in this Credit
Agreement, the parties, including Borrower, the Administrative Agent, and each
Syndication Party shall, except as provided in Article 11 hereof, thereupon
automatically each be fully, finally, and forever released and discharged from
any further claim, liability, or obligation in connection with the Bank Debt.
14.17 LIBERAL CONSTRUCTION. This Credit Agreement constitutes a fully
negotiated agreement between commercially sophisticated parties, each assisted
by legal counsel, and shall not be construed and interpreted for or against any
party hereto.
14.18 COUNTERPARTS. This Credit Agreement may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof, each signed by less than all, but together signed by all of
the parties hereto.
14.19 CONFIDENTIALITY. Each Syndication Party shall maintain the
confidential nature of, and shall not use or disclose, any of Borrower's
financial information, confidential information or trade secrets without first
obtaining Borrower's written consent. Nothing in this Section shall require any
Syndication Party to obtain such consent after there is an Event of Default. The
obligations of the Syndication Parties
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shall in no event apply to: (a) providing information about Borrower to any
financial institution contemplated in Sections 13.6, 13.14, and 13.19 hereof, or
to such Syndication Party's parent holding company or any of such Syndication
Party's affiliates; (b) any situation in which any Syndication Party is required
by Law or required by any Governmental Authority to disclose information; (c)
providing information to counsel to any Syndication Party in connection with the
transactions contemplated by the Loan Documents; (d) providing information to
independent auditors retained by the such Syndication Party; (e) any information
that is in or becomes part of the public domain otherwise than through a
wrongful act of such Syndication Party or any of its employees or agents
thereof; (f) any information that is in the possession of any Syndication Party
prior to receipt thereof from Borrower or any other Person known to such
Syndication Party to be acting on behalf of Borrower; (g) any information that
is independently developed by any Syndication Party; and (h) any information
that is disclosed to any Syndication Party by a third party that has no
obligation of confidentiality with respect to the information disclosed. A
Syndication Party's confidentiality requirements continue after it is no longer
a Syndication Party under this Credit Agreement.
[Signature Pages Begin on Page 54]
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IN WITNESS WHEREOF, the parties have executed this Credit Agreement as
of the date first above written.
BORROWER:
CENEX HARVEST STATES
COOPERATIVES, a cooperative corporation
formed under the laws of the State of
Minnesota
By: /s/ T. F. Baker
----------------------------------------
Name: T. F. Baker
Title: Executive Vice President Finance and
Administration
ADMINISTRATIVE AGENT:
ST. PAUL BANK FOR COOPERATIVES
By: /s/ Jeff Swanhorst
----------------------------------------
Name: Jeff Swanhorst
Title: Associate Vice President
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SYNDICATION PARTIES:
COBANK, ACB
By: /s/ Greg Somerhalder
----------------------------------------
Name: Greg Somerhalder
Title: Vice President
Contact Name: Greg Somerhalder
Title: Vice President
Address: 245 North Waco
Wichita, KS 67202
Phone No.: 316/290-2052
Fax No.: 316/290-2006
Payment Instructions:
CoBank, ACB
ABA No.: 307088754
Acct. Name: CoBank, ACB
Account No.: 22274433
Attn: Marshall Allen
Reference: Cenex Harvest States
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SYNDICATION PARTIES:
ST. PAUL BANK FOR COOPERATIVES
By: /s/ Jeff Swanhorst
----------------------------------------
Name: Jeff Swanhorst
Title: Associate Vice President
Contact Name: Jeff Swanhorst
Title: Associate Vice President
Address: 375 Jackson Street
St. Paul, MN 55101-1849
Phone No.: 612/282-8205
Fax No.: 612/282-8249
Payment Instructions:
St. Paul Bank for Cooperatives
ABA No.: 296090471
Acct. Name: Cenex Harvest States
Account No.: 271998
Reference:
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EXHIBIT 2.4
to Credit Agreement
(Term Loan)
PROMISSORY NOTE
$__________.00 Effective Date: _____ __, 199_
FOR VALUE RECEIVED, CENEX HARVEST STATES COOPERATIVES, a Minnesota
cooperative corporation ("Maker"), promises to pay to the order of
_______________ ("Payee") at the office of the Administrative Agent (as defined
in the Credit Agreement), %St. Paul Bank for Cooperatives at 375 Jackson Street,
St. Paul, Minnesota 55101-1849, or such other place as the Administrative Agent
shall direct in writing, the principal sum of ______________ Dollars
($__________.00) or, if less, the amount outstanding under this Note for
Advances made pursuant to the Credit Agreement dated as of June 1, 1998, by and
between St. Paul Bank (for its own benefit as a Syndication Party, and as the
Administrative Agent for the benefit of the present and future Syndication
Parties as named or defined therein) and Maker (as it may be amended from time
to time in the future, the "Credit Agreement") and any Bank Debt related
thereto. This Note is issued and delivered to Payee pursuant to the Credit
Agreement. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings as set forth in the Credit Agreement.
The unpaid balance of this Note from time to time outstanding shall
bear interest as set forth in the Credit Agreement. Interest shall be payable as
provided in the Credit Agreement. Principal shall be payable on the Maturity
Date as provided in the Credit Agreement. This Note has been issued by Maker to
Payee pursuant to the Credit Agreement and reference is made thereto for
specific terms and conditions under which this Note is made and to which this
Note is subject.
This Note is subject to voluntary and mandatory prepayments as set
forth in the Credit Agreement. Amounts repaid may not be reborrowed. Upon the
occurrence of an Event of Default, Maker agrees that the Administrative Agent
and the Payee shall have all rights and remedies set forth in the Credit
Agreement, including without limitation the rights of acceleration set forth in
the Credit Agreement. In addition, the Administrative Agent and the Payee shall
have the right to recover all costs of collection and enforcement of this Note
as provided in the Credit Agreement.
Maker and any endorser, guarantor, surety or assignor hereby waives
presentment for payment, demand, protest, notice of protest, and notice of
dishonor and nonpayment of this Note, and all defenses on the ground of delay,
suretyship, impairment of collateral, or of extension of time at or after
maturity for the payment of this Note.
This Note shall be governed in all respects by the law of the State of
Colorado.
Maker:
CENEX HARVEST STATES COOPERATIVES
a Minnesota corporation
By: _____________________________
Name:_____________________________
Title:____________________________
EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of June 1, 1998 by and between John
D. Johnson (hereafter "Johnson") and Cenex Harvest States Cooperatives, a
Minnesota cooperative corporation (together with all affiliates, the "Company").
1. The Employment Clause
The Company hereby agrees to and does hereby employ Johnson as
President and General Manager, and Johnson hereby agrees to continue in
the employ of the Company as President and General Manager, for the
period set forth in Paragraph 2 below (the period of employment) upon
the other terms and conditions set forth in this Agreement. Upon the
expiration or termination for any reason of service by Noel Estenson as
CEO of the Company (which shall occur not later than December 31,
2000), Johnson shall automatically assume the position of CEO of the
Company.
2. Period of Employment; Termination of Agreement
(a) The period of employment shall commence on the date of this
Agreement and, subject only to the provisions of Paragraphs
6(b) and 6(c) below, relating, respectively, to death and
disability, shall continue for a rolling three (3) year
period, provided that Johnson's employment may be terminated
by either party on at least thirty (30) days written notice,
subject to the rights and obligations of the parties set forth
herein.
(b) Either party may terminate this Agreement and all of the
rights and obligations of the parties hereunder, upon at least
three (3) years' prior written notice to the other party.
3. The Performance Clause
Throughout the period of employment, Johnson agrees to devote his full
time and attention during normal business hours to the business of the
Company, except for earned vacations and except for illness or
incapacity.
4. The Compensation Clause
(a) For all services to be rendered by Johnson in any capacity
during the period of employment, Johnson shall be paid as
annual compensation a base or fixed salary of at least
$500,000. The Board will annually review Johnson's annual
compensation and determine what is appropriate for a cost of
living, merit increase, and/or increase in responsibilities or
duties in connection with a business combination involving the
Company.
(b) Johnson shall be entitled to receive incentive compensation
based on or comparable to the terms of the Executive
Compensation Plan in effect for CENEX, Inc.
<PAGE>
immediately prior to the merger of CENEX, Inc. with and into
Harvest States Cooperatives.
(d) During the term of his employment hereunder, Johnson shall be
entitled to those employee benefits separately made available
to him from time to time by the Board of Directors in its
discretion.
(e) The Company shall bear such ordinary and necessary business
expenses incurred by Johnson in performing his duties
hereunder as the Company determines from time to time,
provided that Johnson accounts promptly for such expenses to
the Company in the manner prescribed from time to time by the
Company.
5. Termination with Severance Allowance
(a) Conditions for Severance Allowance and Amount. In the event of
termination of the employment of Johnson by the Company during
the period of employment for any reason other than for cause,
as defined in (b) below, death or disability, the Company
shall pay Johnson a severance allowance by continuing
Johnson's base or fixed salary for three (3) years, plus
continuing his family health insurance for at least one (1)
year. Said severance allowance shall be in lieu of all other
severance payable to Johnson under Company severance policies.
Said severance shall be paid in semi-monthly installments,
subject to normal withholding taxes. Failure of the Board of
Directors to appoint Johnson CEO of the Company following
termination or expiration of service by Noel Estenson as CEO
of the Company (not later than December 31, 2000) shall be
deemed to constitute an event of termination without cause and
entitle Johnson to receive the severance allowance provided in
this Agreement.
(b) Definition of "For Cause". For the purpose of this Agreement,
termination of Johnson's employment shall be deemed to have
been for cause (and in which case the Company shall have no
obligation to Johnson whatsoever) only:
(i) if termination of Johnson's employment shall have
been the result of an act or acts of fraud, theft or
embezzlement on the part of Johnson which, if
convicted, would constitute a felony and which
results or which is intended to result directly or
indirectly in gain or personal enrichment of Johnson
at the expense of the Company; or
(ii) if termination of Johnson's employment results from
Johnson's willful and material misconduct, including
willful and material failure to perform his duties,
and Johnson has been given written notice by the
Board of Directors with respect to such and Johnson
does not cure within a reasonable time; or
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<PAGE>
(iii) if there has been a breach by Johnson during the
period of employment of the provisions of Paragraph 3
above, relating to the time to be devoted to the
affairs of the Company, and with respect to any
alleged breach of Paragraph 3 hereof, Johnson shall
have substantially failed to remedy such alleged
breach within thirty days from Johnson's receipt of
notice from the Board of Directors.
(c) Request and Release. In order to obtain the severance
allowance provided for in this Agreement, Johnson must submit
a request for severance and must sign a complete release of
all claims. The Company shall have no obligation to pay any
severance allowance unless and until Johnson shall have
submitted the request for severance and signed a full and
complete release of all claims, to be drafted by Legal Counsel
for the Company.
6. Termination without Severance Allowance
(a) Voluntary Termination by Johnson. In the event of voluntary
termination by Johnson, the Company shall not owe Johnson any
severance allowance and Johnson shall not, for a period of
three (3) years from the date of termination, directly or
indirectly participate anywhere in the continental United
States in any activities which are in competition or conflict
with the activities of the Company or any Company subsidiary
or affiliate, including, but not limited to, managing,
consulting, operating, controlling, owning or having an
ownership interest in, being employed by, or being connected
with the management, operation or control of, any business
which is of the same or similar type of business in which the
Company or any Company subsidiary or affiliate presently
engage, or hereafter engage during the term of this Agreement,
or which competes with, or reasonably could be expected to
compete with, the Company or any Company subsidiary or
affiliate. Notwithstanding any provision herein, Johnson shall
be entitled to receive, to the date of termination, base or
fixed compensation plus a prorated amount of Executive
Compensation.
(b) Death. In the event of Johnson's death during the period of
employment, the legal representative of Johnson shall be
entitled to the base or fixed salary provided for in Paragraph
4(a) above for the month in which death shall have occurred,
at the rate being paid at the time of death, and the period of
employment shall be deemed to have ended as of the close of
business on the last day of the month in which death shall
have occurred but without prejudice to any benefits, such as
life insurance, otherwise due in respect of Johnson's death.
(c) Disability.
(i) In the event of Johnson's disability during the
period of employment, Johnson shall be entitled to an
amount equal to the base or fixed salary provided for
in
3
<PAGE>
Paragraph 4(a) above, at the rate being paid at the
time of the commencement of disability, for the
period of such disability but not in excess of twelve
(12) months from the beginning of the period that
establishes such disability, as described in
Paragraph 6(c)(iii) below.
(ii) The amount of any payments due under Paragraph
6(c)(i) shall be reduced by any payments to which
Johnson may be entitled for the same period because
of disability under any disability or pension plan of
Harvest States or of any division, subsidiary, or
affiliate thereof, or as the result of workers'
compensation or nonoccupational disability payments
received from any government entity.
(iii) The term "Disability" as used in this Agreement,
shall mean an illness or accident occurring during
the period of employment which prevents Johnson from
performing the essential functions of his job under
this Agreement, with reasonable accommodations (as
defined by federal and Minnesota disability laws),
for a period of six consecutive months. The period of
employment shall be deemed to have ended as of the
close of business on the last day of such six-month
period but without prejudice to any payments due
Johnson from any disability policy or disability
insurance.
7. Successor in Interest
This Agreement and the rights and obligations hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, and shall also bind and inure to the
benefit of any successor of the Company by merger or consolidation or
any purchaser or assignee of all or substantially all of its assets,
but, except to any such successor, purchaser, or assignee of the
Company, neither this Agreement nor any rights or benefits hereunder
may be assigned by either party hereto.
8. Construction
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
9. Governing Laws
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Minnesota.
4
<PAGE>
10. Notices
Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing, sent by Certified Mail, Return Receipt
Requested:
If to Johnson: John D. Johnson
51 Dellwood Cove
Dellwood, MN 55110
If to the Company: Chairman of the Board of Directors
Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
With a copy to: Legal Department
Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
11. Entire Agreement
This Agreement shall constitute the entire agreement between the
parties, superseding all prior agreements, and may not be modified or
amended and no waiver shall be effective unless by written document
signed by the Chairman of the Board and Johnson.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
CENEX HARVEST STATES COOPERATIVES
/s/ John D. Johnson By: /s/ Elroy Webster
- ------------------------------------ -----------------------------------
John D. Johnson Elroy Webster
Office of the Chair
By: /s/ Gerald Kuster
-----------------------------------
Gerald Kuster
Office of the Chair
5
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Agreement is made effective as of June 1, 1998, between Cenex Harvest
States Cooperatives, a Minnesota cooperative corporation (together with all
affiliates and predecessor companies, the "Company") and Noel Estenson
("Employee").
RECITALS
The Company desires to employ Employee and Employee desires to accept
employment by the Company.
NOW, THEREFORE, it is agreed as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment with the Company, subject to the terms and conditions
hereinafter provided.
2. Term. The employment of Employee hereunder will be for the period
commencing on the effective date of this Agreement and ending on December 31,
2000 (the "Employment Period"); provided, however, that either party may
terminate the employment relationship and the Employment Period prior to the
expiration of such Employment Period as hereinafter provided.
3. Position, Duties, Responsibilities. Employee shall be employed as the
Chief Executive Officer of the Company. Employee shall exercise such authority
and perform such duties and services, consistent with such position, as may be
assigned to him from time to time by the Board of Directors of the Company (the
"Board").
4. Devotion of Time and Best Efforts. Except for vacations and absences
due to temporary illness, Employee shall devote his full time, best efforts and
undivided attention and energies during the Employment Period to the performance
of his duties and to advance the Company's interests, as determined by the
Board. During the Employment Period, Employee shall not, without the prior
approval of the Company (with the approval of a majority of the Board) be
engaged in any other business activity which, in the reasonable judgment of the
Company, conflicts with the duties of Employee hereunder, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage; but
this shall not be construed as preventing Employee from investing his assets in
such form or manner as will not require the performance of services of Employee
in the operations of the affairs of the enterprises or companies in which such
investments are made and will not create a conflict of interest for Employee.
<PAGE>
5. Compensation.
a. Base Salary. During the Employment Period, the Company shall pay
to Employee an initial "Base Salary" at the rate of Five Hundred Thousand
Dollars ($500,000) per year, commencing on the effective date of this Agreement,
payable in accordance with the Company's regular payroll practices and policies
which are in effect from time to time. The Board shall annually review the
amount of Base Salary and shall increase the amount of Base Salary for each year
at a rate of not less than four percent (4%) per annum. Any such upward
adjustment shall not require a written amendment to this Agreement and shall not
affect any other provisions of this Agreement, which shall remain in effect
unless changed by a written amendment to this Agreement or terminated by either
party as provided herein.
b. Incentive Compensation. During the Employment Period, Employee
shall be entitled to receive incentive compensation, payable within the current
customary time frame, which is at least equal to amounts payable pursuant to the
terms of the Executive Compensation Plan currently in effect for the Company. In
calculating the amount of incentive compensation under the Executive
Compensation Plan, it shall be assumed that the Company has met the projected
earnings in the Cenex Long Range Business Plan in effect on January 1, 1998. The
"cap" currently in effect for Employee shall remain at the current 50th
percentile of the appropriate industry comparables but following the effective
date of any merger or consolidation with Harvest States Cooperatives, the
standard for measurement shall be changed from the current model to that
comparable to the 50th percentile of an entity consistent with the size of the
combined new company.
6. Benefit Plans.
a. General. During the Employment Period, Employee shall be eligible
to participate in all executive compensation and employee benefit plans or
programs generally applicable to senior management employees of the Company
pursuant to the terms and conditions of such plans and programs. Nothing
contained in this Agreement shall preclude the Company from terminating or
amending any such plan or program.
b. Qualified Plans. Employee shall be entitled to Company
contributions and benefits with respect to Base Salary under the Company's
thrift and pension plans determined in the same manner as for other participants
in those plans, subject to any contribution or benefit limitations. However, if
such plans as in effect on the date of execution of this Agreement are modified
in a manner which will reduce future contributions or benefits under those plans
for the Employee, then, as a means to make up for those reductions, the Company
shall establish a new nonqualified plan or amend an existing nonqualified plan
which shall provide for any lost contributions with earnings at the actual rate
of earnings under the Employee's accounts in the Company's thrift plan and shall
provide for any lost benefits under the Company's pension plan.
2
<PAGE>
c. Nonqualified Plans.
(1) CENEX, Inc. Executive Compensation Plan-Deferred
Provision. Payments will be continued under this plan's terms with respect
to the five year period ending on September 30,1995. Payments will also be
made under plan terms with respect to the five year period ending on
September 30, 2,000 (the same assumptions shall be made for this purpose
as are made under Paragraph 5(b) of this Agreement); however, if this plan
should be amended or terminated prior to the end of that five year period
or completion of payments, the terms of the plan will be maintained with
respect to the Employee, unless the Employee agrees to accept the modified
provisions of a revised plan or a new plan intended to replace the
Deferred Provision.
(2) CENEX, Inc. Supplemental Executive Retirement Plan.
Benefits will be payable under this plan to the Employee in accordance
with the restatement of the plan effective January 1, 1997; however, if
this plan should be amended or terminated prior to the completion of
payments under it to the Employee, the terms of the plan will be
maintained with respect to the Employee, unless the Employee agrees to
accept the modified provisions of a revised plan or a new plan intended to
replace that restatement.
(3) CENEX, Inc. Supplemental Thrift Plan. Amounts will be
deferred by the Employee and benefits will be payable under this plan to
the Employee in accordance with the restatement of the plan effective
January 1, 1996; however, if this plan should be amended or terminated
prior to the completion of payments under it to the Employee, the terms of
the plan will be maintained with respect to the Employee, unless the
Employee agrees to accept the modified provisions of a revised plan or a
new plan intended to replace that restatement.
d. Flex Time. The amount payable to the Employee upon termination of
employment with CENEX, Inc. under its flex time policy or any greater amount
then payable to the Employee under a revised or new flex time or related policy
shall be payable to the Employee upon such termination of employment.
7. Early Termination.
a. Death. The Employment Period and Employee's employment shall
terminate upon Employee's death.
b. Termination by the Company.
(1) Without Cause. The Company, by action of the Board, may
terminate the Employment Period and Employee's employment, at any time and
for any reason whatsoever, without cause, effective upon delivery of
written notice of termination to Employee.
3
<PAGE>
(2) For Cause. The Company, by action of the Board, may
terminate the Employment Period and Employee's employment at any time for
Cause, effective upon delivery of written notice of termination to
employee. If such termination by the Company is asserted to be for Cause,
such termination notice shall state the grounds that the Board claims
constitute Cause.
As used herein, "Cause" shall mean (a) willful misconduct by
Employee which is damaging or detrimental to the business and affairs of
the Company, monetarily or otherwise, as determined by the Board in the
exercise of its good faith business judgment; (b) a material breach of
this Agreement by Employee, (c) chronic alcoholism or any other form of
substance addiction on the part of Employee, (d) the commission by
Employee of any act involving fraud or dishonesty or moral turpitude, (e)
the indictment for, being bound over for trial following a preliminary
hearing, or the conviction of Employee of any criminal act in either a
state or federal court proceeding, or (f) willful refusal to implement
policies promulgated by the Board.
(3) Disability. The Company, by action of the Board, may
terminate the Employment Period and Employee's employment if Employee
sustains a disability which is serious enough that Employee is not able to
perform the essential functions of Employee's job, with or without
reasonable accommodations, as defined and if required by applicable state
and federal disability laws. Employee shall be presumed to have such a
disability for purpose of this Agreement if Employee qualifies, because of
illness or incapacity, to begin receiving disability income insurance
payments under the long term disability income insurance policy that
Company maintains for the benefit of Employee. If there is no such policy
in effect at the date of Employee's potential disability, or if Employee
does not qualify for such payments, Employee shall nevertheless be
presumed to have such a disability if Employee is substantially incapable
of performing Employee's duties for a period of more than twelve (12)
weeks.
c. Termination by Employee.
(1) Voluntary Resignation. Employee may terminate the
Employment Period and Employee's employment at any time and for any reason
whatsoever, effective upon delivery of written notice of termination to
the Company.
(2) Good Reason Resignation. Employee may terminate the
Employment Period and Employee's employment at any time for Good Reason,
effective upon delivery of written notice of termination to the Company.
If such termination by Employee is asserted to be for "Good Reason", such
termination notice shall state the grounds that the Employee claims
constitute Good Reason. As used herein, "Good Reason" shall mean a
material breach of this Agreement by the Company.
4
<PAGE>
d. Post-Termination Payments by the Company.
(1) Terminations Without Cause or for Good Reason. If
Employee's employment and the Employment Period are terminated by the
Company without Cause or by Employee for Good Reason, if Employee signs
(and does not rescind, as allowed by law) a Release of Claims in a form
satisfactory to the Company which assures, among other things, that
Employee will not commence any type of litigation or other claims as a
result of the termination, and if Employee honors all of Employee's other
obligations as required by this Agreement, the Company will keep Employee
on its payroll as an inactive employee (i.e., in some other capacity to
assure that Employee remains eligible for employee benefits) until
December 31, 2000, and will continue to pay Employee all of the
compensation and benefits provided for in Paragraphs 5 and 6 of this
Agreement. On December 31, 2000, the Company will terminate the inactive
employment status, and Employee will be entitled to apply for COBRA
continuation coverage with respect to health insurance. If Employee elects
COBRA continuation coverage, then, for a period of 12 months, the Company
will pay the same portion of the cost of medical coverage that the Company
would have paid on behalf of the Employee if not for the termination of
employment. In other words, during calendar year 2001, Employee will be
required to pay the same amount that Employee would have had to pay had
Employee not terminated employment effective December 31, 2000. Effective
January 1, 2002, Employee will be responsible for the payment of the
entire COBRA premium. This medical coverage provision is specifically
subject to: (a) changes in the cost of coverage and/or the portion of such
coverage paid by the Company for similarly situated active employees with
respect to whom a termination of employment did not occur; and (b)
Employee being covered under the group medical plan pursuant to COBRA.
Further, it is understood that this provision is not intended to extend or
otherwise impact the availability or duration of COBRA continuation
coverage, but only to address who is responsible for the cost of COBRA
continuation coverage.
(2) Terminations For Cause, Death, Disability, or Voluntary
Resignation. If Employee's employment and the Employment Period are
terminated due to Employee's death or disability, by the Employee as a
Voluntary Resignation, or by the Company for Cause, Employee (or in the
event of his death, his estate) shall be entitled only to his rights (a)
to receive the unpaid portion of his Base Salary, prorated to the date of
termination, (b) to receive reimbursement for any ordinary and reasonable
business expenses for which he shall not theretofore have been reimbursed,
(c) to receive payment for accrued and unused vacation days, (d) to
receive his incentive compensation for each full or partial (on a pro rata
basis) year during which he was employed, to the extent earned and
accrued, pursuant to the terms and conditions of the applicable incentive
compensation plan(s), (e) to receive payments under the Company's pension,
profit sharing, deferred compensation or other benefit plans in which the
Employee has participated, all to the extent and in accordance with the
terms of such plans, and (f) to continue certain health insurance at his
expense pursuant to COBRA.
5
<PAGE>
8. Other Employee Obligations. Employee agrees that the following
provisions will apply throughout Employee's period of active or inactive
employment, and will continue to apply even if Employee's employment and the
Employment Period of are terminated under Paragraph 7, regardless of the reason
for termination:
a. Nondisclosure of Confidential Information. Except to the extent
required in furtherance of the Company's business in connection with matters as
to which Employee is involved as an employee, Employee will not, during the term
of his employment and for an unlimited period thereafter, directly or
indirectly: (1) disclose or furnish to, or discuss with, any other person or
entity any confidential information concerning the Company or its business or
employees, acquired during the period of his employment by the Company; (2)
individually or in conjunction with any other person or entity, employ or cause
to be employed, any such confidential information in any way whatsoever or (3)
without the written consent of the Company, publish or deliver any copies,
abstracts or summaries of any papers, documents, lists, plans, specifications or
drawings containing any such confidential information.
b. Non-Interference. Employee will not, during the term of his
employment and for an unlimited period thereafter, directly or indirectly
attempt to encourage, induce or otherwise solicit any employee or other person
or entity to breach his, her or its agreement with the Company or otherwise
interfere with the advantageous business relationship of the Company with any
person or entity. Employee specifically agrees not to solicit, on Employee's own
behalf or on behalf of another, any of the Company's employees to resign from
their employment with the Company in order to go to work elsewhere. Employee
further specifically agrees not to make any disparaging remarks of any sort or
otherwise communicate any disparaging remarks about the Company or any of its
members, equity holders, directors, officers or employees, directly or
indirectly, to any of the Company's employees, members, equity holders,
directors, customers, vendors, competitors, or other people or entities with
whom the Company has a business or employment relationship.
c. Non-Competition. Employee agrees that during the term of his
active or inactive employment and thereafter for a period of two (2) years,
Employee will not directly or indirectly engage in or carry on a business that
is in competition with any business of the Company. Further, Employee agrees
that during this same period of time he will not act as an agent,
representative, consultant, officer, director, independent contractor or
employee of any entity or enterprise that is in competition with any business of
the Company.
d. Cooperation in Claims. During the term of his employment and for
an unlimited period thereafter, at the request of the Company, Employee will
cooperate with the Company with respect to any claims or lawsuits by or against
the Company where Employee has knowledge of the facts involved in such claims or
lawsuits. Further, Employee will decline to voluntarily aid, assist or cooperate
with any party who has claims or lawsuits against the Company, or with their
attorneys
6
<PAGE>
or agents. The Company and Employee both acknowledge, however, that nothing in
this paragraph shall prevent Employee from honestly testifying at an
administrative hearing, arbitration, deposition or in court, in response to a
lawful and properly served subpoena in a proceeding involving the Company.
e. Remedies. The parties recognize and agree that, because any
breach by Employee of the provisions of this Paragraph 8 would result in damages
difficult to ascertain, the Company shall be entitled to injunctive and other
equitable relief to prevent a breach or threatened breach of the provisions of
this Paragraph 8. Accordingly, the parties specifically agree that the Company
shall be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Paragraph 8, that such relief may be granted without the
necessity of proving actual damages, and that such relief shall be in addition
to, and not in lieu of, any right to recover money damages for any such breach.
f. Enforceability. Employee agrees that considering Employee's
relationship with the Company, and given the terms of this Agreement, the
restrictions and remedies set forth in Paragraph 8 are reasonable.
Notwithstanding the foregoing, if any of the covenants set forth above shall be
held to be invalid or unenforceable, the remaining parts thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts have not been included therein. In the event the provisions
relating to time periods and/or areas of restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time periods or areas of
restriction permitted by law, then such time periods and areas of restriction
shall be amended to become and shall thereafter be the maximum periods and/or
areas of restriction which said court deems reasonable and enforceable. Employee
also agrees that the Company's action in not enforcing a particular breach of
any part of Paragraph 8 will not prevent the Company from enforcing any other
breaches that the Company discovers, and shall not operate as a waiver by the
Company against any future enforcement of a breach.
9. Notices. Notices hereunder shall be in writing and shall be delivered
personally or sent return receipt requested and postage prepaid, addressed as
follows:
If to Employee:
Noel Estenson
c/o Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
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<PAGE>
If to the Company:
Chairman of the Board
Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
10. Assignment. This Agreement is personal in its nature and the parties
hereto shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon each
successor in a change of control of the Company, whether by merger,
consolidation, transfer of all or substantially all assets, sale or otherwise
(and such successor shall thereafter be deemed the "Company" for purposes of
this Agreement).
11. Binding Agreement. The provisions of this Agreement shall be binding
upon, and shall inure to the benefit of, the respective heirs, legal
representatives and successors of the parties hereto.
12. Dispute Resolution. Disputes arising out of or concerning the
performance of this Agreement or Employee's employment with the Company shall be
resolved in accordance with the procedures set forth in Exhibit A attached
hereto and incorporated herein by this reference.
13. Minnesota Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, unless otherwise pre-empted
by federal law.
14. Captions and Section Headings. Captions and paragraph headings used
herein are for convenience only and are not a part of this Agreement and shall
not be used in construing it.
15. Invalid Provisions. If any provision of this Agreement shall be
unlawful, void, or for any reason unenforceable, it shall be deemed severable
from, and shall in no way affect the validity or enforceability of, the
remaining provisions of this Agreement.
16. Waiver of Breach. The failure to enforce at any time any of the
provisions of this Agreement, or to require at any time performance by the other
party of any of the provisions hereof, shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement or
any part hereof or the right of either party thereafter to enforce each and
every provision in accordance with the terms of this Agreement.
17. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations and understandings of the
parties with respect thereto. No modification or amendment of any of the
provisions of this Agreement shall be effective unless in writing specifically
8
<PAGE>
referring hereto and signed by Employee and a member of the Board upon
authorization of the Board to do so.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date set forth above.
/s/ Noel Estenson CENEX HARVEST STATES
- ------------------------------- COOPERATIVES
Noel Estenson
By /s/ Elroy Webster
-------------------------------
Elroy Webster
Office of the Chair
By /s/ Gerald Kuster
-------------------------------
Gerald Kuster
Office of the Chair
EXHIBIT 99
CAUTIONARY STATEMENT
Cenex Harvest States Cooperatives (the "Company"), or persons acting on
behalf of the Company, or outside reviewers retained by the Company making
statements on behalf of the Company, or underwriters, from time to time, may
make, in writing or orally, "forward-looking statements" as defined under the
Private Securities Litigation Reform Act of 1995 (the "Act"). This Cautionary
Statement is for the purpose of qualifying for the "safe harbor" provisions of
the Act and is intended to be a readily available written document that contains
factors which could cause results to differ materially from those projected in
such forward-looking statements. These factors are in addition to any other
cautionary statements, written or oral, which may be made or referred to in
connection with any such forward-looking statement.
The following matters, among others, may have a material adverse effect on
the business, financial condition, liquidity, results of operations or
prospects, financial or otherwise, of the Company. Reference to this Cautionary
Statement in the context of a forward-looking statement shall be deemed to be a
statement that any one or more of the following factors may cause actual results
to differ materially from those which might be projected, forecast, estimated or
budgeted by the Company in such forward-looking statement or statements:
COMPANY SUBJECT TO SUPPLY AND DEMAND FORCES. The Company may be adversely
affected by supply and demand relationships, both domestic and international.
Supply is affected by weather conditions, disease, insect damage, acreage
planted, government regulation and policies and commodity price levels. The
business is also affected by transportation conditions, including rail, vessel,
barge and truck. Demand may be affected by foreign governments and their
programs, relationships of foreign countries with the United States, the
affluence of foreign countries, acts of war, currency exchange fluctuations and
substitution of commodities. The current monetary crisis in Asia has impacted,
and is expected to continue to impact, exports of US agricultural products.
Demand may also be affected by changes in eating habits, by population growth
and increased or decreased per capita consumption of some products.
The Freedom to Farm Act of 1996, enacted in April 1996, may affect crop
production in several ways. The Act more narrowly defines what will qualify as
environmentally sensitive acreage for purposes of the conservation reduction
program, with the result that 3 to 4 million acres may be put back into
agricultural production in the future from a present enrollment of 36.4 million
acres. The Act also removes restrictions on the type of crops planted (other
than fruit and vegetables), allowing farmers to plant crops having favorable
prices and thereby increasing the production of those crops. Increased
production may lower prices of certain crops but increase the amount available
for export. However, the Act also reduces Export Enhancement Program subsidies,
which may adversely affect the ability of U.S. exports to compete with those of
other countries. Reduced demand for US agricultural products may also adversely
affect the demand for fertilizer, chemicals, and petroleum products sold by the
Company and used to produce the crop.
COMPANY SUBJECT TO PRICE RISKS. Upon purchase, the Company has risks of carrying
grain and petroleum, including price changes and performance risks (including
delivery, quality, quantity and shipment period), depending upon the type of
purchase contract entered into. The Company is exposed to risk of loss in the
market value of positions held, consisting of grain and petroleum inventory and
purchase contracts at a fixed or partially fixed price, in the event market
prices decrease. The Company is also exposed to risk of loss on its fixed price
or partially fixed price sales contracts in the event market prices increase.
To reduce the price change risks associated with holding fixed price positions,
the Company generally takes opposite and offsetting positions by entering into
commodity futures contracts (either a straight futures contract or an options
futures contract) on regulated commodity futures exchanges. While hedging
activities reduce the risk of loss from changing market values, such activities
also limit the gain potential which otherwise could result from changes in
market prices. Hedging arrangements do not protect against nonperformance of a
contract. The Company's policy is to generally maintain hedged positions in
grain and petroleum, which are hedgeable, but the Company can be long or short
at any time. The Company's profitability is primarily derived from margins on
grain and products merchandised and processed, not from hedging transactions.
At any one time the Company's inventory and purchase contracts for delivery to
the Company may be substantial.
<PAGE>
OILSEED PROCESSING AND REFINING BUSINESS COMPETITION. Competition in the soybean
processing and refining business is driven by price, transportation costs,
service and product quality. The industry is highly competitive. Competitors are
adding new plants and expanding capacity of existing plants. Media newsletters
and other publications indicate that new crush plants and refinery operations
are being constructed or under strong consideration. Should those facilities be
constructed, the Company estimates that domestic crush capacity would increase
from 10 to 15% and domestic refining capacity would increase from 20 to 30%.
Unless exports increase or existing refineries are closed, this extra capacity
is likely to put additional pressure on prices and erode margins, adversely
affecting the profitability of the Oilseed Processing and Refining Defined
Business Unit. Several competitors operate over various market segments and may
be suppliers to or customers of other competitors.
MILLING BUSINESS COMPETITIVE TRENDS. Certain major competitors of the Wheat
Milling Defined Business Unit have developed long-term relationships with
customers by locating plants adjacent to pasta manufacturing plants. This trend
could potentially decrease the future demand for semolina from nonintegrated
millers.
TAXATION OF COOPERATIVES COULD CHANGE. Although under Subchapter T of the
Internal Revenue Code patronage refunds are excluded in determining taxable
income of a cooperative and patronage refunds are taxable to the recipient,
current income tax laws, regulations and interpretations pertaining to the
receipt of patronage refunds could be changed.
DEPENDENCE ON CERTAIN CUSTOMERS. Each of the Wheat Milling Defined Business Unit
and the Oilseed Processing and Refining Defined Business Unit has certain major
customers. Loss of or a decline in the business done with one or more of these
customers could have a material adverse effect on the operations of the affected
Defined Business Unit. In addition, the Wheat Milling Defined Business Unit
would be adversely affected by a decline in pasta production in the United
States.
The foregoing review of factors pursuant to the Act should not be construed as
exhaustive or as any admission regarding the adequacy of disclosures made by the
Company prior to the effective date of the Act.
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<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<CASH> 112,485,699
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<RECEIVABLES> 436,869,609
<ALLOWANCES> 23,314,558
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