EXECUTION VERSION
 
 
U.S. $100,000,000
CREDIT AGREEMENT
dated as of June 13, 2011
among
PICO Northstar Hallock, LLC, as the Borrower,
PICO Northstar, LLC, as the Parent Guarantor
VARIOUS LENDERS,
ING CAPITAL LLC,
as Agent for the Lenders,
and
ING CAPITAL LLC,
as Sole Lead Arranger and Bookrunner
 
 

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TABLE OF CONTENTS

         
ARTICLE 1 DEFINITIONS
    1  
Section 1.1 Defined Terms
    1  
Section 1.2 Construction and Use of Defined Terms
    43  
Section 1.3 Cross-References
    43  
Section 1.4 Accounting and Financial Determinations
    43  
 
       
ARTICLE 2 COMMITMENTS
    43  
Section 2.1 Commitments
    43  
Section 2.1.1 Term Loan Facility Commitments
    43  
Section 2.1.2 Working Capital Facility Commitments
    43  
Section 2.1.3 Additional Term Loan Facility Commitments
    44  
Section 2.1.4 Agent and Lenders Not Required to Extend Credit under Working
Capital Facility Commitments
    45  
Section 2.1.5 Additional Working Capital Facility Commitments
    45  
Section 2.2 Establishment of Reserves
    47  
Section 2.3 Commitment Fee, Unused Commitment Fee, Deferral Surcharge and
Administrative Fees
    47  
Section 2.4 Defaulting Lender
    48  
Section 2.5 Increased Costs; Capital Adequacy
    48  
Section 2.6 Replacement of Lenders
    49  
Section 2.7 Change of Lending Office
    50  
 
       
ARTICLE 3 LOANS AND NOTES
    50  
Section 3.1 Borrowing and Issuance Procedure
    50  
Section 3.2 Notes
    52  
Section 3.3 Principal Payments
    52  
Section 3.3.1 Repayments and Prepayments
    52  
Section 3.3.2 Working Capital Facility Loans on Borrower’s Behalf
    55  
Section 3.3.3 Reduction of Commitments
    55  
Section 3.4 Interest
    56  
Section 3.4.1 Loan Rates
    56  
Section 3.4.2 Continuation and Conversion Elections
    56  
Section 3.4.3 Post-Default Rates
    56  
Section 3.4.4 Payment Dates
    57  
Section 3.4.5 Rate Determinations
    57  
Section 3.4.6 Limitation on Types of Loans
    57  
Section 3.4.7 Illegality
    58  
Section 3.4.8 Treatment of Affected Loans
    58  
Section 3.4.9 Compensation
    58  
Section 3.5 Taxes
    59  
Section 3.6 Payments, Interest Rate Computations, Other Computations, Etc.
    62  
Section 3.7 Proration of Payments
    62  
Section 3.8 Setoff
    63  

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Section 3.9 Use of Proceeds and Sources of Payment of Construction Expenses
    63  
Section 3.10 Letters of Credit
    64  
Section 3.10.1 Manner of Issuance
    64  
Section 3.10.2 Terms of Letters of Credit
    64  
Section 3.10.3 Drawings Under Letters of Credit
    65  
Section 3.10.4 Letter of Credit Fees
    66  
Section 3.10.5 Letter of Credit Participations
    66  
Section 3.10.6 Limitation of Liability With Respect to Letters of Credit
    67  
Section 3.11 Income With Respect to Deposit Accounts
    68  
 
       
ARTICLE 4 CONDITIONS TO LOANS
    68  
Section 4.1 Closing Date Conditions to All Loans and Letters of Credit
    68  
Section 4.1.1 Loan Documents
    68  
Section 4.1.2 Resolutions, Etc
    68  
Section 4.1.3 Notes
    69  
Section 4.1.4 Major Project Documents
    69  
Section 4.1.5 Necessary Project Approvals
    69  
Section 4.1.6 Technical Evaluation Report
    69  
Section 4.1.7 Insurance Report
    70  
Section 4.1.8 No Contest, Etc
    70  
Section 4.1.9 Certificate as to Completed Conditions, Warranties, No Default,
Etc
    70  
Section 4.1.10 Compliance with Requirements of Law
    70  
Section 4.1.11 Opinions of Counsel
    71  
Section 4.1.12 Closing Fees, Expenses, Etc
    71  
Section 4.1.13 Perfection
    71  
Section 4.1.14 Employment Agreements; Compensation
    72  
Section 4.1.15 Pension and Welfare Liabilities
    72  
Section 4.1.16 Insurance
    72  
Section 4.1.17 Financial Information, Etc
    72  
Section 4.1.18 Required Equity Funding
    72  
Section 4.1.19 Letter to Accountants
    72  
Section 4.1.20 Appointment of Agent for Service of Process
    72  
Section 4.1.21 Agreement to Contribute Capital
    72  
Section 4.1.22 Construction Budget and Construction Schedule
    72  
Section 4.1.23 Other Documents, Certificates, Etc
    73  
Section 4.2 All Loans, Letters of Credit, and Disbursement Instructions
    73  
Section 4.2.1 Compliance with Warranties, No Default, Etc
    73  
Section 4.2.2 Borrowing Request and Letter of Credit Request
    73  
Section 4.2.3 Satisfactory Legal Form
    74  
Section 4.2.4 Margin Regulations
    74  
Section 4.2.5 Adverse Change
    74  
Section 4.3 Conditions to Term Loans
    74  
Section 4.4 Conditions to Additional Term Loans
    75  

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Section 4.5 Conditions to Disbursement of Funds in Cost Overrun Account
    77  
 
       
ARTICLE 5 REPRESENTATIONS AND WARRANTIES, ETC.
    77  
Section 5.1 Organization, Power, Authority, Etc
    78  
Section 5.2 Due Authorization
    78  
Section 5.3 Validity, Etc
    78  
Section 5.4 Financial Information; Solvency
    78  
Section 5.5 Material Adverse Change
    79  
Section 5.6 Absence of Default
    79  
Section 5.7 Litigation, Legislation, Etc
    79  
Section 5.8 Regulations T, U and X
    79  
Section 5.9 Government Regulation
    79  
Section 5.10 Taxes
    80  
Section 5.11 Pension and Welfare Plans
    80  
Section 5.12 Labor Controversies
    81  
Section 5.13 Ownership of Properties; Collateral
    82  
Section 5.14 Intellectual Property
    82  
Section 5.15 Accuracy of Information
    82  
Section 5.16 Insurance
    82  
Section 5.17 Indebtedness
    83  
Section 5.18 Environmental Matters
    83  
Section 5.19 No Burdensome Agreements
    83  
Section 5.20 Consents
    83  
Section 5.21 Major Project Documents
    83  
Section 5.22 Employment Agreements
    83  
Section 5.23 Condition of Property
    83  
Section 5.24 Subsidiaries
    84  
Section 5.25 Trade Relations
    84  
Section 5.26 Leases
    84  
Section 5.27 Event of Abandonment; Loss
    84  
Section 5.28 Anti-Terrorism Laws
    84  
 
       
ARTICLE 6 COVENANTS
    84  
Section 6.1 Affirmative Covenants
    84  
Section 6.1.1 Financial Information, Etc
    84  
Section 6.1.2 Maintenance of Corporate Existence, Etc
    87  
Section 6.1.3 Foreign Qualification
    87  
Section 6.1.4 Payment of Taxes, Etc
    87  
Section 6.1.5 Insurance
    88  
Section 6.1.6 Notice of Default, Litigation, Etc
    88  
Section 6.1.7 Books and Records
    89  
Section 6.1.8 Maintenance of Properties, Etc
    89  
Section 6.1.9 Maintenance of Licenses and Permits
    90  
Section 6.1.10 Employee Plans
    90  
Section 6.1.11 Compliance with Laws
    90  
Section 6.1.12 Real Estate
    90  

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Section 6.1.13 Deposit Accounts, Securities Accounts and Commodity Accounts
    90  
Section 6.1.14 Subsidiary Guaranty, Etc.
    90  
Section 6.1.15 Hedge Contract
    90  
Section 6.1.16 Agricultural Inventory
    91  
Section 6.1.17 Major Project Documents
    92  
Section 6.1.18 Project Construction Completion Requirements
    92  
Section 6.1.19 Debt Service Reserve Account
    92  
Section 6.2 Negative Covenants
    93  
Section 6.2.1 Business Activities
    93  
Section 6.2.2 Indebtedness
    93  
Section 6.2.3 Liens
    93  
Section 6.2.4 Financial Covenants
    95  
Section 6.2.5 Capital Expenditures
    95  
Section 6.2.6 Lease Obligations
    95  
Section 6.2.7 Investments
    96  
Section 6.2.8 Restricted Payments, Etc.
    96  
Section 6.2.9 Take or Pay Contracts; Sale/Leasebacks
    97  
Section 6.2.10 Consolidation, Merger, Subsidiaries, Etc.
    97  
Section 6.2.11 Asset Dispositions, Etc.
    97  
Section 6.2.12 Modification of Organizational Documents, Etc.
    98  
Section 6.2.13 Transactions with Affiliates
    98  
Section 6.2.14 Inconsistent Agreements
    98  
Section 6.2.15 Change in Accounting Method
    98  
Section 6.2.16 Change in Fiscal Year End
    98  
Section 6.2.17 Compliance with ERISA
    98  
Section 6.2.18 Amendments to, and Replacement of, Project Documents
    98  
Section 6.2.19 Change Orders
    99  
Section 6.2.20 Anti-Terrorism Laws
    99  
 
       
ARTICLE 7 EVENTS OF DEFAULT
    99  
Section 7.1 Events of Default
    99  
Section 7.1.1 Non-Payment of Obligations
    99  
Section 7.1.2 Non-Performance of Certain Covenants
    99  
Section 7.1.3 Defaults Under Other Loan Documents; Non-Performance of Other
Obligations
    100  
Section 7.1.4 Bankruptcy, Insolvency, Etc.
    100  
Section 7.1.5 Breach of Warranty
    100  
Section 7.1.6 Default on Other Indebtedness, Etc.
    100  
Section 7.1.7 Failure of Valid, Perfected Lien; Unenforceability of Loan
Documents
    101  
Section 7.1.8 Employee Plans
    101  
Section 7.1.9 Judgments
    101  
Section 7.1.10 Divestiture
    102  
Section 7.1.11 Loss of Permits, Etc.
    102  
Section 7.1.12 Event of Abandonment
    102  

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Section 7.1.13 Material Loss
    102  
Section 7.1.14 Force Majeure
    102  
Section 7.1.15 Default by Third Parties under Project Documents; Insolvency of
Project Party; Termination or
Unenforceability of Project Document
    102  
Section 7.1.16 Default by Borrower under Major Project Documents
    103  
Section 7.1.17 Default by Sponsor under Contribution Documents
    103  
Section 7.1.18 Major Environmental Event
    103  
Section 7.1.19 Project Delay
    103  
Section 7.1.20 Change in Control
    103  
Section 7.1.21 Minimum Tangible Net Worth of Sponsor
    103  
Section 7.2 Action if Bankruptcy
    103  
Section 7.3 Action if Other Event of Default
    103  
Section 7.4 Application of Proceeds Following Default
    104  
 
       
ARTICLE 8 THE AGENT
    105  
Section 8.1 Actions
    105  
Section 8.2 Funding Reliance, Etc
    105  
Section 8.3 Exculpation
    106  
Section 8.4 Successor
    106  
Section 8.5 Loans and other Transactions by the Agent and its Affiliates
    106  
Section 8.6 Credit Decisions
    106  
Section 8.7 Copies, Etc
    107  
Section 8.8 Collateral Matters
    107  
 
       
ARTICLE 9 MISCELLANEOUS
    108  
Section 9.1 Waivers, Amendments, Etc.
    108  
Section 9.2 Notices
    112  
Section 9.3 Costs and Expenses
    113  
Section 9.4 Indemnification
    113  
Section 9.5 Termination; Survival
    115  
Section 9.6 Severability
    115  
Section 9.7 Headings
    115  
Section 9.8 Counterparts, Effectiveness, Etc
    115  
Section 9.9 Governing Law; Entire Agreement
    116  
Section 9.10 Successors and Assigns
    117  
Section 9.11 Sale and Transfers, Participations, Etc
    117  
Section 9.12 Other Transactions
    119  
Section 9.13 Confidentiality
    119  
Section 9.14 Change in Accounting Principles
    120  
Section 9.15 Immunity
    120  
Section 9.16 Waiver of Jury Trial, Etc
    120  
Section 9.17 Limitation of Liability
    121  
Section 9.18 Usury Savings Clause
    121  
Section 9.19 Notice from Agent
    122  
Section 9.20 Sponsor Non-Recourse
    122  

- v -

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SCHEDULES AND EXHIBITS

 
Schedules
Schedule 1.1(a) Locations of Inventory
Schedule 1.1(b) Project Construction Completion Requirements
Schedule 1.1(c) Construction Schedule
Schedule 1.1(d) Construction Budget
Schedule 1.1(e) Project Site
Schedule 1.1(f) Initial Commitments
Schedule 1.1(g) Standard Hedge Contract Terms and Conditions
Schedule 3.1 Borrower’s Account
Schedule 3.6 Agent’s Account
Schedule 4.1.5 Necessary Project Approvals
Schedule 4.1.16 Insurance Requirements
Schedule 5.10 Taxes
Schedule 5.11 Benefit Plans
Schedule 5.13 Existing Liens
Schedule 5.14 Intellectual Property
Schedule 5.16 Insurance
Schedule 5.18 Environmental Matters
Schedule 5.21 Major Project Documents
Schedule 5.22 Employment Contracts
Schedule 5.26 Existing Leases

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Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Working Capital Facility Note
Exhibit A-3 Form of Additional Term Note
Exhibit B-1 Form of Working Capital Facility Borrowing Request
Exhibit B-2 Form of Term Loan Borrowing Request
Exhibit B-3 Form of Additional Term Loan Borrowing Request
Exhibit B-4 Form of Cost Overrun Account Disbursement Request
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Compliance Certificate
Exhibit E Form of Continuation/Conversion Notice
Exhibit F Form of Letter of Credit Request
Exhibit G Form of Project Party Consent
Exhibit H Form of Transfer Supplement

- vii -

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CREDIT AGREEMENT
     THIS CREDIT AGREEMENT, dated as of June 13, 2011 (this “Agreement”), among
PICO Northstar Hallock, LLC (the “Borrower”), PICO Northstar, LLC (the “Parent
Guarantor”), the various lenders from time to time party hereto (the “Lenders”),
ING Capital LLC, a Delaware limited liability company (“ING”), as agent for the
Secured Parties (in such capacity, the “Agent”).
W I T N E S S E T H:
RECITALS.
     WHEREAS, the Borrower has requested that the Lenders (i) make loans
available to the Borrower from time to time under a delayed draw term loan
facility in an aggregate principal amount of up to Eighty-Nine Million Five
Hundred Thousand and No/100 Dollars ($89,500,000) to finance in part the
construction of the Project, and (ii) extend credit in the form of a working
capital facility in an aggregate principal amount of up to Ten Million Five
Hundred Thousand and No/100 Dollars ($10,500,000); and
     WHEREAS, the Lenders are willing, on the terms and conditions hereinafter
set forth (including, without limitation, Articles 2 and 4), to extend such
credit facilities and make extensions of credit pursuant thereto; and
     WHEREAS, the credit facilities will be used in the manner described in
Section 3.9 below;
     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
DEFINITIONS
     SECTION 1.1 Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
     “Accounts” means “accounts”, “instruments”, “contract rights”, “chattel
paper”, “documents”, and “general intangibles” (including “payment
intangibles”), as each term is defined in the UCC, and the proceeds thereof,
arising directly or indirectly from the sale or lease of goods or the providing
of services in the ordinary course of business and shall include, without
limitation the Land O’Lakes Accounts.
     “Account Debtor” means any Person who is or may become obligated under,
with respect to, or on account of, an Account.

 

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     “Additional Equity Contributions” shall mean all contributions of equity
made by the Sponsor from time to time after the Closing Date pursuant to the
Agreement to Contribute Capital.
     “Additional Lender” means any bank or other financial institution that
agrees to make an Additional Term Loan or to provide an Additional Working
Capital Facility Commitment and that at the time it agrees to extend such credit
is not a Lender hereunder.
     “Additional Term Loan” means a loan made by the Lenders to the Borrower
pursuant to Section 2.1.3.
     “Additional Term Loan Amendment” has the meaning set forth in
Section 2.1.3.
     “Additional Term Loan Facility Availability Period” means the period
(a) beginning on April 30, 2011, and (b) ending on the Additional Term Loan
Maturity Date.
     “Additional Term Loan Facility Commitment” means any commitment that
hereafter may be obtained from the Additional Term Loan Lenders to make
Additional Term Loans pursuant to Section 2.1.3.
     “Additional Term Loan Facility Commitment Amount” means up to $10,500,000,
as such amount may be reduced from time to time upon repayment of the Additional
Term Loans.
     “Additional Term Loan Lender” means a Lender or an Additional Lender that
agrees to provide an Additional Term Loan Facility Commitment in accordance with
Section 2.1.3.
     “Additional Term Loan Maturity Date” means the earliest of:
     (a) the fifth anniversary of the Closing Date;
     (b) immediately and without further action, the date on which any Event of
Default described in Section 7.1.4 occurs;
     (c) the date on which any Event of Default other than any Event of Default
described Section 7.1.4 shall have occurred and be continuing and either:
          (i) any Loans are declared to be due and payable pursuant to
Section 7.3; or
          (ii) in the absence of such declaration, the Agent, acting at the
direction of the Required Lenders, shall give notice to Borrower that the Term
Loan Facility Commitments, the Additional Term Loan Facility Commitments and the
Working Capital Facility Commitments have been terminated; and
     (d) the date on which a Change in Control occurs.
     “Additional Term Loan Mortgage Amendment” has the meaning set forth in
Section 4.4.
     “Additional Term Loan Percentage” means as to any Lender, the percentage
equivalent of a fraction the numerator of which is the amount of such Lender’s
Additional Term Loan

2

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Facility Commitment and the denominator of which is the aggregate amount of the
Additional Term Loan Facility Commitments of all Lenders.
     “Additional Term Note” means a promissory note of the Borrower, dated the
date hereof, and substantially in the form of Exhibit A-3 attached hereto, as
amended, restated, supplemented or otherwise modified from time to time, and
shall also refer to all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
     “Additional Working Capital Facility Commitment” has the meaning set forth
in Section 2.1.5.
     “Additional Working Capital Facility Commitment Amendment” has the meaning
set forth in Section 2.1.5.
     “Additional Working Capital Facility Commitment Amount” has the meaning set
forth in Section 2.1.5.
     “Additional Working Capital Facility Lender” has the meaning set forth in
Section 2.1.5.
     “Additional Working Capital Facility Mortgage Amendment” has the meaning
set forth in Section 2.1.5.
     “Affected Lender” has the meaning set forth in Section 2.6.
     “Affiliate” of any Person means any other Person that, directly or
indirectly, controls or is controlled by or under common control with such
Person. A Person shall be deemed to be “controlled by” any other Person if such
other Person possesses, directly or indirectly, the power:
     (a) to vote 10% or more of the securities having ordinary voting power for
the election of directors of such Person; or
     (b) to direct or cause the direction of the management or policies of such
Person whether by contract or otherwise;
provided, however, that no Lender (other than a Sponsor Lender) shall be deemed
to be an Affiliate of the Borrower.
     “Agent” means ING, as agent for the Secured Parties pursuant to the terms
of this Agreement, or such other Person as shall have subsequently been
appointed as the successor agent pursuant to Section 8.4.
     “Agreement” means this Credit Agreement as originally in effect on the
Closing Date and as thereafter from time to time amended, restated,
supplemented, or otherwise modified from time to time.
     “Agreement to Contribute Capital” means that certain Agreement to
Contribute Capital, dated as of the Closing Date made by the Sponsor in favor of
the Agent, for the benefit of the Secured Parties, pursuant to which the Sponsor
has agreed to make the PICO Equity

3

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Contribution, the Financial Covenant Default Contribution and the Cost Overrun
Contributions, as such Agreement to Contribute Capital may be amended, restated,
supplemented or otherwise modified from time to time.
     “Alternate Base Rate” means a fluctuating rate of interest per annum equal
to the higher of:
     (a) the arithmetic average of rates of interest announced by each of the
Reference Lenders from time to time at such Reference Lender’s principal New
York City office as its prime (or base) rate for U.S. domestic commercial loans;
     (b) the Federal Funds Rate from time to time in effect plus one half of one
percent (0.50%); and
     (c) the Eurodollar Base Rate for a one-month interest period from time to
time in effect plus 1.00% per annum.
The Alternate Base Rate shall be calculated as of each date. If the Alternate
Base Rate as of any given date shall change from the immediately prior date, the
interest rate applicable to Base Rate Loans shall change effective on such date.
     “Anti-Terrorism Laws” means any laws relating to terrorism or money
laundering, including Executive Order No. 13224 (effective September 24, 2001),
the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act,
and the laws administered by OFAC.
     “Applicable Margin” means, (a) at all times prior to the Project
Construction Completion Date, as to Base Rate Loans, 3.00% per annum and as to
Eurodollar Loans, 4.00% per annum, and (b) from and after the Project
Construction Completion Date, (i) for the first ninety (90) days following the
Project Construction Completion Date, as to Base Rate Loans, 2.75% per annum and
as to Eurodollar Loans, 3.75% per annum, and (ii) thereafter, the margins
applicable to Base Rate Loans and Eurodollar Loans, respectively, shall be based
upon the Debt to Capitalization Ratio determined on the applicable Debt to
Capitalization Ratio Determination Date, in accordance with the following grid:

                              Debt to   Eurodollar Base   Base Rate Category  
Capitalization Ratio   Rate Margin   Margin 1  
Greater than 55%
  3.75%   2.75% 2  
Greater than 45% and less than or equal to 55%
  3.00%   2.00% 3  
Greater than 35% and less than or equal to 45%
  2.50%   1.50% 4  
Less than or equal to 35%
  2.00%   1.00%

4

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The Applicable Margin shall be calculated on each Debt to Capitalization Ratio
Determination Date and shall be effective with respect to all Loans and Letters
of Credit outstanding from and including such date up to and excluding the next
succeeding Debt to Capitalization Ratio Determination Date; provided, however,
that, if it is not possible to calculate the Applicable Margin as a result of
the Borrower’s failure to deliver financial statements and Compliance
Certificate when so required by Section 6.1.1(a) and (b) or the Compliance
Certificate when so required by Section 6.1.1(d), respectively, the Applicable
Margin shall be at Category 1 of the grid set forth above until such time as
such financial statements and Compliance Certificates are delivered, at which
time the Applicable Margin shall be determined as provided above. In the event
that the determination of the Debt to Capitalization Ratio is shown to be
inaccurate (regardless of whether this Agreement or the Commitments are in
effect when such inaccuracy is discovered), and such inaccuracy, if corrected,
would have led to the application of a higher Applicable Margin under the grid
set forth above for any period, then (i) the Borrower shall immediately deliver
to the Agent a corrected Compliance Certificate for such period, (ii) the
Applicable Margin shall be at the Applicable Margin under the grid for such
period determined on the basis of such corrected Compliance Certificate, and
(iii) the Borrower shall immediately pay to the Agent, for the account of the
Lenders, the accrued additional interest owing as a result of the increased
Applicable Margin for such period. The provisions of this definition shall not
limit the rights of the Agent and the Lenders with respect to Section 3.4.3 or
Article 7.
     “Approval” means each and every approval, consent, filing and registration
by or with any federal, state or other regulatory authority (domestic or
foreign) necessary to authorize or permit the execution, delivery or performance
of this Agreement, the Notes or any other Loan Document, the granting of any
security contemplated hereby or thereby, the validity or enforceability hereof
or thereof, or the consummation of the transactions contemplated by the Loan
Documents and shall include, without limitation, the Necessary Project
Approvals.
     “Authorized Officer” means, relative to any Loan Party, those officers of
such Loan Party whose signatures, incumbency and authority shall have been
certified to the Agent and the Lenders pursuant to Section 4.1.2(a) or which are
certified after the Closing Date in a certificate conforming to the requirements
of Section 4.1.2(a) and, with respect to the Borrower, shall include the chief
operating officer, president, chief financial officer, or chief legal officer of
the Borrower.
     “Base Rate Loans” means Loans, or portions thereof, that bear interest on
the basis of the Alternate Base Rate.
     “Blocked Person” means any Person: (i) listed in the annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224; (ii) owned or
controlled by, or acting for or on behalf of, any person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224; (iii) with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law; (iv) that commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive
Order No. 13224; or (v) that is named as a “specially designated national” or
“blocked person” on the most current OFAC Lists.

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     “Borrower” has the meaning set forth in the preamble to this Agreement.
     “Borrower’s Tax-Paying Entities” has the meaning set forth in
Section 6.2.8.
     “Borrowing” means any group of Loans, or portions thereof, of the same type
and, in the case of Eurodollar Loans, having the same Interest Period, in each
case made, converted or continued by the Lenders on the same Business Day
pursuant to the same Borrowing Request or Continuation/Conversion Notice in
accordance with Sections 3.1 or 3.4.2, respectively.
     “Borrowing Base” means, on any date of determination, an amount equal to:
(a) the sum of (i) 80% of Eligible Accounts plus (ii) 70% of Eligible Finished
Goods Inventory plus (iii) 80% of Eligible Hedged Seed Inventory, plus (iv) 70%
of Eligible Unhedged Seed Inventory plus (v) 50% of Eligible Canadian Inventory,
plus (vi) 70% of Eligible Crude Canola Oil Inventory plus (vii) 50% of Eligible
Other Inventory plus (viii) 100% of Eligible Margin Deposits minus (b) such
reserves as may be established from time to time pursuant to Section 2.2 hereof.
     “Borrowing Base Certificate” means a certificate of the chief operating,
accounting or financial Authorized Officer of the Borrower in the form of
Exhibit C attached hereto.
     “Borrowing Request” means a loan request and certificate duly executed by
an Authorized Officer of the Borrower in the form of Exhibit B-1 with respect to
Borrowings of Working Capital Facility Loans, in the form of Exhibit B-2 with
respect to Borrowings of Term Loans, and in the form of Exhibit B-3 with respect
to Borrowings of Additional Term Loans.
     “Business Day” means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
     “Capital Stock” of any Person means any and all Stock of such Person,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) Stock of such Person or other equity
participations in such Person, in each case whether general or limited, voting
or non-voting, preferred or common.
     “Capitalized Lease Liabilities” means all monetary obligations of the
Borrower and its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, are or would be classified as capitalized leases.
     “Cash Equivalent Investment” means, at any time:
     (a) any direct obligation issued or guaranteed by the United States of
America or any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America, or issued by any state or political
subdivision or public instrumentality thereof, (i) which has a remaining
maturity at the time of purchase of not more than one year or (ii) which is
subject to a repurchase agreement with a Lender or any Eligible Lending
Institution exercisable within one year from the time of purchase so long as
such direct obligation remains

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in the possession of the Borrower or in the possession of a Lender and
(iii) which, in the case of obligations of any state or political subdivision or
public instrumentality thereof, is rated AA or better by Moody’s;
     (b) certificates of deposit, time deposits, demand deposits and bankers’
acceptances, having a remaining maturity at the time of purchase of not more
than one year, issued by a Lender or by any Eligible Lending Institution;
     (c) corporate obligations rated Prime-1 by Moody’s or A-1 by S&P, having a
remaining maturity at the time of purchase of not more than one year; and
     (d) shares of funds registered under the Investment Company Act of 1940, as
amended, having assets of at least $100,000,000 which invest only in obligations
described above and which shares are rated by Moody’s or S&P in one of the two
highest rating categories assigned by such agencies for obligations of such
nature.
     “Certificate Regarding Capital Contributions” means a certificate duly
executed by the chief operating, accounting or financial Authorized Officer of
the Borrower as to receipt by the Borrower of (i) the Pre-Closing Equity
Contributions, and (ii) the PICO Equity Contribution.
     “Change in Control” means the occurrence of one or more of the following:
     (a) the failure of the Parent Guarantor to own and hold, beneficially and
of record, and to control, 100% of the Stock of the Borrower;
     (b) the failure of the Sponsor to own and hold, directly or indirectly,
beneficially and of record, not less than eighty-eight percent (88%) of the
Common Stock and 100% of the Qualified Preferred Equity Interests of the Parent
Guarantor;
     (c) the failure of the Original Member to own and hold, beneficially and of
record, not less than twelve percent (12%) of the Common Stock of the Parent
Guarantor, other than as a result of any Additional Equity Contributions;
     (d) the sale, transfer or other disposition by the Sponsor or any of its
Subsidiaries, or by the Original Member of any Stock of the Parent Guarantor;
     (e) during any consecutive twelve-month period, individuals who at the
beginning of such period constituted the board of directors of the Sponsor
(together with any new directors whose election by the board of directors of the
Sponsor or whose nomination for election by the stockholders of the Sponsor was
approved by a vote of at least a majority of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved shall cease for any reason to
constitute a majority of the board of directors of the Sponsor then in office;
or
     (f) any “person” or “group” (as such terms are used in sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) shall become the
“beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act),
directly or indirectly, of more than thirty percent (30%) of the outstanding
membership interests of the Sponsor.

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     “Change Order” means a request by the Borrower to amend, modify, supplement
or otherwise alter the scope of work under any Construction Contract where the
effect of such amendment, modification, supplementation or alteration would be
to materially increase the cost payable by the Borrower under such Construction
Contract or to materially extend or delay the period originally provided to the
Project Party under such Construction Contract for the achievement or delivery
of any material item under such Construction Contract.
     “Charges” means all federal, state, county, city, municipal, local, foreign
or other governmental (including, without limitation, PBGC) (a) taxes at the
time due and payable, and (b) levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) the Borrower’s and its Subsidiaries’ employees, payroll, income or gross
receipts, (iv) the Borrower’s and its Subsidiaries’ ownership or use of their
assets, or (v) any other aspect of the Borrower’s and its Subsidiaries’
business.
     “Closing Date” means June 13, 2011.
     “Collateral” means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower or any Subsidiary on
which a Lien is granted to secure the Obligations.
     “Commitment” means, with respect to any Lender, the commitment of such
Lender to make Loans pursuant to Section 2.1 and to participate in Letters of
Credit pursuant to Section 3.10.
     “Commodity Account” means any commodity account, as such term is defined in
the UCC.
     “Commodity Account Control Agreement” means any control agreement executed
by and among the Borrower, the Agent, for the benefit of the Secured Parties,
and the commodity intermediary at which the Borrower maintains a Commodity
Account, in form and substance satisfactory to the Agent.
     “Commonly Controlled Entity” means an entity, trade or business, whether or
not incorporated, which is from time to time a member of a controlled group or a
group under common control with the Borrower within the meaning of
Sections 414(b), 414(c), 414(m) or 414(o) of the IRC or Section 4001(a)(14) of
ERISA.
     “Compliance Certificate” means a certificate duly executed by the chief
operating, accounting or financial Authorized Officer of the Borrower in the
form of Exhibit D attached hereto.
     “Consolidated Capital Expenditures” means, for any period, without
duplication, the sum of (a) the gross dollar amount of additions during such
period to property, plant, equipment and other fixed assets of the Borrower and
its Subsidiaries, including those additions made in the ordinary course of
business, plus (b) (to the extent not otherwise included in clause (a) of this
definition) the aggregate amount of Capitalized Lease Liabilities incurred
during such period by the Borrower and its Subsidiaries.

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     “Construction Budget” means the budget identified as the “Construction
Budget” on Schedule 1.1(d) that sets forth the projected Construction Expenses,
with a categorization of each anticipated material Construction Expense, and
presented in a manner that reflects each of the key dates in the Construction
Schedule.
     “Construction Contracts” means the agreements identified as “Construction
Contracts” on Schedule 5.21, as such agreements may be amended, restated,
supplemented or otherwise modified from time to time, together with such
additional Contractual Obligations for the development, engineering, design,
construction, permitting, insuring, environmental compliance, procurement and
installation of materials, supplies and equipment, start-up and testing of, or
the provision of consulting services in connection with, the Project; provided,
however, that “Construction Contracts” shall not include any Loan Document.
     “Construction Expenses” means all items of costs and expenses required in
connection with the acquisition, development, engineering, design, construction,
permitting, insuring, environmental compliance, procurement and installation of
materials, supplies and equipment, start-up, testing and financing (including
without limitation, interest, fees and expenses related to financing) with
respect to the Project, as more particularly described on Schedule 1.1(d).
     “Construction Schedule” means the schedule for construction of the Project
described in Schedule 1.1(c).
     “Consulting Contracts” means the agreements identified as “Consulting
Contracts” on Schedule 5.21, as such agreements may be amended, restated,
supplemented or otherwise modified from time to time; provided, however, that
“Consulting Contracts” shall not include any agreement with the Lender
Consultants.
     “Continuation/Conversion Notice” means a notice of continuation or
conversion and certificate duly executed by the chief operating, accounting or
financial Authorized Officer of the Borrower in the form of Exhibit E attached
hereto.
     “Contractual Obligation” means, relative to any Person, any provision of
any security issued by such Person or any provision of any Instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound, excluding, in the case of the Borrower and any of its
Subsidiaries, the Loan Documents.
     “Contribution Documents” means (i) the Certificate Regarding Capital
Contributions, and (ii) the Agreement to Contribute Capital, in each case as
amended, restated, supplemented or otherwise modified from time to time.
     “Contributions” means the contributions to the equity capital of the Parent
Guarantor and the Borrower made pursuant to, or described in, the Contribution
Documents.
     “Cost Overrun” means the amount, if any, by which Construction Expenses
exceed the sum of (a) the budgeted amount of Construction Expenses, including
the budgeted contingency amount, as reflected in the Construction Budget, and
(b) the amount of cash on deposit in the Cost Overrun Account.

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     “Cost Overrun Account” means the deposit account which is established for
the payment of Construction Expenses, which shall be subject to a Deposit
Account Control Agreement in favor of the Agent for the benefit of the Secured
Parties, and into which shall be deposited the proceeds of the Cost Overrun
Contributions.
     “Cost Overrun Account Disbursement Request” means a request and certificate
duly executed by an Authorized Officer of the Borrower in the form of
Exhibit B-4.
     “Cost Overrun Contribution” means any and all contributions made by the
Sponsor directly or indirectly to the Borrower in satisfaction of the
requirements of Section 2(a) of the Agreement to Contribute Capital.
     “Current Assets” means, with respect to any Person, all current assets of
such Person as of any date of determination calculated in accordance with GAAP,
but excluding Indebtedness due from Affiliates and cash and Cash Equivalent
Investments.
     “Current Liabilities” means, with respect to any Person, (i) all
liabilities of such Person that should, in accordance with GAAP, be classified
as current liabilities, excluding the current portion of long-term debt.
     “Debt Service” means, for any period, the sum of (a) Interest Expense for
such period, plus (b) scheduled principal repayments of Indebtedness (including,
without limitation, scheduled payments of principal in respect of Capitalized
Lease Liabilities) of the Borrower and its Subsidiaries for such period;
provided, however, (i) Debt Service for the four Fiscal Quarter period ending on
the last day of the second full Fiscal Quarter following the Project
Construction Completion Date shall be deemed to be (x) Debt Service for the
first and second full Fiscal Quarters following the Project Construction
Completion Date multiplied by (y) 2.0; and (ii) Debt Service for the four Fiscal
Quarter period ending on the last day of the third full Fiscal Quarter following
the Project Construction Completion Date shall be deemed to be (x) Debt Service
for the first, second and third full Fiscal Quarters following the Project
Construction Completion Date multiplied by (y) 1.33.
     “Debt Service Coverage Ratio” means, for any period, the ratio of
(a) EBITDA of the Borrower and its Subsidiaries for such period less
(i) Consolidated Capital Expenditures for such period (excluding that portion of
Consolidated Capital Expenditures that is financed by Indebtedness (other than
the Obligations)) less (ii) Permitted Tax Distributions with respect to such
period less (iii) any other distributions made by the Parent Guarantor to its
members during such period to (b) Debt Service for such period.
     “Debt Service Reserve Account” means a Deposit Account established by the
Borrower on or prior to the Project Construction Completion Date, in the name of
the Agent for the benefit of the Lenders into which the Borrower shall, from and
after the Closing Date, remit and maintain an amount on deposit at all times
that is not less than the Debt Service Reserve Amount in accordance with
Section 6.1.19.
     “Debt Service Reserve Amount” means as of any given date, the greater of
(x) an amount equal to $5,000,000, and (y) projected debt service for the Loans
for the immediately following

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six-month period. For the avoidance of doubt, the Debt Service Reserve Amount
shall be in addition to, and shall not include, the amount of any Financial
Covenant Default Contribution.
     “Debt to Adjusted Capitalization Ratio” means, as of any date, the ratio of
(a) Total Debt as of such date to (b) the sum of (i) Total Debt as of such date
plus (ii) the Parent Guarantor’s consolidated shareholders’ or member’s equity
as of such date plus (iii) an amount equal to the difference of (x) an amount
equal to development expenses in an amount not to exceed $8,350,000 incurred in
connection with the Project but solely to the extent such development expenses
are treated as current expenses (and are not capitalized) on the financial
statements of the Borrower in accordance with GAAP minus (y) the amount of
development expenses referenced in clause (x) above that would have been
amortized as of such date in accordance with GAAP had such development expenses
been capitalized and not currently expensed.
     “Debt to Capitalization Ratio” means, as of any date, the ratio of
(a) Total Debt as of such date to (b) the sum of (i) Total Debt as of such date
plus (ii) the Parent Guarantor’s consolidated shareholders’ or member’s equity
as of such date.
     “Debt to Capitalization Ratio Determination Date” means the date of
determination of the Debt to Capitalization Ratio, which shall be the date upon
which the Borrower has delivered to the Agent the financial statements and
Compliance Certificate required pursuant to Section 6.1.1(a) and (b) or the
Compliance Certificate required pursuant to Section 6.1.1(d), or, in the event
the Borrower should fail to deliver any such financial statements or Compliance
Certificate, as applicable, the date such financial statements or Compliance
Certificate were required to be delivered.
     “Default” means any condition that constitutes an Event of Default, or
that, with the giving of any notice or lapse of time or both, would constitute
an Event of Default.
     “Defaulting Lender” means any Lender that (a) has failed to fund any
portion of the Loans or participations in the Letters of Credit required to be
funded by it hereunder within one (1) Business Day of the date required to be
funded by it hereunder unless such failure has been cured, (b) has otherwise
failed to pay over to Agent or any other Lender any other amount required to be
paid by it hereunder within one (1) Business Day of the date when due, unless
the subject of a good faith dispute or unless such failure has been cured,
(c) has been, or its parent company has been, deemed insolvent, (d) has given
verbal or written notice to Agent, Borrower, or any other Lender, or has
otherwise announced, that such Lender believes it will not, or fails to promptly
provide to Agent upon request reasonably satisfactory assurance that such Lender
will, comply with its funding obligations under this Agreement, or (e) has
become, or its parent company has become, the subject of a bankruptcy,
receivership, conservatorship, or insolvency proceeding.
     “Deferral Period” means each Fiscal Quarter with respect to which a
Quarterly Payment has been declared to be a Deferred Payment.
     “Deferred Payment” means a payment of principal due with respect to the
Term Loan which is deferred pursuant to the provisions of Section 3.3.1(c).

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     “Deferred Payment Date” means a Quarterly Payment Date on which a Deferred
Payment would have been due had it not been declared to be a Deferred Payment.
     “Deposit Account” means any deposit account, as such term is defined in the
UCC.
     “Deposit Account Control Agreement” means any control agreement executed by
and among the Borrower, the Agent, for the benefit of the Secured Parties, and
the depository institution at which the Borrower maintains a Deposit Account, in
form and substance satisfactory to the Agent.
     “Disbursement Instruction” means an instruction given by the Agent at the
request of the Borrower, from time to time, to the bank at which the Cost
Overrun Account is maintained, to disburse proceeds maintained in the Cost
Overrun Account for payment or reimbursement of Construction Expenses.
     “Dollar” and the sign “$” mean lawful money of the United States.
     “Downgraded Lender” means any Lender (other than a Farm Credit System
Lender) during any period for which such Lender or, if such Lender does not have
a long term unsecured debt rating, such Lender’s parent company, fails to
maintain both a long term unsecured debt rating by S&P of not less than BBB and
a long term unsecured debt rating by Moody’s of not less than Baa.
     “EBITDA” means, for any period for any Person and its Subsidiaries
determined on a consolidated basis, an amount equal to Net Income plus (to the
extent deducted in determining Net Income) Interest Expense, provisions for
income taxes, depreciation and amortization expense, and all unrealized non-cash
losses minus (to the extent included in determining Net Income) all unrealized
non-cash gains, with each such component of EBITDA to be determined in
accordance with GAAP; provided, however, (i) EBITDA for the four Fiscal Quarter
period ending on the last day of the second full Fiscal Quarter following the
Project Construction Completion Date shall be deemed to be (x) EBITDA for the
first and second full Fiscal Quarters following the Project Construction
Completion Date plus (y) $15,148,557; and (ii) EBITDA for the four Fiscal
Quarter period ending on the last day of the third full Fiscal Quarter following
the Project Construction Completion Date shall be deemed to be (x) EBITDA for
the first, second and third full Fiscal Quarters following the Project
Construction Completion Date plus (y) $6,381,481.
     “Eligible Accounts” means the net outstanding balance, less all finance
charges, late fees and other fees which are unearned, of all Land O’Lakes
Accounts of the Borrower and its Subsidiaries; provided however, that the
following Accounts shall not be Eligible Accounts:
     (a) any Account as to which any representation or warranty contained in
this Agreement, the Security Agreement or any of the other Loan Documents
applicable either to Accounts in general or to any such specific Account is not
true as of any date made in any material respect;
     (b) all Accounts if more than twenty percent (20%) of such Accounts do not
constitute Eligible Accounts by virtue of clause (e) of this definition;

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     (c) all Accounts if Land O’Lakes has (i) become insolvent or generally
failed to pay, or admitted in writing its inability to pay, debts as they become
due, (ii) applied for, consented to, or acquiesced in, the appointment of a
trustee, receiver, sequestrator or other custodian for Land O’Lakes or any
property thereof or made a general assignment for the benefit of creditors,
(iii) in the absence of such application, consent or acquiescence, permitted or
suffered to exist the appointment of a trustee, receiver, sequestrator or other
custodian for Land O’Lakes or for a substantial part of its property, or
(iv) permitted or suffered to exist the commencement and continuance of any
bankruptcy, reorganization, debt arrangement or other case or proceeding under
any bankruptcy or insolvency law or any dissolution, winding up or liquidation
proceeding in respect of Land O’Lakes;
     (d) any Account that is billed with terms that exceed fifteen (15) days;
     (e) any Account that, as of any date of determination, remains unpaid
fifteen (15) days past original due date;
     (f) any Account that is subject to set-off (including, without limitation,
the amount of all commissions owing to Land O’Lakes under the Land O’Lakes
Agreements), provided that only a portion of such Account in the amount by which
such Account may be set off shall not be deemed an Eligible Account;
     (g) any Account that is denominated in any currency other than Dollars;
     (h) any Account that is subject to any claim or dispute by Land O’Lakes;
     (i) any Account that arises from a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
may be conditional;
     (j) any Account that is not subject to a valid and perfected, first
priority Lien in favor of the Agent, for the benefit of the Secured Parties, or
that is subject to any Lien whatsoever, other than such Lien in favor of the
Agent, for the benefit of the Secured Parties and other than Qualified Liens;
     (k) any Account that is not evidenced by an invoice or other writing in
form acceptable to the Agent;
     (l) any Account that is evidenced by chattel paper or an instrument unless
such chattel paper or instrument is pledged to the Agent, for the benefit of the
Secured Parties, pursuant to documentation in form and substance satisfactory to
the Agent;
     (m) any Account as to which the Borrower may be, in order to be entitled to
collect such Account (or, if such Account is evidenced by multiple invoices, the
amount of such Account evidenced by any such invoice), required to perform any
additional service or perform or incur any additional obligation in respect of
such Account (or amount so invoiced);
     (n) any Account as to which the Borrower has not submitted all necessary
documentation or supplied all necessary information to Land O’Lakes for payment
of such

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Account or has not fulfilled all other obligations in respect thereof, including
verification of the eligibility of the Account for payment by Land O’Lakes; or
     (o) any Account that contravenes (or as to which any related contract
contravenes) in any material respect any laws, rules or regulations applicable
thereto or as to which any party to any such related contract is in violation of
any such law, rule or regulation in any material respect.
The determination by the Agent that any Account shall be deemed ineligible by
virtue of its being described by one of such categories shall not be deemed to
indicate that such Account may not also be deemed ineligible by virtue of being
described by any other such category or to preclude the Agent from reclassifying
such Account into such other category, should the Account cease to be described
by the first such category.
     “Eligible Canadian Inventory” means Inventory consisting of canola seed
that would constitute Eligible Inventory but for the fact that it is not located
in the United States so long as (i) such Inventory is located in Manitoba,
Canada, in a bonded warehouse acceptable to the Agent, and (ii) such Inventory
is evidenced by negotiable documents of title which have been delivered to the
Agent; provided that “Eligible Canadian Inventory” shall exclude any Inventory
acquired within 30 days of the date of determination which is subject to the
currently exercisable rights of unpaid suppliers or farmers under section 81.1
or 81.2 of the Bankruptcy and Insolvency Act (Canada) or the comparable
provision of any other applicable law.
     “Eligible Crude Canola Oil Inventory” means Inventory consisting of crude
canola oil that satisfies the criteria for Eligible Inventory set forth in the
definition thereof.
     “Eligible Finished Goods Inventory” means Finished Goods Inventory (valued
at cost or, if such Eligible Finished Goods Inventory is subject to a binding
sales contract, the contract price for such Eligible Finished Goods Inventory as
provided in such binding sales contract) that satisfies the criteria for
Eligible Inventory set forth in the definition thereof.
     “Eligible Futures Contracts” means written contracts between the Borrower
and third-party counterparties for sale at a future date for a specific already
determined price or prices that seek to eliminate or reduce volatility in
(i) price (or cost) and (ii) performance which would otherwise affect the
Borrower in its normal daily operations in cash-basis (or spot) markets,
provided that (a) such contracts are exchange-traded contracts with
counterparties that are futures exchanges regulated by the Commodities Futures
Trading Commission or the Manitoba Securities Commission, or such contracts are
traded over-the-counter with counterparties that have been approved by the
Agent, and (b) such contracts constitute commodity contracts carried in a
Commodity Account that is subject to a Commodity Account Control Agreement.
     “Eligible Hedged Seed Inventory” means Eligible Inventory consisting of
canola seed (valued at fair market value) with respect to which the Borrower has
entered into Eligible Futures Contracts.
     “Eligible Inventory” means Inventory that complies with each of the
representations and warranties with respect to any specific item of Inventory or
to Inventory generally made by the

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Borrower in the Loan Documents, and that the Agent shall have determined to be
eligible for inclusion in the Borrowing Base at any particular time; provided,
however, that the value of such Eligible Inventory shall be the lower of the
cost and fair market value of such Eligible Inventory, such cost determined on a
first-in, first-out basis (except that (x) Eligible Hedged Seed Inventory shall
be valued at fair market value and (y) Eligible Finished Goods Inventory shall
be valued at cost or, if such Eligible Finished Goods Inventory is subject to a
binding sales contract, the contract price for such Eligible Finished Goods
Inventory as provided in such binding sales contract). Without limitation of the
Agent’s right to determine that an item of Inventory does not constitute
Eligible Inventory, an item of Inventory shall not constitute Eligible Inventory
if:
     (a) the Borrower does not have good, valid, and marketable title thereto;
     (b) it is not located at one of the locations in the United States set
forth on Schedule 1.1(a) hereto;
     (c) it is located on real property leased by the Borrower, in a contract
warehouse, in transit in the possession of a third party carrier, or otherwise
in the possession of a third party, in each case, unless (i) such Inventory is
subject to a landlord’s waiver, warehouseman’s agreement, bailee agreement,
freight forwarder’s agreement or similar agreement, in each case in form and
substance satisfactory to the Agent, executed by the landlord, warehouseman,
bailee, or other third party, as the case may be, or (ii) the Agent has
established rent or other appropriate reserves with respect to such Inventory;
     (d) it bears trademarks owned by any third party as to which there are
restrictions (other than the payment of royalties) on the Borrower’s or any
assignee’s rights to re-sell such Inventory (unless such third party has
provided a trademark licensor consent in favor of the Agent in form and
substance satisfactory to the Agent);
     (e) it is not subject to a valid and perfected first priority Lien in favor
of the Agent, for the benefit of the Secured Parties, or it is subject to any
Lien whatsoever, other than such Lien in favor of the Agent, for the benefit of
the Secured Parties and other than Qualified Liens;
     (f) it consists of goods returned or rejected by the Account Debtors;
     (g) it consists of goods that are obsolete or slow-moving, excess,
restrictive or custom items, work-in-process, or goods that constitute packaging
and shipping materials, bill and hold goods, defective goods, or Inventory
acquired on consignment;
     (h) it consists of Finished Goods Inventory that does not meet the
specifications set forth in the Sales and Marketing Contracts, including without
limitation, the Land O’Lakes Agreements, as modified from time to time; or
     (i) it consists of crude canola oil that does not meet the commercial
standards established by the Oil Seed Processors Association for crude canola
oil or established by other similar and generally accepted industry
organizations identified by the Agent from time to time.

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     “Eligible Lending Institution” means a financial institution having a
branch or office in the United States and having capital and surplus and
undivided profits aggregating at least $100,000,000 and rated Prime-1 or better
by Moody’s or A-1 or better by S&P.
     “Eligible Margin Account” means any Commodity Account of the Borrower:
(i) through which the Borrower has entered into Eligible Futures Contracts,
(ii) which is maintained with a registered commodities broker who has entered
into a Commodity Account Control Agreement with the Agent and the Borrower,
(iii) in which the Agent has a first priority perfected Lien, and (iv) which is
subject to no other Lien, other than Permitted Liens.
     “Eligible Margin Deposits” means the net liquidation value maintained in
all Eligible Margin Accounts.
     “Eligible Other Inventory” means Inventory, other than Finished Goods
Inventory, Eligible Hedged Seed Inventory, Eligible Unhedged Seed Inventory,
Eligible Canadian Inventory and Eligible Crude Canola Oil Inventory, that
satisfies the criteria for Eligible Inventory set forth in the definition
thereof.
     “Eligible Unhedged Seed Inventory” means Eligible Inventory consisting of
canola seed that is not Eligible Hedged Seed Inventory.
     “Environment” means soil, surface waters, ground waters, land, streams,
sediments, surface or subsurface strata and ambient air.
     “Environmental Laws” means all federal, state, local and foreign laws and
regulations, codes, common law, consent agreements, orders and decrees, and
judgments or injunctions issued, promulgated, approved or entered thereunder,
relating to pollution or protection of the Environment, natural resources or
human health and safety.
     “Environmental Indemnity Agreement” means the Environmental Indemnity
Agreement, dated as of the Closing Date, made by the Borrower in favor of the
Agent, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.
     “Environmental Liabilities and Costs” means all liabilities, obligations,
responsibilities, remedial actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all fees,
disbursements and expenses of counsel, expert and consulting fees and costs of
investigation and feasibility studies), fines, penalties, settlement costs,
sanctions and interest, incurred as a result of any claim or demand by any
Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute, any Environmental Law, permit, order,
variance or agreement with a Governmental Authority or other Person, arising
from or related to the administration of any Environmental Law or arising from
environmental, health or safety conditions or a release or threatened release
resulting from the past, present or future operations of the Borrower or any of
its Subsidiaries or affecting any of their properties, or any release or
threatened release for which the Borrower or any of its Subsidiaries is
otherwise responsible under any Environmental Law.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case

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as in effect from time to time. References to sections of ERISA also refer to
any successor sections.
     “Eurodollar Base Rate” means, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the greater of (i) one percent (1.0%)
per annum, and (ii) the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period as reported on Reuters Screen LIBOR01 Page (or
any successor source) as of 11:00 A.M., London time, three (3) Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Reuters Screen LIBOR01 Page (or otherwise on such screen), the
“Eurodollar Base Rate” shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected by
the Agent or, in the absence of such availability, by reference to the rate at
which the Agent is offered Dollar deposits at or about 11:00 A.M., New York City
time, three (3) Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.
     “Eurodollar Loans” means Loans, or portions thereof, that bear interest on
the basis of the Eurodollar Rate.
     “Eurodollar Rate” means, with respect to any Borrowing of Eurodollar Loans
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined by the Agent to be equal to
(i) the Eurodollar Base Rate for such Borrowing for such Interest Period divided
by (ii) one (1) minus the Reserve Requirement. The Eurodollar Rate for any
Interest Period will be determined initially by the Agent on the basis of the
Reserve Requirement in effect on the date three (3) Business Days prior to the
commencement of such Interest Period and, from time to time thereafter during
such Interest Period, such Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in the Reserve Requirement during
such Interest Period.
     “Event of Abandonment” means any of the following shall have occurred:
(a) the abandonment by the Borrower of the development, engineering,
construction, use, testing, start-up, operation or maintenance of the Project,
or (b) the suspension of all or any substantial part of the Borrower’s
activities with respect to the Project, except as expressly permitted under the
Loan Documents or in connection with any event of force majeure, a Loss, or an
emergency affecting the Project which the Borrower is using commercially
reasonable efforts to overcome, or any maintenance or repair of the Project
(whether scheduled or unscheduled) which the Borrower is using commercially
reasonable efforts in undertaking.
     “Event of Default” means any of the events set forth in Section 7.1.
     “Excess Cash Flow” means, for any Fiscal Year, an amount equal to: EBITDA
for such Fiscal Year minus (b) the sum of (i) cash Interest Expense paid during
such Fiscal Year, plus (ii) taxes and Permitted Tax Distributions paid in cash
during such Fiscal Year, plus (iii) the amount of actual Consolidated Capital
Expenditures made during such Fiscal Year which are not financed (other than
with the proceeds of Loans), plus (iv) scheduled repayments of principal

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under any Indebtedness plus (v) prepayments of the Term Loan during any such
Fiscal Year (other than prepayments pursuant to Section 3.3.1(l)) plus (vi) any
increase in Working Capital from the last day of the prior Fiscal Year to the
last day of such Fiscal Year, minus (vii) any decrease in Working Capital from
the last day of the prior Fiscal Year to the last day of such Fiscal Year.
     “Excess Cash Flow Recapture Percentage” means, as to each Fiscal Year, the
applicable percentage set forth below the applicable Debt to Capitalization
Ratio as of the last day of such Fiscal Year:

                  Debt to       Less than or   Less than or     Capitalization  
    equal to 55% and   equal to 45% and   Less than or Ratio   Greater than 55%
  greater than 45%   greater than 35%   equal to 35%
Excess Cash Flow Recapture Percentage
  75%   50%   25%   0%

     “Excess Contingency Funds Certificate” means a certificate given by the
Borrower and confirmed by the Independent Engineer stating that after giving
effect to the making of any Borrowing of Term Loans all or any portion of the
proceeds of which are to be used to purchase canola seed, the undrawn amount of
the Term Loan Commitment, together with the amounts in the Cost Overrun Account,
are sufficient to satisfy the Project Construction Completion Requirements on or
prior to the Project Construction Completion Deadline.
     “Excluded Issuances” means the proceeds of any (a) issuance of any Capital
Stock of the Parent Guarantor to any employees, officers, directors or
consultants of any Loan Party under, or upon the exercise of options granted
under, any stock-based incentive plan of any Loan Party, (b) any issuance of
Capital Stock of the Parent Guarantor under any employee stock purchase plan of
any Loan Party, and (c) Qualified Preferred Equity Issuances.
     “Excluded Taxes” means, with respect to the Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, under any Note or any other Loan Document, (a) Taxes imposed
on or measured by the net income (however denominated), gross margins, profits
or gains of, and franchise Taxes imposed (in lieu of net income Taxes) on, such
recipient by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized, in which its principal office (or, in
the case of a Lender, its applicable lending office) is located or with which it
has a permanent or former connection (other than a connection resulting in whole
or in part from any Loan Document or any actions related thereto), (b) any
branch profits Taxes imposed by the United States or any similar Tax imposed by
any other jurisdiction in which the Borrower is located or under the laws of
which such recipient is organized or in which its principal office (or, in the
case of a Lender, its applicable lending office) is located, (c) any backup
withholding Tax required to be withheld from amounts payable to a Lender that
has failed to comply with clause (A) of Section 3.5(f)(ii), and (d) in the case
of a Foreign Lender, any United States withholding tax that (i) is required to
be imposed on amounts that are payable (directly or indirectly) to such Foreign
Lender pursuant

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to the laws in force at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or (ii) is attributable to any failure or
inability of such Foreign Lender (other than as a result of a change in law
after such Foreign Lender becomes a party hereto) to comply with clause (B) of
Section 3.5(f)(ii) or Section 9.11(e) (or to any inaccuracy or deficiency of any
documentation provided by such Foreign Lender under clause (B) of
Section 3.5(f)(ii) or Section 9.11(e)), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding Tax pursuant to Section 3.5(a).
     “Existing Leases” shall have the meaning set forth in Section 6.2.6.
     “Farm Products” means farm products as such term is defined in the Food
Security Act and the regulations promulgated pursuant thereto or the Uniform
Commercial Code as in effect from time to time in any relevant jurisdiction.
     “Farm Products Seller” has the meaning set forth in Section 6.1.16.
     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to:
     (a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York; or
     (b) if such rate is not so published for any day which is a Business Day,
the arithmetic average of the quotations for such transactions received by the
Agent, in its sole discretion, either from (i) three federal funds brokers of
recognized standing selected by the Agent in its sole discretion or (ii) the
Reference Lenders.
     “Fee Letter” means that certain confidential letter agreement dated the
Closing Date among the Agent and the Borrower.
     “Financial Covenant Default Contribution” means an additional one-time
contribution to the Borrower in the amount of $5,000,000 made by the Sponsor for
deposit into the Debt Service Reserve Account upon failure of the Borrower to
comply with any financial covenant set forth in Section 6.2.4.
     “Financing Statements” means the UCC-1 financing statements filed with
respect to the Security Documents pursuant to clause (a) of Section 4.1.13.
     “Finished Goods Inventory” means Inventory that constitutes finished goods
and products produced at the Project Site consisting of canola meal, oil and
other by-products of processed canola seed, but excluding Inventory that
constitutes raw materials, work-in-process and crude canola oil.
     “Fiscal Quarter” means any quarter of a Fiscal Year ending March 31,
June 30, September 30 or December 31.

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     “Fiscal Year” means, subject to Sections 6.2.16 and 9.14, each twelve month
accounting period of the Borrower ending on December 31.
     “Food Security Act” means the Food Security Act, 7 U.S.C. § 1631.
     “Food Security Act Notices” shall have the meaning set forth in Section
6.1.16.
     “Foreign Lender” means any Lender that is organized (or that is otherwise
resident for Tax purposes) under the laws of a jurisdiction other than that in
which the Borrower is resident for Tax purposes. The United States, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction for purposes of this definition.
     “Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course.
     “F.R.S. Board” means the Board of Governors of the Federal Reserve System
(or any successor).
     “GAAP” means generally accepted accounting principles in effect from time
to time in the United States.
     “General Contractor” means McGough Industrial Construction, LLC.
     “General Contractor Agreement” means that certain Agreement dated
November 16, 2007, between Northstar Agri Industries Hallock, LLC and the
General Contractor, for a Canola Crushing Facility, as amended by that certain
Amendment No. 1 to Agreement Between Owner and Contractor dated September 20,
2010, as such agreement may be further amended, restated, supplemented or
otherwise modified from time to time.
     “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.
     “Hedge Contract” means any “floor”, “hedge”, “swap”, “collar”, “cap”,
“futures”, or similar agreement between a Borrower and any other Person,
including any Lender Party or Affiliate of any Lender Party, intended to fix the
relative amount of such Borrower’s risk in respect of changes in interest rates,
commodity prices and/or foreign currency exchange.
     “Hedge Termination Value” means, in respect of any one or more Hedge
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedge Contracts, (a) for any date on or after
the date such Hedge Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Hedge Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Contracts (which may include a Lender or any
Affiliate of a Lender) or, if no such readily available

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quotations are available, the termination value(s) determined in accordance with
such Hedge Contracts.
     “Hedging Reserve” means, at any time, an amount equal at such time to the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower would be required to pay if all Eligible Futures Contracts were
terminated at such time giving effect to current market conditions
notwithstanding any contrary treatment in accordance with GAAP.
     “herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular section,
subsection, clause or provision of this Agreement or such other Loan Document.
     “including” means including without limiting the generality of any
description preceding or following such term.
     “Indebtedness” of any Person means, without duplication,
     (a) all obligations of such Person for borrowed money (including all notes
payable and drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other similar instruments
on which interest charges are customarily paid;
     (b) all obligations, contingent or otherwise, relative to the stated amount
of all letters of credit, whether or not drawn, and banker’s acceptances issued
for the account of such Person and the net obligations under all Hedge Contracts
of such Person;
     (c) all Capitalized Lease Liabilities of such Person (to the extent
required by GAAP to be included on the balance sheet of such Person);
     (d) whether or not so included as liabilities in accordance with GAAP:
     (i) all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade accounts payable arising in the ordinary
course of business) and Indebtedness secured by a Lien on property owned or
being purchased by such Person (including Indebtedness arising under conditional
sales or other title retention agreements), whether or not such Indebtedness
shall have been assumed by such Person or is limited in recourse; and
     (ii) all obligations of such Person in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise assure
a creditor against loss in respect of, Indebtedness of another Person of the
type described in clause (a), (b), (c) or (d)(i), above, or clause (e) below;
     (e) all obligations of such Person to redeem, purchase or otherwise retire
or extinguish any of its Capital Stock at a fixed or determinable date (whether
by operation of a sinking fund or otherwise), at another’s option or upon the
occurrence of a condition not solely with the control of such Person (e.g.,
redemption from future earnings).

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     “Indemnified Liabilities” means any and all actions, causes of action,
suits, losses, costs, liabilities, damages and expenses incurred by or asserted
or awarded against any Lender Party and against which the Borrower has
indemnified the Lender Parties as provided in Section 9.4.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Independent Engineer” means SAIC Energy, Environment & Infrastructure,
LLC, a Delaware limited liability company, successor to R.W. Beck, Inc., a
Washington corporation, or any replacement appointed by the Agent and, unless an
Event of Default shall have occurred and be continuing, consented to by the
Borrower, such consent not to be unreasonably withheld or delayed.
     “ING” means ING Capital LLC, a Delaware limited liability company.
     “Insolvency” or “Insolvent” means, at any particular time, with respect to
any Multiemployer Pension Plan that such Multiemployer Pension Plan is insolvent
within the meaning of Section 4245 of ERISA.
     “Instrument” means any contract, agreement, letter of credit, indenture,
mortgage, warrant, deed, certificate of title, document or writing (whether by
formal agreement, letter or otherwise) under which any obligation is evidenced,
assumed or undertaken, any Lien (or right or interest therein) is granted or
perfected, or any property (or right or interest therein) is conveyed.
     “Insurance Consultant” means Moore-McNeil, LLC, a Tennessee limited
liability company, or any replacement appointed by the Agent and, unless an
Event of Default shall have occurred and be continuing, consented to by the
Borrower, such consent not to be unreasonably withheld or delayed.
     “Intellectual Property” means, collectively, (a) patents, patent rights and
patent applications, copyrights and copyright applications, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights, applications for registration of trademarks, trade names and service
marks, fictitious names registrations and trademarks, trade name and service
mark registrations, domain names and domain name registration agreements, and
(b) patent licenses, trademark licenses, copyright licenses and other licenses
to use any of the items described in clause (a), and any other similar items
necessary to conduct or operate the business of the Borrower and its
Subsidiaries.
     “Interest Expense” means, for any period, the interest expense accrued
during such period in respect of Indebtedness of the Borrower and its
Subsidiaries, measured on a consolidated basis in accordance with GAAP.
     “Interest Period” means, relative to any Eurodollar Loans comprising part
of the same Borrowing, the period beginning on (and including) the date on which
such Eurodollar Loans are made or continued as, or converted into, Eurodollar
Loans pursuant to Section 3.1 or Section 3.4.2 and ending on (but excluding) the
date which numerically corresponds to such date three or six months thereafter
(or, if such month has no numerically corresponding date, on the

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last Business Day of such month), in either case as the Borrower may select in
its relevant notice pursuant to Section 3.1 or Section 3.4.2; provided, however,
that:
     (a) the Borrower shall not be permitted to select Interest Periods to be in
effect at any one time which have expiration dates occurring on more than four
(4) different dates;
     (b) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day
(unless such next following Business Day is the first Business Day of a calendar
month, in which case such Interest Period shall end on the Business Day next
preceding such numerically corresponding date);
     (c) (i) no such Interest Period with respect to Term Loans may end later
than the Term Loan Maturity Date, (ii) no such Interest Period with respect to
Additional Term Loans may end later than the Additional Term Loan Maturity Date,
and (iii) no such Interest Period with respect to Working Capital Facility Loans
may end later than the Working Capital Facility Maturity Date; and
     (d) in the case of Interest Periods for the Term Loans or Additional Term
Loans consisting of Eurodollar Loans, no such Interest Period may end later than
the date of any principal repayment with respect to the Term Loans or Additional
Term Loans as set forth in clause (c) of Section 3.3.1, if on such date the
Borrower otherwise would be required to repay any portion of any Borrowing prior
to the end of the Interest Period relative to such Borrowing.
     “Internal Revenue Service” means the Internal Revenue Service of the United
States of America.
     “Inventory” means “inventory” (as such term is defined in the UCC).
     “Investment” means, relative to any Person:
     (a) any loan or advance made by such Person to any other Person (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business);
     (b) any ownership or similar interest held by such Person in any other
Person; and
     (c) the purchase of any debt or equity securities or instruments issued by
any other Person (including, without limitation, Capital Stock, notes,
debentures, drafts and acceptances, and trust certificates).
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.

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     “IRC” means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to Sections of the IRC
also refer to any successor sections.
     “knowledge” means, with respect to an individual, that such individual has
knowledge of the particular fact or other matter at the applicable time of
determination, and with respect to an entity, that any director, manager or
other person performing similar functions of such entity, or any officer or
employee of such entity at a vice-president level or above, has knowledge of the
particular fact or other matter at the applicable time of determination.
     “Land O’Lakes” means Land O’Lakes Purina Feed, LLC, a wholly owned
subsidiary of Land O’Lakes Inc.
     “Land O’Lakes Accounts” means Accounts for which Land O’Lakes is the
Account Debtor and which (i) arise from the purchase of the Borrower’s Inventory
by Land O’Lakes for its own account as Account Debtor (whether for its own use,
for resale or otherwise), or (ii) consist of the payment obligations of Land
O’Lakes arising under the Land O’Lakes Agreements with respect to purchases of
the Borrower’s Inventory by third parties.
     “Land O’Lakes Agreements” means (i) that certain Canola Oil Exclusive
Product Marketing and Off Take Agreement dated February 9, 2010, between Land
O’Lakes and Northstar Agri Industries Hallock, LLC, a Delaware limited liability
company, and (ii) that certain Canola Meal Exclusive Product Marketing and Off
Take Agreement dated February 9, 2010, between Land O’Lakes and Northstar Agri
Industries Hallock, LLC, a Delaware limited liability company, as such
agreements may be amended, restated, supplemented or otherwise modified from
time to time.
     “Lead Arranger” means ING in its capacity as Lead Arranger for the credit
facilities provided under this Agreement.
     “Lender” means any of the various lenders as are, or hereafter become,
parties to this Agreement.
     “Lender Consultants” means the Independent Engineer, the Insurance
Consultant and any other advisors in connection with the construction or
operation of the Project, including without limitation, the development,
engineering, construction, start-up, permitting, environmental compliance and
testing of the Project, which are selected and engaged by the Agent.
     “Lender Parties” means, collectively, the Agent, any issuer of a Letter of
Credit and each Lender, each of their respective successors and assigns, and
each of their respective officers, directors, employees, attorneys and agents
and each of their respective successors and assigns.
     “Letter of Credit” means an irrevocable standby letter of credit issued
pursuant to the Working Capital Facility Commitment for the account of the
Borrower or one of its Subsidiaries pursuant to Section 3.10.

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     “Letter of Credit Obligation” means, in respect of each Letter of Credit,
the undrawn stated amount of such Letter of Credit, plus the amount of all
drawings under such Letter of Credit for which any Lender has not been
reimbursed by the Borrower.
     “Letter of Credit Request” means a request and certificate for the issuance
of a Letter of Credit, duly executed by the chief operating, accounting or
financial Authorized Officer of the Borrower in the form of Exhibit F, delivered
by the Borrower to the Agent pursuant to Section 3.10.1, together with the
letter of credit application accompanying such request.
     “Letter of Credit Sub-Facility” means the letter of credit facility
provided by the Lenders to the Borrower pursuant to Section 2.1.2 and
Section 3.10.
     “Letter of Credit Sub-Facility Amount” means the maximum amount of the
Working Capital Facility Availability which may be used by the Borrower under
the Letter of Credit Sub-Facility for Letters of Credit, which shall initially
be $5,000,000, as such amount may be reduced from time to time pursuant to
Section 3.3.3.
     “Lien” means any mortgage, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, lien (statutory or otherwise), adverse claim
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever, including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of any jurisdiction.
     “Liquidity” means, as to the Borrower, an amount equal to the sum of
(i) the Borrower’s unrestricted cash and Cash Equivalent Investments plus
(ii) Working Capital Facility Availability.
     “LLC Agreement” means the Agreement of Limited Liability Company dated as
of December 23, 2010, of the Borrower, as it may be amended, restated,
supplemented, or otherwise modified from time to time.
     “Loan Documents” means, collectively, this Agreement, the Notes, each
Security Document, the Fee Letter, the Post-Closing Syndication Letter
Agreement, each Borrowing Request, each Cost Overrun Account Disbursement
Request, and each other Instrument executed in favor of the Agent or any issuer
of a Letter of Credit that is delivered by any Loan Party, on or prior to the
date hereof or at any time hereafter, in connection with the transactions
contemplated by this Agreement, in each case, as amended, restated, supplemented
or otherwise modified from time to time.
     “Loan Party” means any of the Borrower, the Parent Guarantor, the Parent
Guarantor’s Subsidiaries and any Affiliate of any of them which is a party to
any of the Loan Documents, other than the Sponsor.
     “Loans” means, relative to a Lender, the Term Loans, the Additional Term
Loans and the Working Capital Facility Loans made by such Lender to the Borrower
pursuant to Section 2.1.1, Section 2.1.2, Section 2.1.3, and Section 3.10.3(c).

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     “Loss” means any loss, damage, destruction, theft, or seizure of, or any
other casualty with respect to, or any condemnation of, any property or asset of
the Borrower or any Subsidiary in an amount in excess of $500,000 individually
or $500,000 in the aggregate for any Fiscal Year; and the “amount” of any Loss
means the greater of (i) the costs to repair or replace the property or asset
that was the subject of such Loss and (ii) the amount of insurance proceeds or
condemnation awards payable as a result of such Loss.
     “Major Construction Contracts” means the General Contractor Agreement, the
Project Architect-Engineer Agreement, the other Construction Contracts
identified as “Major Construction Contracts” on Schedule 5.21, and each
additional Construction Contract entered into by or on behalf of the Borrower
(a) that provides for payments in an aggregate amount in excess of $2,000,000,
or (b) that the Independent Engineer has determined in good faith and in
consultation with the Borrower is material to the Project and has designated as
a “Major Construction Contract”.
     “Major Environmental Event” means (i) prior to the Project Construction
Completion Date, any event, release, occurrence or other matter arising as a
result of the failure of any Loan Party to be in compliance with all applicable
Environmental Laws or the discovery of the existence of any condition governed
by applicable Environmental Laws (each, an “Environmental Event”), which, singly
or in the aggregate with all other Environmental Events, could reasonably be
expected to result in a Project Delay, a Cost Overrun, or Environmental
Liabilities and Costs in excess of $500,000, and (ii) on or after the Project
Construction Completion Date, the occurrence of any Environmental Event, which,
singly or in the aggregate with all other Environmental Events, could reasonably
be expected to result in Environmental Liabilities and Costs in excess of
$500,000.
     “Major Loss” means a Loss or Losses to the extent that such Loss or Losses
exceed $2,500,000 during the term of this Agreement, provided that such Loss or
Losses do not constitute a Total Loss.
     “Major Permitted Replacement Expenses” means, with respect to a Major Loss,
the sum of (i) expenses required to repair or replace the property and assets
that are the subject of such Major Loss, plus (ii) the Borrower’s Debt Service
and operating expenses for the Major Replacement Construction Period with
respect to such Major Loss.
     “Major Project Documents” means the Major Construction Contracts, the
Consulting Contracts, the Sales and Marketing Contracts and the Project Party
Consents and each additional Major Construction Contract or Replacement Contract
entered into by or on behalf of the Borrower after the Closing Date, and
includes, without limitation, the agreements identified as “Major Project
Documents” on Schedule 5.21, and if a Major Replacement is undertaken by the
Borrower, shall also include the Major Replacement Project Documents.
     “Major Replacement” means the repair and replacement of any portion of the
Project that becomes subject to a Major Loss and for which each of following
conditions has been satisfied: (i) the Insurance Consultant has conducted a
review of the available proceeds of insurance with respect to such Loss,
including the amount and duration for which delay in start-up insurance proceeds
or business interruption insurance proceeds will be available during the

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Major Replacement Construction Period, and the Agent in consultation with the
Insurance Consultant has determined that the sum of (a) such insurance proceeds,
plus (b) the lesser of the amount of any applicable deductibles with respect to
such insurance proceeds and the Deductible Coverage Amount, will be available in
amounts not less than the aggregate projected Major Permitted Replacement
Expenses with respect to such Major Loss, (ii) the Borrower has submitted to the
Agent and the Independent Engineer a Major Replacement Construction Schedule and
a Major Replacement Construction Budget, and in each case the Independent
Engineer has conducted a review thereof and of the proposed repair or
replacement and has notified the Agent in writing of the Independent Engineer’s
approval thereof, (iii) no Material Adverse Change could reasonably be expected
to result from such repair or replacement, including as a result of the delay in
operations during the Major Replacement Construction Period, (iv) such expenses
are incurred within three hundred sixty-five (365) days following receipt by the
Borrower or such Subsidiary of any insurance proceeds or condemnation award with
respect to such Loss, (v) the Major Replacement Construction Period described in
the Major Replacement Construction Schedule shall not extend beyond a date which
is two hundred seventy (270) days prior to the scheduled Term Loan Maturity
Date, (viii) the Sponsor shall have executed in favor of the Agent an agreement
satisfactory to the Agent pursuant to which the Sponsor agrees to make
contributions directly or indirectly to the Borrower to cover cost overruns with
respect to all Major Permitted Replacement Expenses, (ix) each of the Major
Replacement Project Documents shall be in form and substance satisfactory to the
Agent and the Independent Engineer, and the Borrower and each party to each
Major Replacement Project Document shall have entered into a Project Party
Consent in form and substance satisfactory to the Agent, and (x) if such Major
Loss occurs prior to the Project Construction Completion Date, such Major Loss
could not reasonably be expected to result in a Cost Overrun or a Project Delay.
For purposes of the foregoing, “Deductible Coverage Amount” means (i) with
respect to a Major Loss that occurs prior to the Project Construction Completion
Date, the sum of (a) the amount of any unused contingency in the Construction
Budget, plus (b) amounts deposited into the Cost Overrun Account with respect to
such Major Loss, and (ii) with respect to a Major Loss that occurs on or after
the Project Construction Completion Date, the amount by which Borrower’s
Liquidity exceeds $3,000,000.
     “Major Replacement Construction Budget” means a budget prepared with
respect to any Major Replacement (i) which is prepared by the Borrower and
approved by the Independent Engineer and the Agent, (ii) which shall be in a
form substantially similar to the budget identified as the “Construction Budget”
on Schedule 1.1(d), and (iii) which sets forth projected Major Permitted
Replacement Expenses and presented in a manner that reflects each of the key
dates in the Major Replacement Construction Schedule.
     “Major Replacement Construction Deadline” means the date designated in
writing by the Agent following the Agent’s review of the Major Replacement
Construction Schedule by which the Major Replacement Construction Requirements
must be satisfied (which date may not be later than two hundred seventy
(270) days prior to the Term Loan Maturity Date), as such date may be extended
thereafter by the Required Lenders in their sole and absolute discretion.
     “Major Replacement Construction Period” means a period of not greater than
three hundred sixty-five (365) days beginning on the date of any Major Loss and
ending on the date that the Agent receives, with respect to any Major
Replacement for such Major Loss, evidence

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satisfactory to the Agent that the Major Replacement Construction Requirements
have been satisfied, which shall be in the form of (a) a certificate from the
Borrower certifying that each of the matters described on the Major Replacement
Construction Requirements Report and identified as to be certified by the
Borrower are true and correct in all respects with respect to the Major
Replacement Construction Requirements for such Major Loss, and (b) a certificate
of the Independent Engineer certifying that each of the matters described on the
Major Replacement Construction Requirements Report and identified as to be
certified by the Independent Engineer are true and correct in all respects with
respect to the Major Replacement Construction Requirements for such Major Loss.
     “Major Replacement Construction Requirements” means the requirements
established by the Agent and the Independent Engineer with respect to any Major
Replacement, and in any event specifying that the Project after such Major
Replacement shall meet the specifications set forth in Schedule 1.1(b).
     “Major Replacement Construction Requirements Report” means a report
prepared by the Independent Engineer in consultation with the Borrower and
approved by the Agent, which shall be in the form similar to Schedule 1.1(b),
setting forth the Major Replacement Construction Requirements and such other
matters with respect to the Major Replacement as the Agent may request.
     “Major Replacement Construction Schedule” means the schedule established by
the Borrower and approved by the Independent Engineer and the Agent for any
Major Replacement, which shall be substantially in the form of the schedule set
forth on Schedule 1.1(c), and which shall set forth the Major Replacement
Construction Deadline.
     “Major Replacement Project Documents” means the construction contracts, the
consulting contracts, and the Project Party Consents entered into by or on
behalf of the Borrower with respect to any Major Replacement.
     “Material Adverse Change” means a material adverse change in (a) the
condition (financial or otherwise), operations, performance, business,
properties or prospects of the Parent Guarantor and its Subsidiaries, taken as a
whole, or, prior to the Project Construction Completion Date, of the Sponsor,
(b) the Project, (c) the rights and remedies of the Lenders or the Agent under
the Loan Documents, (d) the ability of the Borrower to repay the Obligations or
the ability of the Borrower, any Subsidiary of the Borrower, the Parent
Guarantor or the Sponsor to perform their respective obligations under the Loan
Documents, (e) the legality, validity or enforceability of any Loan Document, or
(f) the Liens granted to the Agent for the benefit of the Secured Parties
pursuant to the Security Documents.
     “Maturity” means (i) relative to any Term Loan or portion thereof, the
earlier of the Term Loan Maturity Date or such other date when such Loan or
portion thereof shall be or become due and payable in accordance with the terms
of this Agreement, whether by required repayment, prepayment, declaration,
acceleration or otherwise, (ii) relative to any Additional Term Loan or portion
thereof, the earlier of the Additional Term Loan Maturity Date or such other
date when such Loan or portion thereof shall be or become due and payable in
accordance with the terms of this Agreement, whether by required repayment,
prepayment, declaration, acceleration or

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otherwise, and (iii) relative to any Working Capital Facility Loan or portion
thereof, the earlier of the Working Capital Facility Maturity Date or such other
date when such Working Capital Facility Loan or portion thereof shall be or
become due and payable in accordance with the terms of this Agreement, whether
by required repayment, prepayment, declaration, acceleration or otherwise.
     “Maximum Lawful Rate” has the meaning set forth in Section 9.18.
     “Monthly Progress Report” means, collectively, (a) a written progress
report prepared by the General Contractor, in form and substance satisfactory to
the Agent and reviewed and certified by the Independent Engineer, detailing
(i) construction progress as compared with the Construction Schedule,
(ii) remaining projected Construction Expenses, (iii) the estimated Project
Construction Completion Date, (iv) progress of payments as compared with the
remaining projected Construction Expenses and to the Construction Budget, and
(v) the status of any Change Orders under any of the Construction Contracts, and
(b) a written report prepared by the Project Architect-Engineer, in form and
substance satisfactory to the Agent and reviewed and certified by the
Independent Engineer, detailing Construction Expenses expended and a description
of the status of design, engineering and procurement.
     “Moody’s” means Moody’s Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, its successors and their
assigns.
     “Mortgage” means any mortgage, leasehold mortgage, deed of trust, deed to
secure debt and other instrument, from time to time executed by a Loan Party for
the purpose of granting the Agent, for the benefit of the Secured Parties, a
Lien on real property, or any interest therein or rights with respect thereto,
of such Loan Party, in form and substance satisfactory to the Agent; and
“Mortgages” means each and every Mortgage.
     “Mortgaged Property” means the real property and related rights and
interests described in the Mortgages and includes, without limitation, the fee
interest of the Borrower in the Project Site and Project Improvements.
     “Multiemployer Pension Plan” means a Multiemployer Plan which is subject to
Subtitle E of Title IV of ERISA.
     “Multiemployer Plan” means a Plan which is a “multiemployer plan” within
the meaning of Section 3(37) of ERISA.
     “Necessary Project Approvals” has the meaning set forth in Section 4.1.5.
     “Necessary Project Expansion Approvals” has the meaning set forth in
Section 4.4.
     “Net Disposition Proceeds” means, with respect to any sale or disposition
of assets (other than sales of inventory in the ordinary course of business),
(A) the gross cash proceeds received from such sale or disposition minus (B) the
sum of (x) all reasonable out-of-pocket fees and expenses incurred in connection
with such sale or disposition plus (y) all taxes incurred in connection with
such sale or disposition plus (z) all amounts used to repay Indebtedness (other

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than the Loans) secured by Liens permitted by Section 6.2.3 on the assets
subject to such sale or disposition.
     “Net Income” means, as to any Person for any period, the net income (or
loss) of such Person for such period, determined in accordance with GAAP.
     “Net Indebtedness Proceeds” means, with respect to the issuance or
incurrence by any Loan Party of any Indebtedness, the excess of: (a) the gross
cash proceeds received by such Loan Party from the issuance or incurrence such
Indebtedness, minus (b) all reasonable out-of-pocket fees and expenses incurred
in connection with such issuance or incurrence and paid or payable to Persons
that are not Affiliates of any Loan Party.
     “Net Securities Proceeds” means, with respect to the issuance or sale by
the Parent Guarantor of any securities representing Stock of the Parent
Guarantor or contribution to the equity capital of the Parent Guarantor (other
than any Excluded Issuance and any issuance of securities described in or made
pursuant to the Contribution Documents), the excess of (a) the gross cash
proceeds received by the Parent Guarantor from such issuance and sale, minus (b)
all reasonable out-of-pocket fees and expenses incurred in connection with such
issuance and sale and paid or payable to Persons that are not Affiliates of the
Parent Guarantor.
     “Net Worth” means, as of any date, with respect to any Person, the amount
by which such Person’s total assets exceed its total liabilities, determined on
a consolidated basis in accordance with GAAP.
     “Notes” means, collectively, all of the Term Notes, any Additional Term
Notes, and all of the Working Capital Facility Notes.
     “Obligations” means and includes any and all of the Loan Parties’
Indebtedness, obligations and/or liabilities to the Agent, Lenders, each other
Lender Party (or any Affiliate of any Lender Party) and each other Secured
Party, of every kind, nature and description, whether direct or indirect,
secured or unsecured, joint, several, joint and several, absolute or contingent,
due or to become due, now existing or hereafter arising, contractual or
tortious, liquidated or unliquidated arising under this Agreement, any other
Loan Document or any Secured Hedge Contract, and all obligations of the Loan
Parties to the Agent, Lenders or any other Lender Party (or any Affiliate of a
Lender Party) to perform acts or refrain from taking any action hereunder, under
any other Loan Document or under any such Secured Hedge Contract. Without
limitation of the foregoing, the term “Obligations” extends to and includes all
Loans, all Letter of Credit Obligations, all accrued (but unpaid) interest
thereon and all fees payable hereunder and any Loan Document.
     “OFAC” means the U.S. Department of Treasury Office of Foreign Assets
Control and its successors.
     “OFAC Lists” means, collectively, the Specially Designated Nationals and
Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224,
66 Fed. Reg. 49079 (Sept. 25, 2001) and any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

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     “Organizational Document” means, relative to any Person, its articles or
certificate of incorporation, certificate of limited liability company or
formation, or certificate of limited partnership or organization, its bylaws,
partnership or operating agreement or other organizational documents, and all
stockholders agreements, member agreements, voting trusts and similar
arrangements applicable to any of its Capital Stock or other ownership
interests, in each case, as amended.
     “Original Member” means Northstar Founders, LLC, f/k/a Northstar Agri
Industries, LLC, a Delaware limited liability company.
     “OSHA” means the Occupational Safety and Health Act of 1970, as amended
from time to time, and any successor statute.
     “Parent Guarantor” means PICO Northstar, LLC, a Delaware limited liability
company.
     “Parent Guarantor’s LLC Agreement” means the Amended and Restated Limited
Liability Company Agreement of the Parent Guarantor dated as of December 23,
2010, by and between PICO Northstar Management, LLC and the Original Member, as
it may be amended, restated, supplemented, or otherwise modified from time to
time.
     “Parent Guaranty” means that certain Parent Guaranty, dated as of the
Closing Date, made by the Parent Guarantor in favor of the Agent, for the
benefit of the Secured Parties, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time.
     “Parent Pledge Agreement” means that certain Parent Pledge Agreement, dated
as of the Closing Date, made by the Parent Guarantor in favor of the Agent, for
the benefit of the Secured Parties, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time.
     “Participant” means the banks or other entities that purchase participating
interests in any Loan, Note, Commitment, Letter of Credit Obligation or other
interest hereunder, as provided in subsection (a) of Section 9.11.
     “Pass-Through Entity” means a Person which is an “S corporation” within the
meaning of Section 1361 of the IRC, a “qualified subchapter S subsidiary” within
the meaning of Section 1361 (b)(3)(B) of the IRC, a partnership (including a
limited liability company) within the meaning of Section 7701(a)(2) of the IRC
(other than one electing to be taxed as a corporation), or an entity with a
single owner that is disregarded pursuant to Treasury Reg. §301.7701-3.
     “PBGC” means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
     “Pension Plan” means any Plan which is subject to the provisions of Title
IV of ERISA, or to the provisions of Section 302 of ERISA or Section 412 of the
IRC.

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     “Perfection Certificate” means that certain Perfection Certificate executed
by the Borrower and delivered to the Agent in connection with the transactions
contemplated herein.
     “Permitted Amendment” means any amendment, modification or change to a
Project Document (other than a Project Document that is a Loan Document) that
(a) does not adversely affect the rights and privileges of the Borrower or its
Subsidiaries in any material respect, (b) does not adversely affect the ability
of the Borrower to perform its obligations hereunder or under the other Loan
Documents or Major Project Documents, (c) does not restrict the ability of the
Borrower or its Subsidiaries to amend, modify, renew or supplement the terms of
this Agreement or any of the other Loan Documents, (d) does not adversely affect
the interests of the Agent or the Lenders in any material respect, (e) would not
reasonably be expected to result in a Project Delay or a Cost Overrun and (f) in
the case of the Land O’Lakes Agreements, does not shorten the duration of the
“Initial Term” (as such quoted term is defined in each of the Land O’Lakes
Agreements as in effect on the Closing Date); provided, however, in each case
that no such amendment, modification or change shall constitute a “Permitted
Amendment” if at the time of such amendment, modification or change, a Default
or an Event of Default has occurred and is continuing or would result therefrom.
     “Permitted Hedge Contract” means (a) any Hedge Contract that is required to
be entered into pursuant to the terms hereof on or subsequent to the Closing
Date, (b) the Qualified Commodity Hedge Contract, and (c) any other Hedge
Contract that has been approved by the Required Lenders and the Agent.
     “Permitted Investments” means cash and Cash Equivalent Investments and
other investments selected by the Agent and approved by the Borrower.
     “Permitted Liens” means Liens permitted under Section 6.2.3.
     “Permitted Replacement Expenses” means expenses incurred by the Borrower or
any Subsidiary to repair or replace any property and assets that are subject to
Losses that do not exceed $2,500,000 in the aggregate with other such Losses
during the term of this Agreement and that satisfy each of the following
conditions: (i) the amount of such expenses does not exceed available funds for
such use (including any insurance and condemnation proceeds with respect to such
Loss), (ii) if such Loss occurs prior to the Project Construction Completion
Date, the Independent Engineer has conducted a review of the proposed repair or
replacement satisfactory to the Agent and has approved such repair or
replacement, (iii) no Material Adverse Change could reasonably be expected to
result from such repair or replacement, and (iv) such expenses are incurred
within one hundred and eighty (180) days following receipt by the Borrower or
such Subsidiary of any insurance proceeds or condemnation award with respect to
such Loss.
     “Permitted Tax Distributions” has the meaning set forth in Section 6.2.8.
     “Person” means any natural person, corporation, partnership, limited
liability company, firm, association, government, governmental agency or other
entity, whether acting in an individual, fiduciary or other capacity.

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     “PICO Equity Contribution” shall mean the equity contribution to the Parent
Guarantor made by the Sponsor on or prior to the Closing Date, in the aggregate
amount of not less than $60,000,000, all of which has been contributed by the
Parent Guarantor to the Borrower.
     “Plan” means, at a particular time, any employee benefit plan (within the
meaning of Section 3(3) of ERISA), which is covered by ERISA and in respect of
which the Borrower, a Subsidiary or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.
     “Post-Closing Syndication Letter Agreement” means the letter agreement
dated the Closing Date among the Borrower, the Parent Guarantor, the Sponsor,
PICO Northstar Management, LLC, the Lenders, and ING.
     “Post-Default Rate” means the sum of (i) the highest rate per annum
applicable to any Loans from time to time plus (ii) two percent (2%) per annum.
     “Pre-Closing Equity Contributions” shall mean equity contributions to the
Parent Guarantor made by the Original Member prior to the Closing Date, in the
aggregate amount of not less than $8,350,000, all of which has been contributed
by the Parent Guarantor to the Borrower.
     “Project” means the Project Improvements and the Project Site.
     “Project Architect-Engineer” means Karge-Faulconbridge, Inc.
     “Project Architect-Engineer Agreement” means that certain Agreement dated
November 16, 2007, between Northstar Agri Industries Hallock, LLC and the
Project Architect-Engineer, for a Canola Crushing Facility, as amended by that
certain Amendment No. 1 to Agreement Between Owner and Architect dated
September 20, 2010, as such agreement may be further amended, restated,
supplemented or otherwise modified from time to time.
     “Project Construction Completion Date” shall mean the date on which the
Agent receives (a) a certificate from the Borrower certifying that each of the
matters described on Schedule 1.1(b) and identified as to be certified by the
Borrower are true and correct in all respects, and (b) a certificate of the
Independent Engineer certifying that each of the matters described on
Schedule 1.1(b) and identified as to be certified by the Independent Engineer
are true and correct in all respects.
     “Project Construction Completion Deadline” means April 15, 2013, as such
date may be extended by the Required Lenders in their sole and absolute
discretion.
     “Project Construction Completion Requirements” means the requirements
established by the Independent Engineer and set forth in Schedule 1.1(b).
     “Project Delay” means (i) the failure of the Project Construction
Completion Requirements to be satisfied on or before the Project Construction
Completion Deadline, and (ii) if a Major Replacement is undertaken by the
Borrower, shall also include the failure of the Major

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Replacement Construction Completion Requirements to be satisfied on or before
the Major Replacement Construction Completion Deadline.
     “Project Documents” means the Major Project Documents plus all other
documents and agreements entered into by the Borrower with respect to the
design, development, procurement, construction and operation of the Project,
including without limitation, the documents and agreements for which copies are
provided to the Agent pursuant to Section 6.1.1(g) or which are included on any
of the lists provided to the Agent pursuant to Section 6.1.1(g).
     “Project Expansion” means the expansion of the Project Improvements to
increase the capacity of the Project Improvements to process up to 1,650 short
tons per day of canola seed into canola meal, oil and other by-products.
     “Project Improvements” means the canola seed processing plant and
integrated refinery which is to be constructed at the Project Site near Hallock,
Minnesota and which initially will have the capacity to process up to 1,000
short tons per day of canola seed into canola meal, oil and other by-products.
     “Project Title Insurance Policy” has the meaning set forth in Section
4.1.13(c).
     “Project Party” means each Person (other than the Borrower or any
Subsidiary thereof) who is a party to a Major Project Document.
     “Project Party Consent” means a Project Party Consent executed by the
Borrower and a Project Party in favor of the Agent for the benefit of the
Secured Parties substantially in the form of Exhibit G (with such changes and
modifications to which the Agent in its discretion may agree).
     “Project Site” means the real property located in Kittson County,
Minnesota, near Hallock, Minnesota, described on Schedule 1.1(e) on which the
Project is located.
     “Projections” means, collectively, the projected balance sheets, statements
of operations and changes in cash flows of the Borrower and any of its
Subsidiaries for the Fiscal Years 2011 through 2018 inclusive, delivered to the
Agent from time to time, prepared by or on behalf of the Borrower on an annual
basis, together with supporting details and a statement of underlying
assumptions. On the Closing Date, “Projections” shall refer to the Projections
prepared by Christianson & Associates, PLLP and dated January 18, 2011.
     “Punch List Certificate” means the certificate from the Borrower and
approved by the Independent Engineer as described on Schedule 1.1(b) as the
“Punch List Certificate”.
     “Purchase Money Indebtedness” means Indebtedness incurred to finance part
or all of (but not more than) the purchase price of equipment in which neither
the Borrower nor any of its Subsidiaries had an interest at any time prior to
such purchase.
     “Purchasing Lender” means any Person purchasing all or any part of the
rights and obligations under this Agreement and the Notes of any Lender in
accordance with Section 9.11.

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     “Qualified Commodity Hedge Contract” means “over-the-counter” Hedge
Contracts between the Borrower and a Qualified Counterparty with respect to
commodity prices having terms substantially as set forth on Schedule 1.1(g)
provided that (a) the Borrower and such Qualified Counterparty shall have
provided the Agent prior written notice thereof and copies of all documentation
related thereto, and (b) the Loan Parties, the Qualified Counterparty to such
Hedge Contracts, and the Agent shall have executed and delivered the Qualified
Commodity Hedge Intercreditor Agreement.
     “Qualified Commodity Hedge Intercreditor Agreement” means an intercreditor
agreement among the Loan Parties, the Qualified Counterparties to all
commodities-related Secured Hedge Contracts and the Agent, having terms and
conditions substantially as set forth on Schedule 1.1(g).
     “Qualified Commodity Hedge Related Amendment” means (i) any amendment or
modification of the definitions of “Major Loss”, “Qualified Commodity Hedge
Contract”, “Qualified Commodity Hedge Intercreditor Agreement” or “Total Loss”,
including defined terms included in the foregoing, or any amendment or
modification of Section 8.8 or Section 9.1(a) (iv) or (vi), in each case in any
manner adverse to the rights of a Qualified Counterparty to a Qualified
Commodity Hedge Contract, or (ii) any amendment or modification of Section 3.3.1
the effect of which would be to require prepayment of the Loans from Net
Disposition Proceeds or the proceeds of a Loss in an amount that would be
greater or at a time that would be earlier than the amount and time otherwise
required under Section 3.3.1 as in effect on the Closing Date; provided,
however, that any amendment or modification of the definition of “Project
Delay”, or defined terms included therein, the effect of which is to extend the
Project Construction Completion Deadline or a Major Replacement Construction
Deadline shall not constitute a Qualified Commodity Hedge Related Amendment.
     “Qualified Counterparty” means any counterparty to a Permitted Hedge
Contract (other than the Borrower and its Subsidiaries) that was a Lender or an
Affiliate of a Lender at the time it entered into such Permitted Hedge Contract.
     “Qualified Liens” means Liens permitted by Sections 6.2.3(c) and (e).
     “Qualified Preferred Equity Interests” means preferred equity membership
interests in the Parent Guarantor, which preferred equity membership interests
(i) are in addition to any Additional Equity Contributions required under the
terms of the Agreement to Contribute Capital, (ii) provide for the payment of
dividends and the making of distributions solely at the discretion of the board
of directors of the Parent Guarantor or upon liquidation of the Parent
Guarantor, (iii) do not require redemption, purchase or otherwise retirement or
extinguishment at a fixed or determinable date (whether by operation of a
sinking fund or otherwise), at the holder’s or member’s option, or upon the
occurrence of any event other than liquidation of the Parent Guarantor, and
(iv) otherwise does not contain any terms or conditions that would adversely
effect the Agent’s or the Lender’s rights under the Loan Documents or such Loan
Party’s capacity or ability to meet its obligations under this Agreement or any
Loan Document.
     “Qualified Preferred Equity Issuance” means the issuance on or prior to the
Project Construction Completion Date by the Parent Guarantor to the Sponsor or
any of its Subsidiaries,

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other than the Parent Guarantor and its Subsidiaries, of Qualified Preferred
Equity Interests for cash the proceeds of which are contributed by the Parent
Guarantor to the common equity capital of the Borrower and which proceeds are
used by the Borrower to make a mandatory prepayment pursuant to
Section 3.3.1(g).
     “Quarterly Payment” means a payment of principal on the Term Loans due on a
Quarterly Payment Date in the amount of the Quarterly Principal Payment Amount
pursuant to Section 3.3.1(c).
     “Quarterly Payment Date” means the last day of each March, June, September
or December, or, if such day is not a Business Day, the immediately preceding
Business Day.
     “Quarterly Principal Payment Amount” means $1,491,667.
     “Reference Lenders” means, collectively, JPMorgan Chase Bank, N.A.,
Citibank, N.A. and Bank of America, N.A.
     “Register” has the meaning set forth in Section 9.11(c).
     “Regulatory Change” means, as to any or all of the Lenders or the Agent,
any change (including, without limitation, any change in the interpretation)
occurring after the Closing Date in, or the adoption after the Closing Date of,
(i) any United States federal, state or foreign law applicable to the Agent or
such Lender, or (ii) any regulation, interpretation, directive, guideline or
request (whether or not having the force of law) applicable to the Agent or such
Lender of any court or Governmental Authority charged with the interpretation or
administration of any law referred to in clause (i) or of any central bank or
fiscal, monetary or other authority having jurisdiction over the Agent or such
Lender; provided, that notwithstanding anything herein to the contrary, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests,
rules, guidelines or directives thereunder issued in connection therewith shall
be deemed to be a “Regulatory Change”, regardless of the date enacted, adopted
or issued; and further provided, that notwithstanding anything herein to the
contrary, the International Convergence of Capital Measurement and Capital
Standards, a Revised Framework published by the Basel Committee on Banking
Supervision in June 2004 (“Basel II”) or any law or other regulation which
implements Basel II (whether such implementation, application or compliance is
by a government, regulator, Loan Party, Lender, or any of their respective
Affiliates) shall be deemed to be a “Regulatory Change”, regardless of the date
enacted, adopted or issued; and further provided, that notwithstanding anything
herein to the contrary, each of the agreements reached on July 26, 2010 and
September 12, 2010 by the Groups of Governors and Heads of Supervision of the
Basel Committee on Banking Supervision, the paper “The Basel Committee’s
response to the financial crisis: report to the G20” published by the Basel
Committee on Banking Supervision in October 2010, the documents “Basel III: A
global regulatory framework for more resilient banks and banking systems” and
“Basel III: International framework for liquidity risk measurement, standards
and monitoring” both published by that committee in December 2010 or any
follow-up agreement or paper from that committee, shall be deemed to be a
“Regulatory Change”, regardless of the date enacted, adopted or issued.

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     “Related Fund” means any Fund that is administered, advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers, advises or manages a Lender.
     “Reorganization” means with respect to any Multiemployer Pension Plan, the
condition that such plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.
     “Replacement Contract” means, in respect of a Project Document (other than
a Project Document which is a Loan Document), a replacement of such Project
Document with a contract in form and substance, and executed by parties,
reasonably acceptable to the Agent as evidenced by its written consent thereto,
as such agreement may be amended, restated, supplemented or otherwise modified
from time to time; provided, however, that if such Project Document is a Major
Project Document, the Project Party to such Replacement Contract shall have
executed a Project Party Consent in form and substance satisfactory to the
Agent.
     “Reportable Event” means (i) a reportable event described in Section 4043
of ERISA and regulations thereunder (other than any Reportable Event described
in Section 4043(c)(2) or (7) for which notice is waived), (ii) a withdrawal by a
“substantial employer” (within the meaning of Section 4001(a)(2) of ERISA) from
a Single Employer Plan to which more than one employer contributes, as referred
to in Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility
causing more than twenty percent (20%) of participants under a Single Employer
Plan to be separated from employment, as referred to in Section 4062(e) of
ERISA.
     “Required Lenders” means, (a) Lenders having, in the aggregate, more than
50% of the aggregate Commitments or (b) if the Commitments shall have been
terminated, whether pursuant to this Agreement or otherwise, Lenders having, in
the aggregate, more than 50% of the aggregate outstanding principal amount of
the Loans and Letter of Credit Obligations; provided that (i) the Commitment of,
and the portion of the outstanding principal amount of the Loans and Letter of
Credit Obligations held by, any Defaulting Lender shall be excluded for purposes
of making a determination of Required Lenders, and (ii) the Commitment of, and
the portion of the outstanding principal amount of the Loans and Letter of
Credit Obligations held by any Sponsor Lender shall be excluded for purposes of
making a determination of Required Lenders.
     “Requirements of Law” means, as to any Person, the Organizational Documents
of such Person, and all federal, state and local laws, rules, regulations,
orders, decrees or other determinations of an arbitrator, court or other
Governmental Authority, including all disclosure and other requirements of
ERISA, the requirements of Environmental Laws and environmental permits, and the
requirements of OSHA, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject.
     “Reserve Requirement” means, relative to any Interest Period for any
Eurodollar Loans, from time to time during such Interest Period, the reserve
percentage (expressed as a decimal) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or liabilities consisting
of or including

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“Eurodollar Liabilities”, as currently defined under Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
     “Sales and Marketing Contracts” means the Land O’Lakes Agreements and each
other agreement identified as a “Sales and Marketing Agreement” on
Schedule 5.21, as such agreements may be amended, restated, supplemented or
otherwise modified from time to time.
     “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., a corporation organized and existing under the laws
of the State of New York, its successors and assigns.
     “Schedule” means each Schedule attached hereto, as each may be amended,
supplemented or otherwise modified from time to time by the Borrower with the
consent of the Required Lenders as provided in Section 4.2.2.
     “Secured Hedge Contract” means any Permitted Hedge Contract between the
Borrower and a Qualified Counterparty.
     “Secured Hedge Related Amendment” means (i) any amendment or modification
of the definitions of “Obligations”, “Secured Hedge Contract” or “Secured
Party”, including defined terms included in the foregoing, the effect of which
is that the Obligations of the Borrower under a Secured Hedge Contract shall
cease to be Obligations or otherwise cease to be secured by the Collateral, or a
Secured Hedge Contract or a Qualified Counterparty to a Secured Hedge Contract
shall cease to have the rights and privileges accorded a Secured Hedge Contract
or Qualified Counterparty under this Agreement and the Security Documents, or
(ii) any amendment or modification of Section 9.1(a)(vii).
     “Secured Parties” means the collective reference to (i) the Agent, the
Lenders, and the issuers of the Letters of Credit, and (ii) any Qualified
Counterparty to a Secured Hedge Contract, and (iii) the respective successors,
indorsees, transferees, and assigns of each of the foregoing.
     “Securities Account” means any securities account, as such term is defined
in the UCC.
     “Securities Account Control Agreement” means any control agreement executed
by and among the Borrower, the Agent, for the benefit of the Secured Parties,
and the securities intermediary at which the Borrower maintains a Securities
Account, in form and substance satisfactory to the Agent.
     “Security Agreement” means the Security Agreement, dated as of the Closing
Date, made by the Borrower in favor of the Agent, for the benefit of the Secured
Parties, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.
     “Security Documents” means, collectively, the Security Agreement, the
Trademark Security Agreement, the Parent Guaranty, the Parent Pledge Agreement,
the Financing Statements, the Perfection Certificate, each of the Deposit
Account Control Agreements, the Project Party Consents, each Mortgage, each
assignment of insurance, and each other Instrument at any time delivered in
connection with the foregoing to secure the Obligations.

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     “Single Employer Plan” means any Plan which is covered by Title IV of
ERISA, other than a Multiemployer Plan.
     “Solvent” means, with respect to any Person on a particular date, that on
such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is greater than the total amount
of liabilities, including contingent and unliquidated liabilities, of such
Person, (ii) such Person is able to pay all liabilities of such Person as they
mature, and (iii) such Person does not have unreasonably small capital with
which to carry on its business. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
     “Sponsor” means PICO Holdings, Inc., a California corporation.
     “Sponsor Lender” has the meaning set forth in Section 9.1(f).
     “Sponsor Loan” means a loan made to the Borrower by the Sponsor solely for
use by the Borrower to refinance that portion of the Sponsor Temporary Working
Capital Loan which is not repaid with advances of the Working Capital Facility
on the Project Construction Completion Date and which (i) shall at all times be
unsecured, (ii) shall be subordinated to the prior payment in full in cash of
all Obligations on terms and conditions satisfactory to the Agent, (iii) shall
mature not earlier than six months after the scheduled Term Loan Maturity Date,
(iv) shall not require any payments of principal prior to its maturity,
(v) shall bear interest payable-in-kind and not in cash, (vi) shall be subject
to documentation in form and substance satisfactory to the Agent which, among
other things, shall not contain any restrictive covenants or events of default,
other than for the failure to pay at maturity, and (vii) may not be prepaid,
unless (a) any such prepayment made in any Fiscal Year is in an amount that does
not exceed the Borrower’s Excess Cash Flow with respect to the immediately prior
Fiscal Year (beginning with the first full Fiscal Year ending after the Project
Construction Completion Date) multiplied by the Excess Cash Flow Recapture
Percentage for such immediately preceding Fiscal Year, and (b) such prepayment
satisfies each of the Sponsor Loan Prepayment Requirements.
     “Sponsor Loan Prepayment Requirements” means the satisfaction of each of
the following requirements: (i) the Borrower shall have provided the Agent with
not less than ten (10) days prior written notice of its desire to prepay all or
any portion of the Sponsor Loan, (ii) the Borrower shall have provided written
evidence satisfactory to the Agent of the amount of the Borrower’s Excess Cash
Flow based upon which such prepayment will be made, (iii) both before and after
giving effect to such prepayment, but without taking into account any prepayment
required under Section 3.3.1(l), the Borrower’s Liquidity shall not be less than
$3,000,000, (iv) both before and after giving effect to such prepayment, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, and (v) both before and after giving effect to such
prepayment, all representations and warranties set forth in the Loan Documents
shall be true and correct in all material respects.
     “Sponsor Temporary Working Capital Loan” means a loan made to the Borrower
by the Sponsor solely for use by the Borrower to purchase canola seed for
processing at the Project, which loan may be secured solely by the Borrower’s
interest in such canola seed and in

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identifiable cash proceeds thereof and which shall have terms, including
interest rates and tenor, satisfactory to the Agent and shall be subject to
documentation and an intercreditor agreement in form and substance satisfactory
to the Agent; provided, however, that the principal amount of such loan shall
not exceed at any time $10,500,000.
     “Stock” means all shares of capital stock of or in a Person which is a
corporation, whether voting or non-voting, and including common stock and
preferred stock, all membership or other equity interests of or in a Person
which is a limited liability company, all partnership and other equity interests
of or in a Person which is a partnership, and all similar equity and other
interests of or in any other Person.
     “Subsidiary” of any Person (other than a natural Person) means a
corporation, partnership or limited liability company of which greater than 50%
of the outstanding shares of Stock or other ownership interests having ordinary
voting power for the election of directors (or others serving equivalent
functions) is owned directly or indirectly by such Person. Except as otherwise
indicated herein, references to Subsidiaries shall refer to Subsidiaries of the
Borrower.
     “Tangible Net Worth” means, as of any date, with respect to the Sponsor,
the Net Worth of the Sponsor less amounts attributable to goodwill arising from
the acquisition of a Person or business unit of a Person.
     “Taxes” means all taxes, levies, imposts, deductions, charges or
withholdings imposed by any Governmental Authority, including interest,
additions to tax or penalties applicable thereto.
     “Term Loan” means a loan made by the Lenders to the Borrower pursuant to
Section 2.1.1.
     “Term Loan Facility Availability Period” means the period (a) beginning on
April 30, 2011, and (b) ending on the earliest to occur of (i) the Project
Construction Completion Date, (ii) the Project Construction Completion Deadline
or (iii) the Term Loan Maturity Date.
     “Term Loan Facility Commitment” means the commitment of a Lender to make
Term Loans pursuant to Section 2.1.1.
     “Term Loan Facility Commitment Amount” means $89,500,000, as such amount
may be reduced from time to time.
     “Term Loan Maturity Date” means the earliest of:
     (a) the earlier to occur of (i) the fifth anniversary of the Project
Construction Completion Date, and (ii) April 15, 2018;
     (b) the date on which any Event of Default described in Section 7.1.4
occurs;
     (c) the date on which any Event of Default other than any Event of Default
described Section 7.1.4 shall have occurred and be continuing and either:
          (i) any Loans are declared to be due and payable pursuant to
Section 7.3; or

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          (ii) in the absence of such declaration, the Agent, acting at the
direction of the Required Lenders, shall give notice to the Borrower that the
Term Loan Facility Commitments, the Additional Term Loan Facility Commitments
(if any) and the Working Capital Facility Commitments have been terminated; and
     (d) the date on which a Change in Control occurs.
     “Term Loan Percentage” means as to any Lender, the percentage equivalent of
a fraction the numerator of which is the amount of such Lender’s Term Loan
Facility Commitment and the denominator of which is the aggregate amount of the
Term Loan Facility Commitments of all Lenders.
     “Term Note” means a promissory note of the Borrower substantially in the
form of Exhibit A-1 attached hereto, as amended, restated, supplemented or
otherwise modified from time to time, and shall also refer to all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
     “Total Debt” means, as of any date, the aggregate outstanding principal
amount of all Indebtedness of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
     “Total Loss” means, with respect to the Project, (a) a Loss affecting all
or substantially all of the Project, (b) a Loss for which the cost to repair or
replace is projected by the Independent Engineer to exceed 90% of the original
Construction Budget, (c) if such Loss occurs prior to the Project Construction
Completion Date, a Loss which is projected by the Independent Engineer to result
in a Project Delay, or (d) if such Loss occurs on or after the Project
Construction Completion Date, a Loss which is reasonably expected (or which the
Independent Engineer has determined is reasonably expected) to result in the
Project ceasing to operate substantially in accordance with the Project
Construction Completion Requirements for a period of more than 365 days.
     “Trademark Security Agreement” means that certain Trademark Security
Agreement, dated as of the Closing Date, made by the Borrower and each of its
Subsidiaries in favor of the Agent, for the benefit of the Secured Parties, as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time.
     “Transfer Supplement” has the meaning set forth in Section 9.11.
     “UCC” means the Uniform Commercial Code of the State of New York, as in
effect from time to time.
     “United States” or “U.S.” means the United States of America, its 50 states
and the District of Columbia.
     “Working Capital” means an amount equal to (a) (i) Current Assets less (ii)
cash and Cash Equivalent Investments, less (b) (i) Current Liabilities less (ii)
the current portion of long-term debt required to be paid within one year.

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     “Working Capital Facility” means the revolving credit facility provided by
the Lenders to the Borrower pursuant to Section 2.1.2.
     “Working Capital Facility Availability” means, on any date, the amount
available to the Borrower under the Working Capital Facility, which shall be an
amount equal to (a) the lesser of (i) the Working Capital Facility Commitment
Amount or (ii) the Borrowing Base minus (b) the then aggregate outstanding
principal amount of Working Capital Facility Loans minus (c) the then aggregate
outstanding amount of Letter of Credit Obligations.
     “Working Capital Facility Availability Period” means the period
(a) beginning with the Project Construction Completion Date, and (b) ending on
the Working Capital Facility Maturity Date.
     “Working Capital Facility Commitment” means the commitment of a Lender to
make Working Capital Facility Loans pursuant to Section 2.1.2 and to cause the
issuance of Letters of Credit pursuant to Section 3.10.
     “Working Capital Facility Commitment Amount” means $10,500,000, as such
amount may be increased pursuant to Section 2.1.5 or reduced from time to time
pursuant to Section 3.3.3.
     “Working Capital Facility Loan” means, relative to any Lender, any Loan
made by such Lender to the Borrower pursuant to Section 2.1.2.
     “Working Capital Facility Maturity Date” means the earliest of:
     (a) the earlier to occur of (i) the fifth anniversary of the Project
Construction Completion Date, and (ii) April 15, 2018;
     (b) the date on which any Event of Default described in Section 7.1.4
occurs;
     (c) the date on which any Event of Default other than an Event of Default
described in Section 7.1.4 shall have occurred and be continuing and either:
     (i) any Loans are declared to be due and payable pursuant to Section 7.3;
or
     (ii) in the absence of such declaration, the Agent, acting at the direction
of the Required Lenders, shall give notice to Borrower that the Term Loan
Facility Commitments, the Additional Term Loan Facility Commitments (if any) and
the Working Capital Facility Commitments have been terminated; and
     (d) the date on which a Change in Control occurs.
     “Working Capital Facility Note” means a promissory note of the Borrower,
dated the date hereof, and substantially in the form of Exhibit A-2 attached
hereto, as amended, restated, supplemented or otherwise modified from time to
time, and shall also refer to all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.

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     “Working Capital Facility Percentage” means, as to any Lender, the
percentage equivalent of a fraction the numerator of which is the amount of such
Lender’s Working Capital Facility Commitment and the denominator of which is the
aggregate amount of the Working Capital Facility Commitments of all Lenders.
     “written” or “in writing” means any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
     SECTION 1.2 Construction and Use of Defined Terms. Unless otherwise defined
or the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Schedules and each Note,
Borrowing Request, Compliance Certificate, Borrowing Base Certificate, notice
and other communication delivered from time to time in connection with this
Agreement or any other Loan Document. Unless otherwise indicated, the use of any
gender includes all genders. References to any time of the day in this Agreement
shall refer to Eastern standard time or Eastern daylight saving time, as in
effect in New York City on such day.
     SECTION 1.3 Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and unless otherwise specified, references in any
Article, Section, or definition to any subsection or clause are references to
such subsection or clause of such Section, Article or definition.
     SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared, in accordance with GAAP.
ARTICLE 2
COMMITMENTS
     SECTION 2.1 Commitments. Subject to the terms and conditions of this
Agreement (including Article 4), each Lender agrees to provide: (a) its Working
Capital Facility Commitment, and (b) its Term Loan Facility Commitment, each as
more fully described in this Section 2.1. The Commitments of each initial Lender
as of the Closing Date are set forth on Schedule 1.1(f).
     SECTION 2.1.1 Term Loan Facility Commitments. Subject to the limitations
set forth in this Agreement, from time to time on any Business Day occurring
during the Term Loan Facility Availability Period, each Lender severally will
make its Term Loan Facility Percentage of any Borrowing of Term Loans on such
Business Day as the Borrower shall request in accordance with Section 3.1. Once
repaid, Term Loans may not be reborrowed.
     SECTION 2.1.2 Working Capital Facility Commitments. Subject to the
limitations set forth in this Agreement, from time to time on any Business Day
occurring during the Working Capital Facility Availability Period, each Lender
severally will make its Working Capital

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Facility Percentage of any Borrowing of Working Capital Facility Loans on such
Business Day as the Borrower shall request in accordance with Section 3.1 and
shall endeavor to arrange for the issuance of any Letters of Credit as the
Borrower shall request in accordance with Section 3.10. Subject to the terms
hereof, the Borrower may from time to time borrow, repay, and reborrow Working
Capital Facility Loans pursuant to the Working Capital Facility Commitment.
     SECTION 2.1.3 Additional Term Loan Facility Commitments. The Borrower may,
on one occasion during the Additional Term Loan Facility Availability Period by
written notice to the Agent (whereupon the Agent shall promptly deliver a copy
to each of the Lenders), request additional term loans (the “Additional Term
Loans”) in an aggregate principal amount not to exceed the Additional Term Loan
Facility Commitment Amount, provided that (i) both at the time of any such
request and upon the date that any such Additional Term Loans are made (and
after giving effect thereto), no Default or Event of Default shall have occurred
and be continuing, and (ii) the Borrower shall be in compliance with each of the
covenants set forth in Section 6.2.4, determined on a pro forma basis as if such
Additional Term Loans were incurred on the last day of the most recently ended
Fiscal Quarter of the Borrower. The Additional Term Loans (a) shall rank pari
passu in right of payment and of security with the Term Loans, (b) shall not
mature earlier than the Term Loan Maturity Date (but may be amortized prior to
such date), and (c) except as set forth above, shall be treated substantially
the same as the Term Loans (in each case, including with respect to mandatory
and voluntary prepayments and the deferral surcharge with respect to any
Deferred Payments of any Additional Term Loan); provided that (x) the terms and
conditions applicable to Additional Term Loans may be materially different from
those of the Term Loans to the extent such differences are acceptable to the
Agent and the Borrower, and (y) the interest rates and amortization schedule
applicable to the Additional Term Loans shall be determined by the Borrower and
the Additional Term Loan Lenders; provided, that the yield to maturity with
respect to the Additional Term Loans (taking into account upfront fees paid to
Additional Term Loan Lenders) may be no more than 25 basis points (0.25% per
annum) greater than the yield to maturity with respect to the Term Loans (taking
into account upfront fees paid to the original Lenders making the Term Loans)(it
being understood that the pricing of the Term Loans may be increased or
additional fees may be paid to such original Lenders, without the consent of
such original Lenders, to the extent necessary to satisfy such requirement). Any
notice from the Borrower pursuant to this Section 2.1.3 shall set forth the
requested amount and proposed terms of the Additional Term Loans. Additional
Term Loans may be made by any existing Lender (and each existing Lender will
have the right to make a portion of the Additional Term Loans on terms permitted
in this Section 2.1.3 and otherwise on terms acceptable to the Agent and the
Borrower) or by any Additional Lender, provided that the Agent shall have
consented to such Lender’s or Additional Lender’s making such Additional Term
Loans if such consent would be required under Section 9.11 for an assignment of
Loans to such Lender or Additional Lender. Commitments in respect of Additional
Term Loans shall become Commitments under this Agreement pursuant to an
amendment (“Additional Term Loan Amendment”) to this Agreement and, as
appropriate, the other Loan Documents, executed by the Parent Guarantor, the
Borrower, each Additional Term Loan Lender and the Agent. Each Lender shall have
the right for a period of fifteen (15) days following receipt of notice from the
Agent of the Borrower’s request for an Additional Term Loan to elect by written
notice to the Agent and the Borrower to provide an Additional Term Loan Facility
Commitment in a principal amount equal to its pro rata share of the Additional
Term Loan Facility Commitment Amount. No Lender shall be obligated to provide
any Additional Term Loan Facility Commitment unless

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it so agrees. If any Lender shall not elect to provide an Additional Term Loan
Facility Commitment, the Borrower may designate another bank or other financial
institution (which may be, but need not be, one or more of the existing Lenders)
which at the time agrees to provide an Additional Term Loan Facility Commitment,
and in the case of an Additional Lender, to become a party to this Agreement.
The Additional Term Loan Amendment may, without the consent of any Lenders other
than the Additional Term Loan Lenders and the Agent, effect such amendments to
this Agreement and the other Loan Documents as may be necessary or appropriate,
in the reasonable opinion of the Agent, to effect the provisions of this
Section 2.1.3. The effectiveness of any Additional Term Loan Amendment shall be
subject to the satisfaction on the date thereof of each of the conditions set
forth in Section 4.2 and Section 4.4 and such other conditions as the Additional
Term Loan Lenders or the Agent shall require, together with such evidence of
appropriate authorization on the part of the Borrower with respect to the
Additional Term Loan Facility Commitment and such opinions of counsel and other
items as the Agent may reasonably request. The Borrower will use the proceeds of
the Additional Term Loans for the Project Expansion. Once repaid, Additional
Term Loans may not be reborrowed.
     SECTION 2.1.4 Agent and Lenders Not Required to Extend Credit under Working
Capital Facility Commitments. The Agent and the Lenders shall not be required to
make any Working Capital Facility Loan or issue or cause the issuance of any
Letter of Credit if, after giving effect thereto, the then aggregate outstanding
principal amount of all Working Capital Facility Loans plus the outstanding
amount of all Letter of Credit Obligations would exceed the lesser of (i) the
Working Capital Facility Commitment Amount and (ii) the Borrowing Base. The
Agent and the Lenders shall not be required to issue or cause the issuance of
any Letter of Credit if, after giving effect thereto, the then aggregate
outstanding amount of all Letter of Credit Obligations would exceed the Letter
of Credit Sub-Facility Amount.
     SECTION 2.1.5 Additional Working Capital Facility Commitments. The Borrower
may, at any time prior to the Working Capital Facility Maturity Date, by written
notice to the Agent (whereupon the Agent shall promptly deliver a copy to each
of the Lenders), request an increase in the Working Capital Facility Commitment
(such increased commitment, an “Additional Working Capital Facility Commitment”,
and the amount of any such increase, the “Additional Working Capital Facility
Commitment Amount”) in an aggregate principal amount not to exceed $10,000,000;
provided that (i) both at the time of any such request and upon the effective
date of such increase, no Default or Event of Default shall have occurred and be
continuing, and (ii) the Borrower shall be in compliance with each of the
covenants set forth in Section 6.2.4 determined on a pro forma basis as if such
increase and any Working Capital Facility Loans were made as of the last day of
the most recently ended Fiscal Quarter of the Borrower. Additional Working
Capital Facility Commitments may be made by any existing Lender or by any
Additional Lender, provided that the Agent shall have consented to such Lender’s
or Additional Lender’s providing such Additional Working Capital Facility
Commitment if such consent would be required under Section 9.11 for an
assignment of Loans to such Lender or Additional Lender. Each Lender shall have
the right for a period of fifteen (15) days following receipt of notice from the
Agent of the Borrower’s request for an increase in the Working Capital Facility
Commitment to elect by written notice to the Agent and the Borrower to increase
its Working Capital Facility Commitment by a principal amount equal to its pro
rata share (in proportion to their existing Working Capital Facility
Commitments) of the Additional Working Capital Facility Commitment Amount. No
Lender shall be obligated to provide any

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Additional Working Capital Facility Commitment unless it so agrees. If any
Lender shall not elect to increase its Working Capital Facility Commitment, the
Borrower may designate another bank or other financial institution (which may
be, but need not be, one or more of the existing Lenders) which at the time
agrees to, in the case of any existing Lender, increase its Working Capital
Facility Commitment, or in the case of an Additional Lender, to become a party
to this Agreement (each such Lender or Additional Lender agreeing to provide an
Additional Working Capital Facility Commitment, an “Additional Working Capital
Facility Lender”). An increase in the aggregate amount of the Working Capital
Facility Commitments shall become effective upon the receipt by the Agent of
each of the following items which shall be in form and substance satisfactory to
the Agent and each Additional Working Capital Facility Lender: (i) an amendment
(“Additional Working Capital Facility Commitment Amendment”) to this Agreement
which shall have been authorized and executed by the Borrower, the Agent, and
the Additional Working Capital Facility Lenders, and acknowledged by the Parent
Guarantor, (ii) an amendment to the Mortgage increasing the maximum principal
amount secured by the Mortgage by the amount of the Additional Working Capital
Facility Commitment (“Additional Working Capital Facility Mortgage Amendment”)
which shall have been authorized and executed by the Borrower and the Agent,
(iii) confirmation that all additional mortgage taxes with respect to the
Additional Working Capital Facility Mortgage Amendment have been paid, (iv) an
endorsement to the Project Title Insurance Policy to bring forward the date of
the Project Title Insurance Policy, including all endorsements thereto, to the
effective date of the Additional Working Capital Facility Mortgage Amendment and
to modify the description of the Mortgage to mean the Mortgage as amended by the
Additional Working Capital Facility Mortgage Amendment, and (v) such other
documents, agreements, certificates, affidavits and opinions as the Agent, the
Additional Working Capital Facility Lenders and the title insurer shall require,
including without limitation amendments to the other Loan Documents, executed by
the Parent Guarantor, the Borrower, each Additional Working Capital Facility
Lender, and the Agent, as appropriate, together with such evidence of
appropriate authorization on the part of the Borrower with respect to the
increase in the Working Capital Facility Commitment and such opinions of counsel
and other items as the Agent may reasonably request. The Additional Working
Capital Facility Commitment Amendment may, without the consent of any other
Lenders, effect such amendments to this Agreement and the other Loan Documents
as may be necessary or appropriate, in the reasonable opinion of the Agent, to
effect the provisions of this Section 2.1.5. Upon any increase in the aggregate
amount of the Working Capital Facility Commitments pursuant to this
Section 2.1.5 that is not pro rata among Lenders (in proportion to their
existing Working Capital Facility Commitments), within five (5) Business Days,
the Borrower shall prepay the outstanding Working Capital Facility Loans, and
subject to the conditions specified in Section 4.2, the Borrower shall borrow
such Working Capital Facility Loans from Additional Working Capital Facility
Lenders to the extent necessary that such Working Capital Facility Loans are
held by the Lenders and Additional Lenders ratably in proportion to their
respective Working Capital Facility Commitments after giving effect to such
increase. If such prepayment is not made on the last day of the applicable
Interest Period, the Borrower shall pay to the Agent for the account of the
applicable Lenders any amount required under Section 3.4.9(a). Effective upon
such increase, the amount of the participations held by each Lender in the
issuer’s obligations and rights under and in respect of each Letter of Credit
issued hereunder shall be adjusted such that, after giving effect to such
adjustments, each Lender and Additional Lender shall hold a participation in
each such Letter of Credit in the proportion its respective Working

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Capital Facility Commitment bears to the aggregate Working Capital Facility
Commitments after giving effect to such increase.
     SECTION 2.2 Establishment of Reserves. The Agent shall have the right to
establish reserves against the Borrowing Base in such amounts, and with respect
to such matters, as the Agent shall deem necessary or appropriate, including
reserves with respect to (i) Charges and Liens; (ii) Environmental Liabilities
and Costs, (iii) sums as to which the Agent and the Lenders are permitted to
make Working Capital Facility Loans on the Borrower’s behalf under Section 3.3.2
of this Agreement; (iv) Accounts for which the Agent, based on customary credit
decisions, reasonably determines that the prospect of payment or performance is
impaired or that there is a reasonable probability that such Account will not be
paid, (v) Requirements of Law, (vi) any Hedging Reserve, and (vii) such other
matters, events, conditions or contingencies as to which the Agent, based on
customary credit considerations, reasonably determines reserves should be
established from time to time hereunder.
     SECTION 2.3 Commitment Fee, Unused Commitment Fee, Deferral Surcharge and
Administrative Fees.
     (a) The Borrower agrees to pay to the Agent, during the Working Capital
Facility Availability Period, for the account of each Lender of a Working
Capital Facility (other than a Defaulting Lender), a nonrefundable unused
commitment fee equal to such Lender’s Working Capital Facility Percentage
multiplied by 0.75% per annum multiplied by the amount by which (A) the Working
Capital Facility Commitment Amount exceeds (B) the aggregate outstanding
principal amount of all Working Capital Facility Loans plus the aggregate
outstanding amount of Letter of Credit Obligations. The unused commitment fee
described in this subsection (a) shall be calculated on a daily basis and shall
be payable by the Borrower in arrears on each Quarterly Payment Date and on the
Working Capital Facility Maturity Date.
     (b) The Borrower shall pay to the Agent, for the account of each Lender
(other than a Defaulting Lender), a nonrefundable ticking fee equal to (i) 0.75%
per annum times (ii) such Lender’s Working Capital Facility Percentage of the
Working Capital Facility Commitments, which shall be payable commencing on the
Closing Date and continuing to but excluding the Project Construction Completion
Date, such fee to be payable by the Borrower in arrears on each Quarterly
Payment Date occurring prior to the Project Construction Completion Date and on
the Project Construction Completion Date.
     (c) The Borrower agrees to pay to the Agent, during the Term Loan Facility
Availability Period, for the account of each Term Lender (other than a
Defaulting Lender), a nonrefundable unused commitment fee equal to such Lender’s
Term Loan Percentage multiplied by 0.75% per annum multiplied by the amount by
which (A) the Term Loan Facility Commitment Amount exceeds (B) the aggregate
outstanding principal amount of all Term Loans. The unused commitment fee
described in this subsection (c) shall be calculated on a daily basis and shall
be payable by the Borrower in arrears on each Quarterly Payment Date and on the
last day of the Term Loan Facility Availability Period.
     (d) The Borrower shall pay to the Agent, for its own account, the fees in
the amounts and at such times as shall be set forth in the Fee Letter.

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     (e) The Borrower shall pay to the Agent, during each Deferral Period, for
the account of each Term Lender (other than a Defaulting Lender) a deferral
surcharge equal to such Lender’s Term Loan Percentage multiplied by 0.50% per
annum multiplied by the aggregate principal amount of all Term Loans outstanding
during such Deferral Period. The deferral surcharge described in this subsection
(e) shall be calculated on a daily basis and shall be payable by the Borrower in
arrears on each Quarterly Payment Date and on the Term Loan Facility Maturity
Date.
     SECTION 2.4 Defaulting Lender.
     (a) Notwithstanding anything to the contrary set forth in this Agreement,
any amounts owed to a Defaulting Lender under this Agreement may be applied to
satisfy such Defaulting Lender’s obligations under this Agreement, including
without limitation, such Defaulting Lender’s obligation to make Loans and such
Defaulting Lender’s obligations under Section 3.10.5 with respect to its pro
rata participation interest in the Letters of Credit, and may be applied in such
order as the Agent may determine in its sole discretion to satisfy any of the
other obligations of such Defaulting Lender to the Agent, to the other Lenders
which are not Defaulting Lenders or to the Borrower under this Agreement.
     (b) The obligation of each Lender to makes Loans and to purchase and make
payments in respect of participations in Letters of Credit in accordance with
this Agreement shall not be affected or impaired in any manner by the failure of
any other Lender to do so or to otherwise constitute a Defaulting Lender.
     SECTION 2.5 Increased Costs; Capital Adequacy.
     (a) The Borrower shall pay to the Agent, for the account of each Lender,
from time to time within five (5) Business Days of its receipt of the
certificate referred to in Section 2.5(c) (with a copy to the Agent) such
amounts as such Lender may determine to be reasonably necessary to compensate it
or its holding company for any increased costs which such Lender determines are
attributable to its making or maintaining Loans, issuing Letters of Credit, or
maintaining Commitments hereunder, or any reduction in any amount receivable by
such Lender hereunder in respect of any such Loans, Letters of Credit or
Commitments, resulting from any Regulatory Change which: (i) changes the basis
of taxation of any amounts payable to such Lender under this Agreement in
respect of any of such Loans, Letters of Credit or Commitments (other than taxes
imposed on the overall net income or franchise taxes of Lender); or (ii) imposes
or modifies any reserve, special deposit, deposit insurance or assessment,
minimum capital, capital ratio or similar requirement relating to any extensions
of credit or other assets of, or any deposits with or other liabilities of, such
Lender or any holding company of such Lender, but excluding any such reserve to
the extent reflected in the definition of Eurodollar Rate (including a request
or requirement which affects the manner in which such Lender or the holding
company thereof allocates capital resources to commitments, including the
Commitments). Each Lender will notify the Borrower (with a copy to the Agent) of
any event occurring after the date of this Agreement which will entitle such
Lender to compensation pursuant to this subsection (a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.

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     (b) Without limiting the effect of the foregoing provisions of this
Section 2.5 (but without duplication), the Borrower shall pay to the Agent, for
the account of each Lender, from time to time within five (5) Business Days of
its receipt of the certificate referred to in Section 2.5(c) (with a copy to the
Agent), such amounts as such Lender may determine to be reasonably necessary to
compensate such Lender for any costs which it determines are attributable to the
maintenance by it or its holding company, pursuant to any Regulatory Change, of
capital in respect of its Loans, Letters of Credit or Commitments (such
compensation to include an amount equal to any reduction in return on assets or
equity of such Lender or its holding company to a level below that which it
could have achieved but for such law, regulation, interpretation, directive or
request). Each Lender will notify the Borrower (with a copy to the Agent) if it
is entitled to compensation pursuant to this subsection (b) as promptly as
practicable after it determines to request such compensation.
     (c) Each notice delivered by a Lender pursuant to this Section 2.5 shall
contain a statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) which shall, in the
absence of manifest error, be presumed correct of the matters stated therein and
be binding upon the Borrower. In determining such amount, such Lender may use
any method of averaging and attribution that it in good faith shall deem
applicable.
     (d) The Borrower shall not be required to compensate a Lender pursuant to
this Section 2.5 for any amounts incurred more than one hundred and eighty
(180) days prior to the date that such Lender notifies the Borrower of such
Lender’s intention to claim compensation therefor; and provided, further, that
(x) if the circumstances giving rise to such claim have a retroactive effect,
then such one hundred and eighty (180) day period shall be extended to include
the period of such retroactive effect, and (y) the limitation set forth in this
proviso shall not apply to amounts already included in the determination of the
applicable Eurodollar Rate.
     SECTION 2.6 Replacement of Lenders. Within thirty (30) days after
(1) receipt by Borrower of written notice and demand from any Lender for payment
of additional amounts or increased costs as provided in Sections 2.5(a), 2.5(b),
2.7 or 3.5 or (2) any Lender shall notify the Borrower pursuant to Section 3.4.7
that it has become unlawful for such Lender to make or maintain a Eurodollar
Loan or (3) any Lender fails to designate an alternate lending office after it
is required to use reasonable efforts to do so under Section 2.7 or (4) any
Lender is a Defaulting Lender (each, an “Affected Lender”), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default has occurred and is continuing, within
ninety (90) days following such notice by Borrower to Agent, at Borrower’s
request and expense, Agent, or a Person reasonably acceptable to Agent, shall
have the right (but shall have no obligation) to purchase from such Affected
Lender, and such Affected Lender agrees that it shall sell and assign to Agent
or such Person, all of the Loans and Commitments of such Affected Lender for an
amount equal to the principal balance of all Loans held by the Affected Lender
and all accrued interest and fees and other obligations owing with respect
thereto through the date of such sale (except those amounts payable by Borrower
as set forth in the proviso to this sentence), such purchase and sale to be
consummated pursuant to an executed Transfer Supplement; provided, that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive pursuant to Section 2.5(a), 2.5
(b), 2.7 or 3.5 through the date of such sale and assignment. Notwithstanding

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the foregoing, Borrower shall not have the right to replace such Affected Lender
as provided herein if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower’s notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower’s rights under this
Section 2.6 based on such events shall terminate with respect to such Affected
Lender and Borrower shall promptly pay all increased costs or additional amounts
demanded by such Affected Lender pursuant to Section 2.5(a) and (b).
     SECTION 2.7 Change of Lending Office. Each Lender agrees that it will use
reasonable efforts to designate an alternate lending office with respect to any
of its Eurodollar Loans affected by the matters or circumstances described in
Section 2.5, Section 3.4.7 or Section 3.5, so long as such designation is not
disadvantageous to such Lender as determined by such Lender in its sole
discretion; provided that such Lender shall have no obligation to so designate
an alternate lending office located in the United States.
ARTICLE 3
LOANS AND NOTES
     SECTION 3.1 Borrowing and Issuance Procedure.
     (a) In the case of Working Capital Facility Loans, by delivering a
Borrowing Request to the Agent’s office (i) on or before 1:00 p.m., New York
City time, at least three (3) Business Days in advance of the requested
borrowing date for a Eurodollar Loan and (ii) on or before 12:00 Noon, New York
City time, on the requested borrowing date for a Base Rate Loan, the Borrower
may from time to time request that a Borrowing of Working Capital Facility Loans
be made on the Business Day specified in such Borrowing Request. Such Borrowings
of Working Capital Facility Loans shall be in a minimum aggregate amount equal
to $500,000 for Eurodollar Loans and $100,000 for Base Rate Loans, and in
integral multiples of $100,000 or, if less, the amount of the Working Capital
Facility Availability immediately prior to such Borrowing. Promptly following
the receipt by the Agent of a Borrowing Request in accordance with this
Section 3.1(a), the Agent shall advise each Lender of the details and amount of
such Lender’s Working Capital Facility Percentage of such Borrowing. Each
Borrowing shall be made on the Business Day specified in the Borrowing Request
therefor (including the initial Borrowing to be made on the Closing Date, if
any). On such Business Day, each Lender shall, on or before 3:00 p.m., New York
City time, deposit same day funds with the Agent in the amount equal to such
Lender’s Working Capital Facility Percentage of such Borrowing, such deposit to
be made to such account as the Agent shall specify from time to time by notice
to the Lenders. On the Business Day specified by the Borrower in the Borrowing
Request, the proceeds of such Borrowing shall be made available to the Borrower
by wire transfer of such proceeds to the account of the Borrower specified in
Schedule 3.1 or to such other accounts of the Borrower as the Borrower shall
have specified in the Borrowing Request therefor; provided, however, that in
each case the Agent shall be required to make available to the Borrower the
proceeds of any Borrowing only to the extent received by it in same day funds
from the Lenders. No Lender’s obligation to make any Working Capital Facility
Loan shall be affected by any other Lender’s failure to make any Working Capital
Facility Loan.

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     (b) In the case of Term Loans, by delivering a Borrowing Request to the
Agent’s office (i) on or before 1:00 p.m., New York City time, at least three
(3) Business Days in advance of the requested borrowing date for a Eurodollar
Loan and (ii) on or before 12:00 Noon, New York City time, on the requested
borrowing date for a Base Rate Loan, the Borrower may from time to time request
that a Borrowing of Term Loans be made on the Business Day specified in such
Borrowing Request. Such Borrowings of Term Loans shall be in a minimum aggregate
amount equal to $2,000,000 and in integral multiples of $1,000,000 or, if less,
the amount of the unused portion of the Term Loan Facility Commitments
immediately prior to such Borrowing. Promptly following the receipt by the Agent
of a Borrowing Request in accordance with this Section 3.1(b), the Agent shall
advise each Lender of the details and amount of such Lender’s Term Loan
Percentage of such Borrowing. Each Borrowing shall be made on the Business Day
specified in the Borrowing Request therefor. On such Business Day, each Lender
shall, on or before 3:00 p.m., New York City time, deposit same day funds with
the Agent in the amount equal to such Lender’s Term Loan Facility Percentage of
such Borrowing, such deposit to be made to such account as the Agent shall
specify from time to time by notice to the Lenders. On the Business Day
specified by the Borrower in the Borrowing Request, the proceeds of such
Borrowing shall be made available to the Borrower by wire transfer of such
proceeds to the account of the Borrower specified in Schedule 3.1 or to such
other accounts of the Borrower as the Borrower shall have specified in the
Borrowing Request therefor; provided, however, that in each case the Agent shall
be required to make available to the Borrower the proceeds of any Borrowing only
to the extent received by it in same day funds from the Lenders. No Lender’s
obligation to make any Term Loan shall be affected by any other Lender’s failure
to make any Term Loan.
     (c) In the case of Additional Term Loans, by delivering a Borrowing Request
to the Agent’s office (i) on or before 1:00 p.m., New York City time, at least
three (3) Business Days in advance of the requested borrowing date for a
Eurodollar Loan and (ii) on or before 12:00 Noon, New York City time, on the
requested borrowing date for a Base Rate Loan, the Borrower may from time to
time request that a Borrowing of Additional Term Loans be made on the Business
Day specified in such Borrowing Request. Such Borrowings of Additional Term
Loans shall be in a minimum aggregate amount equal to $2,000,000 or, if less,
the amount of the unused portion of the Additional Term Loan Facility
Commitments immediately prior to such Borrowing. Promptly following the receipt
by the Agent of a Borrowing Request in accordance with this Section 3.1(b), the
Agent shall advise each Lender of the details and amount of such Lender’s
Additional Term Loan Percentage of such Borrowing. Each Borrowing shall be made
on the Business Day specified in the Borrowing Request therefor. On such
Business Day, each Lender shall, on or before 3:00 p.m., New York City time,
deposit same day funds with the Agent in the amount equal to such Lender’s
Additional Term Loan Facility Percentage of such Borrowing, such deposit to be
made to such account as the Agent shall specify from time to time by notice to
the Lenders. On the Business Day specified by the Borrower in the Borrowing
Request, the proceeds of such Borrowing shall be made available to the Borrower
by wire transfer of such proceeds to the account of the Borrower specified in
Schedule 3.1 or to such other accounts of the Borrower as the Borrower shall
have specified in the Borrowing Request therefor; provided, however, that in
each case the Agent shall be required to make available to the Borrower the
proceeds of any Borrowing only to the extent received by it in same day funds
from the Lenders. No Lender’s obligation to make any Additional Term Loan shall
be affected by any other Lender’s failure to make any Additional Term Loan.

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     SECTION 3.2 Notes. All Loans made by any Lender shall be evidenced:
     (a) in the case of the Term Loans, by a Term Note made by the Borrower
payable to the order of such Lender in a principal amount up to such Lender’s
Term Loan Percentage of the Term Loan Facility Commitment Amount;
     (b) in the case of the Working Capital Facility Loans, by a Working Capital
Facility Note made by the Borrower payable to the order of such Lender in a
principal amount equal to such Lender’s Working Capital Facility Percentage of
the Working Capital Facility Commitment Amount; and
     (c) in the case of the Additional Term Loans, by an Additional Term Note
made by the Borrower payable to the order of such Additional Term Loan Lender in
a principal amount up to such Additional Term Loan Lender’s Additional Term Loan
Percentage of the Additional Term Loan Facility Commitment Amount.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on a grid schedule attached to such Lender’s Notes
(or on a continuation of any such grid attached to any Note and made a part
thereof), which notations shall evidence, inter alia, the date and outstanding
principal amount of the Loans evidenced thereby. The notations on any such grid
(and on any such continuation) indicating the outstanding principal amount of a
Lender’s Loans shall be presumptive evidence of the principal amount thereof
owing and unpaid, but the failure to record any such amount on any such grid (or
on any such continuation) shall not limit or otherwise affect the obligations of
the Borrower hereunder or under such Note to make payments of principal of or
interest on such Loans when due.
     SECTION 3.3 Principal Payments. Repayments and prepayments of principal of
the Loans shall be made in accordance with this Section 3.3.
     SECTION 3.3.1 Repayments and Prepayments. The Borrower will make payment in
full of all unpaid principal of the Term Loans, and, if applicable, the
Additional Term Loans, at the Term Loan Maturity Date and the Working Capital
Facility Loans at the Working Capital Facility Maturity Date (or such earlier
date as the Loans may become or be declared due and payable pursuant to
Article 7). Prior thereto, the Borrower:
     (a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that (i) all such voluntary prepayments shall be in a
minimum amount of $500,000 (subject to the Borrower’s right to prepay in full
the entire unpaid principal amount of the Loans it has incurred), and (ii) any
such prepayment of the Term Loans shall require at least five (5) Business Days
prior written notice to the Agent;
     (b) shall, on any Business Day on which the aggregate outstanding principal
amount of all Working Capital Facility Loans plus the then aggregate amount of
Letter of Credit Obligations exceeds the lesser of (i) the Working Capital
Facility Commitment Amount and (ii) the Borrowing Base, either (x) make a
mandatory prepayment of the outstanding principal amount of the Working Capital
Facility Loans in an amount equal to such excess amount, (y) provide cash
collateral in respect of such Letter of Credit Obligations in an amount equal to
such

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excess amount, or (z) perform a combination of (x) and (y) in an amount that, in
the aggregate, equals or exceeds such excess amount;
     (c) shall, commencing on the earlier of (x) the first Quarterly Payment
Date occurring one hundred and eighty (180) or more days after the Project
Construction Completion Date or (y) September 30, 2013, and on each Quarterly
Payment Date thereafter (other than a Deferred Payment Date), make a payment to
the Agent in the amount of the Quarterly Principal Payment Amount, which amount
shall be applied to the outstanding principal amount of the Term Loans;
provided, however, that once during the term of this Agreement at the request of
the Borrower, up to four (4) consecutive Quarterly Payments may be deferred to
the Term Loan Maturity Date subject to the following conditions: (i) such
request may only be made once during the term of this Agreement; (ii) a
weather-related event shall have had a negative impact on that year’s aggregate
canola seed crop for the geographic region comprised of Minnesota, North Dakota,
and Manitoba by reducing the size of the crop by at least 15% from the prior
year’s canola seed crop for the geographic region comprised of Minnesota, North
Dakota, and Manitoba; (iii) no Default or Event of Default shall have occurred
and be continuing at the time of such request or after giving effect thereto;
and (iv) all representations and warranties shall be true and correct as of the
date of such request and after giving effect thereto.
     (d) shall, within one hundred and eighty (180) days following receipt by
the Borrower or any Subsidiary or the Agent of any condemnation awards with
respect to any Loss (other than a Major Loss or a Total Loss), make a mandatory
prepayment of the Loans in an amount by which such condemnation award proceeds
exceed the Permitted Replacement Expenses incurred by the Borrower or such
Subsidiary to repair or replace the property or asset which was the subject of
the condemnation giving rise to such condemnation award proceeds;
     (e) shall, within one hundred and eighty (180) days following receipt by
the Borrower or any Subsidiary or the Agent of any insurance proceeds with
respect to any Loss resulting from a casualty (other than a Major Loss or a
Total Loss), make a mandatory prepayment of the Loans in an amount by which such
insurance proceeds exceed the Permitted Replacement Expenses incurred by the
Borrower to repair or replace the property or asset which was the subject of the
Loss giving rise to such insurance proceeds;
     (f) shall, promptly after (and in any event within two (2) Business Days
following) receipt by the Borrower or any Subsidiary or the Agent of any
insurance proceeds or any condemnation proceeds with respect to any Major Loss,
make a mandatory prepayment of the Loans in the amount of such insurance
proceeds or condemnation proceeds; provided, however, that such mandatory
prepayment shall not be required during any period in which (i) the Borrower has
provided written notice to the Agent that the Borrower intends to undertake a
Major Replacement with respect to such Major Loss, which notice shall specify
the aggregate amount of deductibles that are applicable to the insurance
proceeds with respect to such Major Loss and the amount and source of funds (in
addition to such insurance proceeds) that are available to pay Major Permitted
Replacement Expenses, (ii) the Borrower is diligently proceeding to satisfy each
of the conditions for a Major Replacement with respect to such Major Loss,
(iii) the Borrower is diligently proceeding to satisfy the Major Replacement
Construction Requirements not later than the Major Replacement Construction
Deadline, and no event has occurred which could reasonably be expected to result
in the failure of such Major Replacement

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Construction Requirements to be satisfied by the Major Replacement Construction
Deadline or to cause the cost of such Major Replacement to exceed the amounts
set forth in the Major Replacement Construction Budget; and (iv) no Default or
Event of Default has occurred and is continuing; provided further, however, that
to the extent any insurance proceeds or any condemnation proceeds with respect
to such Major Loss exceed the Major Permitted Replacement Expenses actually
incurred by the Borrower with respect to such Major Replacement, the Borrower
shall make a mandatory prepayment of the Loans in the amount of such excess
insurance or condemnation proceeds within two (2) days of the date that such
Major Replacement is completed;
     (g) shall, promptly after (and in any event within two (2) Business Days
following) receipt by the Borrower of any proceeds from a Qualified Preferred
Equity Issuance, make a mandatory prepayment of the outstanding principal amount
of Term Loans held by the Sponsor Lenders, in an amount equal to the amount of
such proceeds;
     (h) shall, promptly after (and in any event within two (2) Business Days
following) receipt by the Borrower or any Subsidiary or the Agent of any
insurance proceeds with respect to any Loss resulting from a liability, make a
mandatory prepayment of the Loans in an amount by which such insurance proceeds
exceed the amount of the liability to be satisfied with such proceeds (to the
extent such liability is so satisfied);
     (i) shall, promptly after (and in any event within two (2) Business Days
following) receipt by the Borrower or any Subsidiary or the Agent of any Net
Disposition Proceeds which are in excess of $1,000,000 in the aggregate in any
Fiscal Year, make a payment to the Agent in an amount equal to such excess Net
Disposition Proceeds; provided, that this clause (i) of Section 3.3.1 shall not
in any event be deemed a consent to any disposition by any Loan Party which is
otherwise prohibited by the terms of this Agreement or of any of the other Loan
Documents;
     (j) shall, promptly after (and in any event within two (2) Business Days
following) receipt by the Borrower or any Subsidiary or the Agent of any Net
Securities Proceeds, make a payment to the Agent in an amount equal to such Net
Securities Proceeds; provided, that this clause (j) of Section 3.3.1 shall not
in any event be deemed a consent to any issuance or sale of Stock by any Loan
Party that is otherwise prohibited by the terms of this Agreement or of any of
the other Loan Documents;
     (k) shall, concurrently with receipt by any Loan Party after the Closing
Date of any Net Indebtedness Proceeds (excluding any Net Indebtedness Proceeds
resulting from the incurrence by any Loan Party of any Indebtedness permitted
under Section 6.2.2 of this Agreement), make a payment to the Agent in an
aggregate amount equal to such Net Indebtedness Proceeds; provided that this
clause (k) of Section 3.3.1 shall not in any event be deemed a consent to any
incurrence of Indebtedness by any Loan Party which is otherwise prohibited by
the terms of this Agreement or any of the other Loan Documents;
     (l) shall, promptly after (and in any event within two (2) Business Days
following delivery of) the Borrower’s annual financial statements pursuant to
Section 6.1.1(a) with respect to each Fiscal Year, make a payment to the Agent
in an amount equal to (i) Borrower’s Excess

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Cash Flow for such Fiscal Year multiplied by the Excess Cash Flow Recapture
Percentage calculated for such Fiscal Year, less (ii) the amount of any
prepayment made by the Borrower with respect to any Sponsor Loan that satisfies
the Sponsor Loan Prepayment Requirements; provided, however, that in connection
with the first full Fiscal Year following the Project Construction Completion
Date, no such prepayment shall be required if, after giving effect to such
prepayment, Borrower’s Liquidity would be less than $3,000,000; and
     (m) shall, upon the occurrence of a Change in Control, make a mandatory
prepayment of the entire outstanding principal amount of all Loans and all
unreimbursed Letter of Credit Obligations, together with accrued and unpaid
interest and fees and all other outstanding Obligations, and deposit with the
Agent, as cash collateral, an amount equal to 105% of the aggregate undrawn
stated amount of all Letters of Credit.
Unless expressly set forth to the contrary in this Section 3.3.1 or elsewhere in
this Agreement, any mandatory prepayment of any Loans or other payment required
to be made by the Borrower pursuant to this Section 3.3.1 shall be applied
(i) first, to the payment in full of the outstanding amount of the Term Loans;
(ii) second, to the payment in full of the outstanding amount of all drawings
under Letters of Credit that have not been reimbursed by the Borrower, (iii)
third, to the payment in full of all outstanding Working Capital Facility Loans;
and (iv) fourth, to be held by the Agent as cash collateral, an amount equal to
105% of any outstanding Letter of Credit Obligations; provided, however, that to
the extent mandatory prepayments required under Section 3.3.1(f) during the term
of this Agreement exceed $20,000,000 in the aggregate, such prepayments in
excess of such amount shall be applied pari passu to the payment of (A) all
principal on the Loans, Letter of Credit Obligations (to be held by the Agent as
cash collateral in the amount of 105% of the then outstanding Letters of Credit
Obligations), and (B) all Obligations in respect of the Qualified Commodity
Hedge Contract (to be held by the Qualified Counterparty as cash collateral).
Unless expressly set forth to the contrary in this Section 3.3.1 or elsewhere in
this Agreement, (i) any mandatory prepayment of the Term Loans required to be
made by the Borrower pursuant to this Section 3.3.1 shall be applied to required
installments of principal under subsection (c) of this Section 3.3.1 in the
inverse order of maturity.
     SECTION 3.3.2 Working Capital Facility Loans on Borrower’s Behalf. The
Lenders are authorized to, and at their option may, make Working Capital
Facility Loans on behalf of the Borrower for payment of all fees, expenses,
charges, costs, principal and interest owed and outstanding beyond any due date
under this Agreement and the other Loan Documents by the Borrower to the Lenders
(or any of them), or any issuer of a Letter of Credit, or the Agent. Such
Working Capital Facility Loans shall be made when and as the Borrower fails
promptly to pay same, and all such Working Capital Facility Loans shall
constitute Loans made to the Borrower and shall be secured by all of the
Collateral. Following the making of any Working Capital Facility Loans pursuant
to this Section 3.3.2, such Lender shall promptly notify the Borrower of the
making of such Working Capital Facility Loans and the aggregate principal amount
of such Loans; provided that the failure by any Lender to give such notice shall
not affect the Borrower’s obligations under this Agreement or with respect to
such Working Capital Facility Loans.
     SECTION 3.3.3 Reduction of Commitments.

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     (a) The Borrower shall not have the right to reduce the Working Capital
Facility Commitment Amount unless (i) concurrently with such reduction it makes
any prepayment required pursuant to Section 3.3.1(b) and (ii) such reduction is
permitted under the next succeeding sentence. The Borrower shall not have the
right to reduce the Working Capital Facility Commitment Amount to less than
$5,000,000 or cancel the Working Capital Facility Commitment except upon the
simultaneous prepayment of all outstanding Loans, reimbursement of all drawings
under Letters of Credit, deposit by the Borrower with the Agent, to be held by
the Agent as cash collateral, of an amount equal to 105% of all Letters of
Credit, termination of all Commitments, payment of all accrued and unpaid
interest and fees, and payment of all other Obligations.
     (b) The Term Loan Facility Commitments (and the Term Loan Facility
Commitment Amount) shall be permanently reduced on any day on which the
principal amount of the Term Loans are repaid, by the amount of such repayment.
     SECTION 3.4 Interest. Interest on the outstanding principal amount of the
Loans and other outstanding Obligations shall accrue and be payable in
accordance with this Section 3.4.
     SECTION 3.4.1 Loan Rates. Subject to Section 3.4.6, each Borrowing of Term
Loans and each Borrowing of Working Capital Facility Loans shall accrue interest
at the following rates per annum, at the election of the Borrower pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice:
     (a) during such periods as such Borrowing consists of Base Rate Loans, the
Alternate Base Rate plus the Applicable Margin, each as in effect from time to
time, and
     (b) during such periods as such Borrowing consists of Eurodollar Loans, for
each Interest Period relating thereto, the Eurodollar Rate for such Interest
Period plus the Applicable Margin as in effect from time to time.
     SECTION 3.4.2 Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 3:00 p.m., New York
City time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three (3) or no more than five (5) Business Days notice,
that all or any portion of an aggregate minimum amount of $500,000 and an
aggregate multiple of $100,000 of Loans be, in the case of Base Rate Loans,
converted into Eurodollar Loans or, in the case of Eurodollar Loans, continued
as Eurodollar Loans; provided, however, that no portion of the outstanding
principal amount of any Loan may be continued as, or converted into, a
Eurodollar Loan when any Event of Default has occurred and is continuing.
The Agent shall give prompt notice to each Lender of the interest rate
determined pursuant to this Section 3.4.2 with respect to such Loans. Absent
delivery of a Continuation/Conversion Notice with respect to any Eurodollar Loan
at least three (3) Business Days before the last day of the then current
Interest Period with respect thereto, such Eurodollar Loan shall, on such last
day, automatically convert to a Base Rate Loan.
     SECTION 3.4.3 Post-Default Rates. From and after the occurrence of an Event
of Default and during the continuance thereof, the Borrower shall pay interest
(after as well as

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before judgment) on the outstanding principal amount of all Loans and other
Obligations at a rate per annum equal to the Post-Default Rate applicable to
such Loans and other Obligations.
     SECTION 3.4.4 Payment Dates. Accrued interest on the Loans shall be
payable, without duplication:
     (a) on Maturity of such Loans;
     (b) with respect to any portion of any Loan prepaid or repaid pursuant to
Section 3.3.1 or Section 3.3.2, on the date of such prepayment or repayment is
due as provided in Section 3.3.1 or Section 3.3.2 and, in the case of a
voluntary prepayment, on the date set forth in any notice required for such
prepayment; and
     (c) with respect to Base Rate Loans, on each Quarterly Payment Date,
commencing with the first such day following the Closing Date;
     (d) with respect to Eurodollar Loans, on the last day of each applicable
Interest Period (and if such Interest Period shall exceed three (3) months, also
on the numerically corresponding day of the third calendar month after the
commencement of such Interest Period);
     (e) with respect to any Base Rate Loans converted into Eurodollar Loans on
a day which is not a Quarterly Payment Date, on the date of such conversion;
     (f) on the date of acceleration of such Loans pursuant to Section 7.2 or
Section 7.3; and
     (g) with respect to interest accruing at any Post-Default Rate and, to the
extent permitted by applicable law, interest on overdue amounts (including
overdue interest), upon demand.
     SECTION 3.4.5 Rate Determinations. All determinations by the Agent of the
rate of interest applicable to any Loan shall be presumed correct in the absence
of manifest error.
     SECTION 3.4.6 Limitation on Types of Loans. (a) Anything herein to the
contrary notwithstanding, if on or prior to the determination of any Eurodollar
Rate for any Interest Period, the Agent determines in good faith, which
determination shall be conclusive, that quotations of interest rates for the
relevant deposits referred to in the definition of “Eurodollar Rate” are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar Loans as provided
herein; or (b) the Required Lenders determine in good faith, which determination
shall be conclusive, and notify the Agent that the relevant rates of interest
referred to in the definition of “Eurodollar Rate” upon the basis of which the
rate of interest for Eurodollar Loans for such Interest Period is to be
determined are not likely to cover adequately the cost to such Lenders of making
or maintaining Eurodollar Loans for such Interest Period; then the Agent shall
give the Borrower and each Lender prompt notice thereof, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Eurodollar Loans, to continue Eurodollar Loans or to convert Base
Rate Loans into Eurodollar Loans, and the Borrower shall, on the last day(s) of
the then current

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Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or such Loans shall be converted into Base Rate Loans in accordance with
Section 3.4.8 hereof.
     SECTION 3.4.7 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain Eurodollar Loans hereunder, then such Lender
shall promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender’s obligation to make or continue, or to convert Base Rate Loans into,
Eurodollar Loans shall be suspended until such time as such Lender may again
make and maintain Eurodollar Loans (in which case the provisions of
Section 3.4.8 hereof shall be applicable).
     SECTION 3.4.8 Treatment of Affected Loans. If the obligation of any Lender
to make Eurodollar Loans or continue, or to convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Sections 3.4.6 or 3.4.7 hereof,
such Lender’s Eurodollar Loans shall be automatically converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a conversion required by Sections 3.4.6 or 3.4.7
hereof, on such earlier date as such Lender may specify to the Borrower with a
copy to the Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Sections 3.4.6 or 3.4.7 hereof which
gave rise to such conversion no longer exist:
     (a) to the extent that such Lender’s Eurodollar Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Lender’s Eurodollar Loans shall be applied instead to its Base
Rate Loans; and
     (b) all Loans which would otherwise be made or continued by such Lender as
Eurodollar Loans shall be made or continued instead as Base Rate Loans and all
Base Rate Loans of such Lender which would otherwise be converted into
Eurodollar Loans shall remain as Base Rate Loans.
Promptly after the circumstances specified in Sections 3.4.6 or 3.4.7 which gave
rise to the conversion of such Lender’s Eurodollar Loans pursuant to this
Section 3.4.8 no longer exist, such Lender shall give the Agent and the Borrower
notice thereof, and the Borrower may thereafter request conversion of such Loans
to Eurodollar Loans, subject to the subsequent application of Section 3.4.6 or
3.4.7.
     SECTION 3.4.9 Compensation. The Borrower shall pay to the Agent for the
account of each Lender, within ten (10) Business Days of receipt of a written
request of such Lender through the Agent, which request shall set forth the
basis for, and a calculation of, such requested amounts, such amount or amounts
as shall be sufficient (in the opinion of such Lender) to compensate it for any
loss, cost or expense which such Lender determines is attributable to:
     (a) any payment, prepayment or conversion of a Eurodollar Loan made by
Lender for any reason (including, without limitation, the acceleration of the
Loans pursuant to Article 7 hereof) on a date other than the last day of the
Interest Period for such Loan; or
     (b) any failure by the Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Article 4 hereof to be satisfied, but excluding a default by such Lender to fund
such Loan), to borrow a Eurodollar Loan from

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Lender on the date for such borrowing specified in the Borrowing Request given
pursuant to Section 3.1 hereof.
     SECTION 3.5 Taxes.
     (a) Any and all payments by the Borrower hereunder or under the Notes or
any other Loan Document shall, to the extent permitted by law, be made, in
accordance with this Section 3.5, free and clear of and without deduction for
any and all present or future Taxes. If the Borrower shall be required by law to
deduct any Taxes, including both United States federal backup withholding and
withholding Taxes, from or in respect of any sum payable hereunder or under any
Note or any other Loan Document to any Lender or the Agent, (i) the Borrower
shall withhold or make such deductions as are determined by the Borrower to be
required based upon the information and documentation it has received pursuant
to subsection (f) of this Section 3.5 or Section 9.11(e), (ii) the Borrower
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law, and (iii) to the
extent the withholding or deduction is made on account of Indemnified Taxes, the
sum payable by the Borrower to such Lender or the Agent (as the case may be)
shall be increased as necessary so that, after making all required deductions
(including deductions applicable to additional sums payable under this
Section 3.5), such Lender or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made;
     (b) In addition, the Borrower agrees to pay any present or future stamp or
documentary Taxes or intangibles Taxes or any other excise or property Taxes,
transfer Taxes, charges or similar levies which arise from any payment made
hereunder or under the Notes or from the execution, delivery or registration of,
or otherwise with respect to this Agreement, the Notes, or any other Loan
Document;
     (c) The Borrower will indemnify each Lender or the Agent (as the case may
be) for the full amount of Indemnified Taxes (including, without limitation, any
Indemnified Taxes imposed by any jurisdiction on amounts payable under this
Section 3.5) paid by such Lender or the Agent (as the case may be) and any
penalties, interest and expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally asserted.
Payment under this subsection (c) shall be made within ten (10) days from the
date such Lender or the Agent (as the case may be) makes written demand therefor
and provides a certificate setting forth in reasonable detail the calculation of
the amount required to be paid under this subsection (c);
     (d) Each Lender will indemnify the Borrower for the full amount of any
Taxes (including, without limitation, any Taxes imposed by any jurisdiction on
amounts payable under this Section 3.5) paid by the Borrower and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto incurred by, or asserted against, the Borrower as a result of the
failure of such Lender to deliver, or as a result of the inaccuracy, inadequacy
or deficiency of, any documentation that is required to be delivered by such
Lender to the Borrower pursuant to subsection (f) of this Section 3.5 or
Section 9.11(e). Payment under this subsection (d) shall be made within ten
(10) days from the date the Borrower makes written demand therefor and provides
a certificate setting forth in reasonable detail the calculation of the amount
required to be paid under this subsection (e). Each Lender hereby authorizes the
Agent to set off

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and apply any and all amounts at any time owning to such Lender under this
Agreement or any Note or any other Loan Document against any amount that such
Lender is required to pay under this subsection (d). The agreement in this
subsection (d) shall survive the resignation and/or replacement of the Agent,
and assignment of rights by, or the replacement of, any Lender, the termination
of the aggregate Commitments and the repayment, satisfaction or discharge of all
other Obligations;
     (e) Within ten (10) days after the date of any payment of any Taxes by the
Borrower pursuant to Section 3.5(a), the Agent makes written demand therefor,
the Borrower will furnish to the Agent, at its address referred to in
Section 9.2, the original or a certified copy of any receipt received by the
Borrower evidencing payment of such Taxes by the Borrower.
     (f) Status of Lenders; Tax Documentation.
     (i) Each Lender shall promptly deliver to the Borrower and to the Agent, at
the time or times prescribed by applicable laws or when reasonably requested by
the Borrower or by the Agent, such properly completed and executed documentation
prescribed by applicable laws or by the taxing authorities of any jurisdiction
and such other reasonably requested information as will permit the Borrower or
the Agent (as the case may be) to determine (A) whether or not payments made
hereunder or under any Note or any other Loan Document are subject to Taxes,
(B) if applicable, the required rate of withholding or deduction, and (C) such
Lender’s entitlement to any available exemption from, or reduction of,
applicable Taxes in respect of all payments to be made to such Lender by the
Borrower pursuant to this Agreement or any other Loan Document or otherwise to
establish such Lender’s status for withholding Tax purposes in the applicable
jurisdictions.
     (ii) Without limiting the generality of the foregoing, if the Borrower is
resident for Tax purposes in the United States,
     (A) any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the IRC shall deliver to the Borrower and the Agent (in
such number of copies as requested by the recipient), on or prior to the date on
which such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Agent) executed originals of
Internal Revenue Service Form W-9 or other documentation or information
prescribed by applicable laws or requested by the Borrower or the Agent as will
enable the Borrower or the Agent (as the case may be) to determine whether or
not such Lender is subject to backup withholding or information reporting
requirements; and
     (B) each Foreign Lender that is entitled under the IRC or under any
applicable treaty to any exemption from or reduction of withholding Tax with
respect to payments hereunder or under any Note or any other Loan Document shall
deliver to the Borrower and the Agent (in such number of copies as requested by
the recipient), on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon

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the request of the Borrower or the Agent, but only if such Foreign Lender is
legally entitled to do so), whichever of the following is applicable:
     (I) executed originals of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,
     (II) executed originals of Internal Revenue Service Form W-8ECI,
     (III) executed originals of Internal Revenue Service Form W-8IMY and all
required supporting documentation,
     (IV) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 871(h) of the IRC, (x) a certificate to the
effect that such Foreign Lender is not a “10 percent shareholder” of the
Borrower within the meaning of Section 871(h)(3)(B) of the IRC and (y) executed
originals of Internal Revenue Service Form W-8BEN,
     (V) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the IRC, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
Section 881(c)(3)(A) of the IRC, (B) a “10 percent shareholder” of the Borrower
within the meaning of Section 881(c)(3)(B) of the IRC, or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the IRC and
(y) executed originals of Internal Revenue Service Form W-8BEN, or
     (VI) executed originals of any other form prescribed by applicable laws as
a basis for claiming exemption from or a reduction in United States federal
withholding tax, together with such supplementary documentation as may be
prescribed by applicable laws to permit the Borrower or the Agent to determine
the withholding or deduction required to be made.
     (iii) Each Lender shall promptly (A) notify the Borrower and the Agent of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction, and (B) take such steps (including the re-designation of
its lending office) as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary to avoid
any requirement of applicable laws of any jurisdiction that the Borrower or the
Agent make any withholding or deduction for Taxes from amounts payable to such
Lender.
     (g) Unless required by applicable laws, at no time shall the Borrower have
any obligation to file for or otherwise pursue on behalf of any Lender, or have
any obligation to pay to any Lender, any refund of Taxes withheld or deducted
from funds paid for the account of such Lender. If the Agent or any Lender
determines that it has received a refund of any Taxes as to

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which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 3.5, it shall pay
to the Borrower an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 3.5 with respect to the Taxes giving rise to such refund), net of all
reasonable out-of-pocket expenses incurred by the Agent or such Lender (as the
case may be) and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of the Agent or such Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Agent or such Lender in the event
the Agent or such Lender is required to repay such refund to such Governmental
Authority. This subsection (g) shall not be construed to require the Agent or
any Lender to make available its tax returns (or any other information relating
to its Taxes that it deems confidential) to the Borrower or any other Person.
     SECTION 3.6 Payments, Interest Rate Computations, Other Computations, Etc.
Except as otherwise expressly provided in Section 3.3.1(g), all payments by the
Borrower pursuant to this Agreement, the Notes or any other Loan Document, in
respect of principal or interest on the Term Notes shall be made by the Borrower
to the Agent for the account of the Lenders, pro rata according to their
respective Term Loan Percentages. All payments by the Borrower pursuant to this
Agreement, the Notes or any other Loan Document, in respect of principal or
interest on the Working Capital Facility Notes shall be made by the Borrower to
the Agent for the account of the Lenders, pro rata according to their respective
Working Capital Facility Percentages. Except as otherwise provided therein, the
payment of fees referred to in Section 2.3 shall be made by the Borrower to the
Agent for the account of the Lenders pro rata according to their respective
Working Capital Facility Percentages and Term Loan Percentages. All other
amounts payable to the Agent or any Lender under this Agreement or any other
Loan Document (except under Section 2.5) shall be paid to the Agent for the
account of the Person entitled thereto. All such payments required to be made to
the Agent shall be made, without setoff, deduction or counterclaim, not later
than 1:00 p.m., New York City time, on the date due, in immediately available
funds, to the account of the Agent specified in Schedule 3.6 or to another
account of the Agent specified from time to time in writing to the Borrower.
Funds received after that time shall be deemed to have been received by the
Agent on the next following Business Day. The Agent shall promptly remit in the
type of funds received to each Lender notified to the Agent its share, if any,
of such payments received by the Agent for the account of such Lender. All
interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 360 days with
respect to Eurodollar Loans and 365/366 days with respect to all Obligations
other than Eurodollar Loans. Whenever any payment to be made shall otherwise be
due on a day which is not a Business Day, such payment shall be made on the
immediately preceding Business Day.
     SECTION 3.7 Proration of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of principal of or interest on any Loan or other
Obligation (other than any payment otherwise expressly provided under this
Agreement) in excess of such Lender’s respective share of payments in respect of
such Loan or Obligation then and therewith obtained thereon by all Lenders, such
Lender which has received in excess of its ratable share of such Loan or

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Obligation shall purchase from the other Lenders such participations in such
Notes or other Obligations held by them as shall be necessary to cause such
purchaser to share the excess payment or other recovery ratably with each of
them; provided, however, that if all or any portion of the excess payment or
other recovery is thereafter recovered from such purchasing holder, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 3.7 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 3.8) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 3.7 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders under this Section 3.7 to share in the benefits of any recovery
on such secured claim.
     SECTION 3.8 Setoff. In addition to and not in limitation of any rights of
any Lender under applicable law, each Lender shall, upon the occurrence and
during the continuance of any Event of Default, have the right to appropriate
and apply to the payment of the Obligations owing to it (whether or not then
due), and the Borrower hereby grants to each Lender, as security for such
Obligations, a continuing security interest in any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter maintained with
such Lender; provided, however, any such appropriation and application shall be
subject to the provisions of Section 3.7.
     SECTION 3.9 Use of Proceeds and Sources of Payment of Construction
Expenses.
     (a) Until the Construction Expenses are paid in full and the Project
Construction Completion Date has occurred, the proceeds of the Term Loans shall
be used solely (a) to finance Construction Expenses and to fund the initial
deposit by the Borrower into the Debt Service Reserve Account required under
Section 6.1.19, and (b) upon receipt by the Agent, not earlier than ninety
(90) days prior to the projected Project Construction Completion Date, of an
Excess Contingency Funds Certificate, to finance the purchase by the Borrower of
initial canola seed Inventory for processing at the Project. Thereafter, the
proceeds of the Term Loan shall be used for general corporate purposes. The
proceeds of the Working Capital Facility Loans shall be used for the purposes
set forth in Section 3.3.2 and working capital purposes of the Borrower, but
shall not be used (i) to finance the payment of any Construction Expenses
(ii) for the payment of any dividend or distribution by the Borrower, (iii) to
finance Inventory located in Canada having a cost basis in excess of $1,000,000
unless such Inventory constitutes Eligible Canadian Inventory, or (iv) to
finance Inventory located in any province in Canada other than Manitoba.
Proceeds of any Working Capital Facility Loan made on the Project Construction
Completion Date may be used to repay any outstanding amounts owed by the
Borrower with respect to the Sponsor Temporary Working Capital Loan.
     (b) No part of the proceeds of any Loans shall be used for any purpose
which violates Regulations T, U or X of the F.R.S. Board.
     (c) Construction Expenses shall be paid from the following sources in the
following order as such Construction Expenses become due and payable from time
to time: (i)

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Construction Expenses which are due and payable at any given time shall be paid
first from funds received by the Borrower as Contributions until all such funds
have been applied to pay such Construction Expenses, (ii) any Construction
Expenses which remain outstanding after the application of the funds received by
the Borrower as Contributions shall be paid with proceeds of the Term Loans,
subject to the terms and conditions for the making of Term Loans in this
Agreement, and (iii) to the extent any Construction Expenses remain outstanding
after the application of the funds from the foregoing sources, the Borrower
shall pay any remaining Construction Expenses from its own funds.
     SECTION 3.10 Letters of Credit. Upon and subject to the terms and
conditions of this Section 3.10, in addition to the terms and conditions set
forth elsewhere in this Agreement, the Lenders, from time to time, in accordance
with their respective Working Capital Facility Percentages severally shall
participate in the issuance of Letters of Credit for the account of the Borrower
or any of its Subsidiaries.
     SECTION 3.10.1 Manner of Issuance. The Borrower shall deliver to the Agent
prior to 1:00 p.m. (New York City time) at least three (3) Business Days before
the requested date of issuance of a Letter of Credit, a Letter of Credit Request
for the issuance of such Letter of Credit setting forth (i) the beneficiary of
the Letter of Credit, (ii) the stated amount thereof, (iii) the requested issue
date, (iv) the requested expiration date, and (v) the purpose for such Letter of
Credit. Each such Letter of Credit Request shall be accompanied by the proposed
issuer’s standard form standby letter of credit application, duly completed and
executed by the Borrower (which application shall be deemed for purposes of this
Agreement to constitute part of such Letter of Credit Request), together with
all other documents, materials and evidences reasonably required by the Agent
prior to the issuance of such Letter of Credit. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the relevant
issuer relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
     SECTION 3.10.2 Terms of Letters of Credit. Each Letter of Credit shall
(a) have an expiration date not later than the earlier of (i) 365 days or, in
the case of a leap year, 366 days, after the date of issuance thereof (or such
longer period to which the Agent and the issuer shall consent provided the
Borrower agrees to pay any additional issuance cost or facing fees arising by
virtue of the issuance of a Letter of Credit for a period longer than the period
specified in this clause (i)) and (ii) the maturity date of the Working Capital
Facility Loans set forth in clause (a) of the definition of Working Capital
Facility Maturity Date and (b) be issued solely to secure bid, tender, surety,
payment, performance, litigation or similar bonds required by the Borrower and
its Subsidiaries in the ordinary course of business. The Agent shall use
reasonable efforts to cause Letters of Credit to be governed by, and construed
and enforced in accordance with, the Uniform Customs and Practice for
Documentary Credits (2007 Revision), International Chamber of Commerce
Publication 600 and, to the extent not inconsistent therewith, the laws of the
State of New York.

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     SECTION 3.10.3 Drawings Under Letters of Credit.
     (a) Notice to Borrower. Promptly upon receipt by the Agent from the issuer
of a Letter of Credit of a copy of any draft upon, or other notice of drawing
under, a Letter of Credit, the Agent shall give the Borrower written or
telephonic notice of the amount of such draft or notice of drawing, of the
Letter of Credit against which it is drawn and of the date upon which the issuer
proposes to honor such draft.
     (b) Repayment by Borrower. The Borrower shall pay to the Agent the amount
of any drawing under any Letter of Credit on the date of such drawing. The
amount of any drawing under a Letter of Credit not paid on the date provided
herein shall bear interest, payable on demand, from the due date thereof until
paid, at the Post-Default Rate.
     (c) Repayment with Working Capital Facility Loans. On the date of any
drawing under a Letter of Credit, the amount of such drawing automatically shall
be paid with, and the Borrower hereby authorizes the Lenders to make, a
Borrowing of Working Capital Facility Loans in the amount of such drawing;
provided, that all conditions set forth in Sections 4.1, 4.2 and 4.3 (other than
Section 4.2.2) have been satisfied. Unless the Lenders shall have received a
written notice otherwise prior to the making of any Working Capital Facility
Loans pursuant to this subsection (c) of this Section 3.10.3, the making of any
such Working Capital Facility Loans shall constitute a representation and
warranty by the Borrower that on the date of the making of such Working Capital
Facility Loans, and after giving effect thereto, all statements set forth in
Section 4.2.1 are true and correct.
     (d) Borrower’s Obligation Absolute. The obligation of the Borrower to pay
the Agent for each drawing under a Letter of Credit shall be irrevocable, shall
not be subject to any qualification or exception whatsoever and shall be binding
in accordance with the terms and conditions of this Agreement under all
circumstances, including the following circumstances:
     (i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
     (ii) the existence of any claim, set-off, defense or right which the
Borrower or the account party may have at any time against a beneficiary of any
Letter of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Lender or any other Person, whether
in connection with this Agreement, or any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;
     (iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
     (iv) the surrender or impairment of any security for the performance or
observance of any of the terms of this Agreement or the other Loan Documents;
     (v) any failure of the Agent to provide notice to the Borrower of any
drawing under any Letter of Credit;

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     (vi) the occurrence or continuance of any Default; or
     (vii) any other reason.
Nothing contained herein shall be deemed to relieve the issuer of a Letter of
Credit from liability for errors or omissions in connection with its honoring of
any drawing under such Letter of Credit if such errors or omissions result from
the gross negligence or willful misconduct of such issuer (but without in any
way impairing Borrower’s obligations under this Section 3.10.3).
     SECTION 3.10.4 Letter of Credit Fees. With respect to each Letter of
Credit, the Borrower shall pay (a) to the Agent, for the benefit of the Lenders
in accordance with their respective Working Capital Facility Percentages, a per
annum fee equal to the Applicable Margin in effect for Eurodollar Rate Loans
times the undrawn stated amount of such Letter of Credit which fee shall be
calculated on a daily basis and shall be payable by the Borrower quarterly in
arrears on each Quarterly Payment Date and on the Term Loan Maturity Date,
(b) to the issuer of each Letter of Credit a fronting fee in the amount of
0.125% per annum of the stated amount of such Letter of Credit, which fee shall
be calculated on a daily basis and shall be payable by the Borrower quarterly in
arrears on each Quarterly Payment Date, and (c) issuer of each Letter of Credit,
such issuer’s customary fees with respect to issuance, amendment, cancellation,
negotiation, transfer, renewal or extension of any Letter of Credit or
processing of drawings thereunder. From and after the occurrence of an Event of
Default and during the continuance thereof, the fee payable pursuant to clause
(a) of the preceding sentence shall increase to a per annum rate equal to the
Applicable Margin in effect for Eurodollar Rate Loans plus 200 basis points
(2.00%) times the undrawn stated amount of each Letter of Credit, payable on
demand. All fees payable under this Section 3.10.4 shall be fully earned and
nonrefundable on the date such fees are due. Any fees described in this
Section 3.10.4 which accrue on the Commitment of, or are payable to, a
Defaulting Lender, shall be paid to the Agent and held for the benefit of the
Agent, the Lenders or the issuers with respect to the Letter of Credit to which
such fee relates, which are not Defaulting Lenders, to reimburse the Agent, the
Lenders or such issuers which are not Defaulting Lenders for any losses, costs
or expenses incurred from time to time as a result of any Defaulting Lender’s
failure to comply with its obligations hereunder, and to the extent such accrued
fees exceed the aggregate amount of such losses, costs or expenses, may be
applied to satisfy such Defaulting Lender’s obligations under Section 3.10.5
with respect to its pro rata participation interest in the Letters of Credit and
then may be applied in such order as the Agent may determine in its sole
discretion to satisfy any of the other obligations of such Defaulting Lender to
the Agent, to the other Lenders which are not Defaulting Lenders or to the
Borrower under this Agreement.
     SECTION 3.10.5 Letter of Credit Participations. The issuer of each Letter
of Credit irrevocably agrees to grant and hereby grants to each Lender, and, to
induce such issuer to issue such Letter of Credit, each Lender irrevocably
agrees to accept and purchase and hereby accepts and purchases from such issuer,
on the terms and conditions set forth below, for such Lender’s own account and
risk an undivided pro rata participation interest in such issuer’s obligations
and rights under and in respect of each Letter of Credit and the amount of each
draft paid by the issuer thereunder based on such Lender’s Working Capital
Facility Percentage of the Working Capital Facility Commitment Amount. Each
Lender agrees with each issuer of a Letter of Credit that, if a draft is paid
under any Letter of Credit for which such issuer is not reimbursed in full by

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the Borrower in accordance with the terms of this Agreement, such Lender shall
pay to the issuer of such Letter of Credit upon demand, at such issuer’s address
for notices specified herein, an amount equal to such Lender’s Working Capital
Facility Percentage of the amount of such draft, or any part thereof, that is
not so reimbursed. Notwithstanding anything to the contrary set forth in this
Agreement, each Lender’s obligation to pay such amount shall be absolute and
unconditional and shall not be affected by any circumstance, including (i) any
setoff, counterclaim, recoupment, defense or other right that such Lender may
have against the issuer, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 4.2, (iii) any adverse change in the condition (financial or otherwise)
of the Borrower or any other Loan Party, (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Lender or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing. At any time during which a Lender is a
Downgraded Lender, such Downgraded Lender shall provide to the Agent, for the
benefit of the issuer of each Letter of Credit, cash collateral (or other
security acceptable to each issuer of Letter of Credit in its sole discretion)
in an amount equal to such Downgraded Lender’s pro rata participation interest
in such issuer’s obligations under and in respect of the Letter of Credit. The
issuer of such Letter of Credit shall pay to the Agent, for the account of each
Downgraded Lender, interest on any cash collateral provided by such Downgraded
Lender on each Quarterly Payment Date, at a rate not less than the Eurodollar
Base Rate.
     SECTION 3.10.6 Limitation of Liability With Respect to Letters of Credit.
As among the Borrower, the Agent and the Lenders, the Borrower assumes all risks
of the acts and omissions of, or misuse of any Letter of Credit by, the
beneficiaries of such Letter of Credit. Without limiting the foregoing, neither
the Agent nor any Lender shall be responsible for:
     (a) the form, validity, sufficiency, accuracy, genuineness or legal effect
of any draft, demand, application or other documents submitted by any party in
connection with any Letter of Credit even if such document should in fact prove
to be in any and all respects invalid, insufficient, inaccurate, fraudulent or
forged;
     (b) the validity, genuineness or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason;
     (c) failure of the beneficiary of a Letter of Credit to comply fully with
the conditions required in order to draw upon such Letter of Credit;
     (d) errors, omissions, interruptions or delays in transmission or delivery
of any messages by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher;
     (e) errors in interpretations of technical terms;
     (f) any loss or delay in the transmission or otherwise of any document
required to make a drawing under any Letter of Credit or with respect to the
proceeds thereof;

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     (g) the misapplication by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or
     (h) any consequences arising from causes beyond the control of the Agent or
any Lender, including any act or omission, rightfully or wrongfully, of any
present or future Governmental Authority.
None of the above circumstances shall affect, impair or prevent the vesting of
any of the Agent’s or any Lender’s rights or powers under this Agreement.
Nothing contained herein shall be deemed to relieve the issuer of a Letter of
Credit from liability for errors or omissions in connection with its honoring of
any drawing under such Letter of Credit if such errors or omissions result from
the gross negligence or willful misconduct of such issuer (but without in any
way impairing Borrower’s obligations under Section 3.10.3 or Section 3.10.4).
     SECTION 3.11 Income With Respect to Deposit Accounts. So long as no Default
or Event of Default has occurred and is continuing or would be caused thereby,
the Borrower may invest, or direct the investment of, the funds in its Deposit
Accounts, other than the Cost Overrun Account, in any Permitted Investment.
ARTICLE 4
CONDITIONS TO LOANS
     SECTION 4.1 Closing Date Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make all Loans, to cause the issuance of all
Letters of Credit, and to cause the Agent to provide Disbursement Instructions,
shall be subject to the prior or concurrent satisfaction on or prior to the
Closing Date of each of the conditions precedent set forth in this Section 4.1,
except as the Required Lenders shall otherwise consent.
     SECTION 4.1.1 Loan Documents. Each Loan Party shall have delivered the Loan
Documents to which it is a party, each duly executed by an Authorized Officer of
such Loan Party and the other parties thereto.
     SECTION 4.1.2 Resolutions, Etc. The Agent shall have received on or before
the Closing Date with respect to each Loan Party and the Sponsor:
     (a) a certificate, dated the date hereof, of the Secretary or an assistant
secretary of such Person, as to:
     (i) resolutions of its Board of Directors or similar governing body, then
in full force and effect, authorizing the execution, delivery and performance of
the Loan Documents or Major Project Documents to which such Person is a party
and the related transactions contemplated thereby, and
     (ii) the incumbency and signatures of those of its officers authorized to
act with respect to the Loan Documents or Project Documents to which it is
party, upon which certificate the Agent and the Lenders may conclusively rely
until it shall have received further certificates

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of the Secretary or an assistant secretary of such Person canceling or amending
such prior certificates;
     (b) copies of the Organizational Documents of each Loan Party and the
Sponsor certified by, in the case of the charters, the appropriate Governmental
Authority of the State of such Person’s incorporation or formation and, in the
case of its other Organizational Documents, such Person’s Secretary or assistant
secretary, which documents shall be satisfactory to the Agent;
     (c) a so-called “good standing” certificate with respect to each such
Person from the appropriate Governmental Authority of the State of its
incorporation or formation and the State in which the Project is located;
     (d) evidence satisfactory to the Agent in its sole discretion of
qualification of each Loan Party to do business in each other jurisdiction in
which such Person is required to qualify; and
     (e) such other documents (certified if requested) as the Agent may
reasonably request, with respect to this Agreement, the Notes, any other Loan
Document, or any Major Project Document, the transactions contemplated hereby
and thereby, or any Organizational Document, Contractual Obligation of the
Borrower or any of its Subsidiaries, or any Approval, including any Necessary
Project Approval.
     SECTION 4.1.3 Notes. The Agent shall have received, for the account of each
Lender, such Lender’s Notes, in each case duly executed and delivered pursuant
to subsections (a) and (b) of Section 3.2.
     SECTION 4.1.4 Major Project Documents. Each of the Major Project Documents
shall have been executed and delivered by all parties thereto and shall be in
form and substance satisfactory to the Agent and the Lenders. The Borrower shall
have delivered to the Agent copies of all Major Project Documents, certified by
an Authorized Officer of the Borrower to be true, correct and complete. No
default or event of force majeure shall have occurred and be continuing under
any of the Major Project Documents as of the Closing Date. The Borrower shall
have delivered a Project Party Consent executed by each Project Party with
respect to the Major Project Documents to which such Project Party is a party,
in form and substance satisfactory to the Agent and the Lenders.
     SECTION 4.1.5 Necessary Project Approvals. The Independent Engineer shall
have confirmed that all governmental and third party consents, approvals and
permits which are required for the construction and operation of the Project
(“Necessary Project Approvals”) have been obtained, other than consents,
approvals and permits which the Independent Engineer has determined in good
faith are readily obtainable in due course and conditioned only upon the filing
of the appropriate application and the payment of nominal fees, and copies of
all Necessary Project Approvals shall have been delivered to the Agent,
including without limitation those items listed on Schedule 4.1.5.
     SECTION 4.1.6 Technical Evaluation Report. The Agent shall have received,
on or before the Closing Date, a report of the Independent Engineer, in form and
substance satisfactory

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to the Agent and the Lenders, covering the technical and economic feasibility of
the Project (including, but not limited to a review of engineering design,
equipment selections, actual and projected performance, Construction Budget,
Construction Schedule, actual and projected performance, adequacy of
contingency, status of construction, relevant Project Documents, status of
permits and licenses and compliance with applicable zoning laws) and covering
such other matters as the Agent may reasonably request.
     SECTION 4.1.7 Insurance Report. The Agent shall have received, on or before
the Closing Date, a report of the Insurance Consultant, in form and substance
satisfactory to the Agent and the Lenders, covering the adequacy of the
insurance coverage to be maintained with respect to the Project and such related
matters as the Agent may reasonably request.
     SECTION 4.1.8 No Contest, Etc. On the Closing Date, no litigation,
arbitration, governmental investigation, injunction, proceeding or inquiry shall
be pending or, to the knowledge of the Borrower, threatened which:
     (a) seeks to enjoin or otherwise prevent the consummation of, or to recover
any damages or obtain relief as a result of, the transactions contemplated by or
in connection with this Agreement or any other Loan Document, or any Major
Project Document; or
     (b) would, in the opinion of the Required Lenders, be materially adverse to
any of the parties hereto with respect to the transactions contemplated hereby
or give rise to any liability on the part of the Agent or any Lender in
connection with this Agreement, any other Loan Documents, any Major Project
Document or the transactions contemplated hereby or thereby.
     SECTION 4.1.9 Certificate as to Completed Conditions, Warranties, No
Default, Etc. The Agent shall have received, on or before the Closing Date, a
certificate dated the Closing Date of an Authorized Officer of the Borrower, to
the effect that:
     (a) all conditions precedent set forth in this Section 4.1 have been
satisfied, except that such certificate shall not certify as to whether such
documents or conditions referenced in this Section 4.1 are in form and substance
satisfactory to the Agent or the Lenders;
     (b) all representations and warranties set forth in Article 5 are true and
correct in all material respects;
     (c) all representations and warranties set forth in the Loan Documents are
true and correct in all material respects; and
     (d) no Default or Event of Default has occurred and is continuing.
     SECTION 4.1.10 Compliance with Requirements of Law. The Agent shall have
received, on or before the Closing Date, evidence satisfactory to it that the
Borrower is in compliance in all material respects with all other Requirements
of Law (including without limitation applicable zoning laws) and has obtained
and maintains in full force and effect (a) all licenses, permits and approvals
issued by Governmental Authorities necessary to carry on its business (except
where the failure to have any such license, permit or approval could not
reasonably be expected to result in a Material Adverse Change), (b) all permits
and consents

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necessary to consummate this Agreement and necessary for Agent to have a first
priority perfected security interest in any such permits or licenses to the
extent permitted by applicable law, and (c) all Approvals, other than Approvals
which the Independent Engineer has determined in good faith are readily
obtainable in due course and conditioned only upon the filing of the appropriate
application and the payment of nominal fees.
     SECTION 4.1.11 Opinions of Counsel. The Agent shall have received, on or
before the Closing Date, an opinion letter dated the Closing Date and addressed
to the Agent and the Lenders from special counsel to the Borrower, as well as
such local counsel opinions as the Agent shall require, each of which shall be
in form and substance satisfactory to the Agent.
     SECTION 4.1.12 Closing Fees, Expenses, Etc. The Agent shall have received
the fees payable on the Closing Date pursuant to this Agreement and the Fee
Letter, and payment or reimbursement of all costs and expenses of the Agent
which are payable upon the initial Borrowing pursuant to Section 9.3.
     SECTION 4.1.13 Perfection. The Agent shall have received, on or before the
Closing Date:
     (a) evidence of all filings of the Financing Statements with respect to the
Security Agreement and other Security Documents; searches or other evidence as
to the absence of any Liens (other than Permitted Liens); and evidence that all
other actions with respect to the Liens created by the Security Documents have
been taken as are necessary or appropriate to perfect such Liens;
     (b) duly executed Deposit Account Control Agreements with respect to the
deposit accounts of each Loan Party, all in form and substance satisfactory to
the Agent and the Lenders;
     (c) duly executed counterparts of the Mortgages executed by Borrower as to
the Mortgaged Property, together with: (i) mortgagee title insurance policies in
form and substance satisfactory to the Agent, including, without limitation, any
and all endorsements as the Agent shall request and which are available in the
jurisdiction in which the Project is located (as amended, further endorsed,
reissued, supplemented or replaced, and collectively, together with any
additional title insurance policy issued with respect to the Project, the
“Project Title Insurance Policy”), (ii) current surveys satisfactory in form and
substance to Agent, (iii) environmental reports prepared by an environmental
testing firm satisfactory to the Agent and which reports shall be in form and
substance satisfactory to the Agent and the Lenders (including Phase I
assessments in accordance with ASTM 1527-05 and such other reports as Agent may
reasonably require), (iv) flood zone certifications, (v) evidence that
counterparts of the Mortgages have been delivered to the appropriate title
agents for recording in all places to the extent necessary or desirable, in the
judgment of the Agent, to create a valid and enforceable first priority lien on
each Mortgaged Property (subject to no Liens other than Permitted Liens) in
favor of Agent for the benefit of the Secured Parties (or in favor of such
trustee as may be required under local law), (vi) landlords waivers from all
landlords of real estate leased by any Loan Party, and (vii) such other
documents, instruments and agreements relating to the Mortgaged Property as
Agent may reasonably require.

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     SECTION 4.1.14 Employment Agreements; Compensation. The Agent shall have
received copies of all employment agreements to which any Loan Party is a party.
     SECTION 4.1.15 Pension and Welfare Liabilities. The Agent shall have
received (i) the most recent actuarial valuation report, if any, for each Single
Employer Plan, if any, and a copy of Schedule B to the Annual Report on
Form 5500 of the Internal Revenue Service, if any, for each Single Employer
Plan, if any, most recently filed with the Internal Revenue Service, and (ii) a
report prepared by the Borrower in form and substance satisfactory to the Agent
detailing any liabilities of the Borrower and each Subsidiary and Commonly
Controlled Entity for post-retirement benefits under Plans which are welfare
benefit plans.
     SECTION 4.1.16 Insurance. The Agent shall have received evidence
satisfactory to it that the insurance maintained by the Borrower and its
Subsidiaries has been issued in accordance with the requirements set forth in
Schedule 4.1.16, coverage is in full force and effect and all premiums then due
have been paid or are not in arrears.
     SECTION 4.1.17 Financial Information, Etc. The Agent shall have received,
with counterparts for each Lender, the Projections, a pro forma balance sheet
and a solvency certificate of each of the Loan Parties.
     SECTION 4.1.18 Required Equity Funding. The Agent shall have received, on
or before the Closing Date, satisfactory evidence that the Borrower has received
(a) the Pre-Closing Equity Contributions, and (b) the PICO Equity Contribution
by deposit into a Deposit Account which is subject to a Deposit Account Control
Agreement.
     SECTION 4.1.19 Letter to Accountants. The Agent shall have received, on or
before the Closing Date, satisfactory evidence that the Borrower has delivered a
letter to such independent public accountants authorizing such public
accountants to discuss the Borrower’s financial matters with the Agent and each
Lender or any of their representatives.
     SECTION 4.1.20 Appointment of Agent for Service of Process. The Agent shall
have received, on or before the Closing Date, a signed acceptance from each
agent appointed for service of process in Section 9.9(c) hereof, under the
Project Party Consent or under any other agreement between the Agent and the
Project Parties or the Borrower, each of which shall be in form and substance
satisfactory to the Agent and the Lenders.
     SECTION 4.1.21 Agreement to Contribute Capital. The Agreement to Contribute
Capital shall have been executed and delivered by all parties thereto and shall
be in form and substance satisfactory to the Agent and the Lenders. Each Person
party thereto shall be in compliance with its obligations thereunder.
     SECTION 4.1.22 Construction Budget and Construction Schedule. The Agent
shall have received the Construction Budget and the Construction Schedule
certified by the Borrower as true and correct, which shall be based on
reasonable assumptions following reasonable investigation and which shall be in
form and substance satisfactory to the Agent and the Lenders.

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     SECTION 4.1.23 Other Documents, Certificates, Etc. The Agent shall have
received, on or before the Closing Date, such other documents, certificates,
opinions of counsel or other materials as it reasonably requests from any Loan
Party.
     For purposes of determining compliance with the conditions specified in
this Section 4.1, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required hereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Agent shall have received
written notice from such Lender prior to the proposed Closing Date specifying
its objection thereto.
     SECTION 4.2 All Loans, Letters of Credit, and Disbursement Instructions.
Without duplication of any conditions precedent required to be satisfied on or
before the Closing Date pursuant to Section 4.1, the obligations of the Lenders
to make any Loans, to cause the issuance of Letters of Credit, and to cause the
Agent to provide Disbursement Instructions shall be subject to the satisfaction
of each of the additional conditions precedent set forth in this Section 4.2.
     SECTION 4.2.1 Compliance with Warranties, No Default, Etc. The
representations and warranties set forth in Article 5 shall have been true and
correct in all material respects as of the date initially made;
     (a) such representations and warranties shall be true and correct in all
material respects with the same effect as if then made (except to the extent
expressly stated to be as of an earlier date) both before and after giving
effect to the making of any such Loan, the issuance of such Letter of Credit or
the provision of such Disbursement Instructions,
     (b) all representations and warranties set forth in the other Loan
Documents shall be true and correct in all material respects with the same
effect as if then made (except to the extent expressly stated to be as of an
earlier date) and both before and after giving effect to the making of any such
Loan, the issuance of such Letter of Credit or the provision of such
Disbursement Instructions,
     (c) no material adverse development shall have occurred in any litigation,
arbitration or governmental investigation or proceeding which renders such
litigation, arbitration or governmental investigation or proceeding reasonably
likely to succeed and, if successful, could reasonably be expected to result in
a Material Adverse Change;
     (d) no Default or Event of Default shall have occurred and be continuing or
would result therefrom; and
     (e) the aggregate of all Working Capital Facility Loans plus the aggregate
outstanding amount of all Letter of Credit Obligations does not exceed the
Borrowing Base.
     SECTION 4.2.2 Borrowing Request and Letter of Credit Request. The Agent
shall have received a duly completed Borrowing Request in the case of a
Borrowing, a Letter of Credit Request in the case of the issuance of a Letter of
Credit, or a Cost Overrun Account Disbursement Request in the case of a
Disbursement Instruction. Each delivery of any such Borrowing Request, Letter of
Credit Request, or Cost Overrun Account Disbursement Request,

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and the acceptance by the Borrower of the proceeds of the Loan or the benefits
of a Letter of Credit, or Disbursement Instruction requested thereby shall
constitute a representation and warranty by the Borrower that on the date of
such request, and before and after giving effect to the making of such Loans and
the application of any proceeds of such Loans or the issuance of such Letter of
Credit or the sending of such Disbursement Instruction, as the case may be, all
statements set forth in Section 4.2.1 are true and correct. In the event that,
in connection with the delivery of any such Borrowing Request, Letter of Credit
Request, or Disbursement Instruction, the Borrower is required to amend any item
on the Schedules attached hereto in order that the statement set forth in
subsection (a) or (b) of Section 4.2.1 shall be true and correct, the Borrower
shall deliver to the Agent at least five (5) Business Days prior to the date of
the requested Borrowing, Letter of Credit, or Disbursement Instruction, a
request that such Schedule be amended, and the Agent shall promptly forward such
request to the Lenders. To the extent that the Required Lenders agree to such
requested amendment after receipt of such request, the representations and
warranties proposed to be amended by such requested amendment to the Schedules
will be deemed amended for purposes of this Agreement.
     SECTION 4.2.3 Satisfactory Legal Form. All documents executed or submitted
by or on behalf of the Borrower or any other Loan Party shall be satisfactory in
form and substance to the Agent and its counsel; the Required Lenders shall have
received all information, and such counterpart originals or such certified or
other copies of such Instruments, as the Required Lenders may reasonably
request; and all legal matters incident to the transactions contemplated by this
Agreement shall be satisfactory to the Required Lenders.
     SECTION 4.2.4 Margin Regulations. The making of such Loan, the issuance of
such Letter of Credit, and the use of the proceeds thereof and of any
disbursement made from the Cost Overrun Account based on any Disbursement
Instruction shall not violate Regulations T, U and X of the F.R.S. Board.
     SECTION 4.2.5 Adverse Change. Since the Closing Date, no event shall have
occurred which Agent shall determine has resulted in, or could reasonably be
expected to result in, a Material Adverse Change, a Project Delay or a Cost
Overrun.
     SECTION 4.3 Conditions to Term Loans. Without duplication of any conditions
precedent required to be satisfied pursuant to Section 4.1 and Section 4.2, the
obligations of the Lenders to make any Term Loans shall be subject to the
satisfaction of each of the additional conditions precedent set forth in this
Section 4.3.
     (a) the Agent shall have received a certification from the Borrower that no
event has occurred that could reasonably be expected (i) to result in a Cost
Overrun, or (ii) to result in a Project Delay;
     (b) the Agent shall have received a Monthly Progress Report for the
immediately preceding calendar month, certified by the Independent Engineer;
     (c) the Agent shall have received evidence satisfactory to it that (i) the
Borrower has received all equity contributions needed as of that time to satisfy
the equity contribution requirements set forth in the Agreement to Contribute
Capital, and that such contributions shall

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have been deposited into the Cost Overrun Account, and (ii) the principal amount
of Term Loans requested in such Borrowing Request does not exceed the amount of
Construction Expenses then due and payable after deducting the amount, if any,
then on deposit in the Cost Overrun Account;
     (d) the Agent shall have received copies of all invoices and other
supporting information with respect to the amount for which such Term Loans are
requested; and
     (e) if requested by the Agent, the Agent shall have received a title
continuation with respect to, or an endorsement of, the Project Title Insurance
Policy, updating the date of the Project Title Insurance Policy to the date of
the disbursement requested in the Borrowing Request for such Term Loans, in each
case in form and substance satisfactory to the Agent;
     (f) if any portion of the proceeds of such Term Loans are to be used by the
Borrower to purchase its initial Inventory of canola seed, the Agent shall have
received an Excess Contingency Funds Certificate; and
     (g) in addition to each of the other conditions precedent to the
obligations of the Lenders to make any Term Loans, with respect to the initial
funding of the Term Loans, the Agent shall have received (i) copies of all
invoices and other supporting information with respect to all disbursements of
Contributions, whether from the Cost Overrun Account or otherwise, applied to
the payment of Construction Expenses, (ii) evidence that the entire amount of
the PICO Equity Contribution has been applied to the payment of Construction
Expenses, and (iii) a title continuation with respect to, or an endorsement of,
the Project Title Insurance Policy, updating the date of the Project Title
Insurance Policy to the date of the disbursement requested in the Borrowing
Request for such Term Loans, in each case in form and substance satisfactory to
the Agent.
     SECTION 4.4 Conditions to Additional Term Loans. Without duplication of any
conditions precedent required to be satisfied pursuant to Section 4.1 and
Section 4.2, upon receipt by the Borrower of any Additional Term Loan Facility
Commitments from one or more Additional Term Loan Lenders in accordance with
Section 2.1.3, the obligations of such Additional Term Loan Lenders to make any
Additional Term Loans shall be subject to the satisfaction of each of the
additional conditions precedent set forth in this Section 4.4.
     (a) the Agent shall have received a certification from the Borrower that no
event has occurred that could reasonably be expected (i) to result in a Cost
Overrun, or (ii) to result in a Project Delay;
     (b) the Agent shall have received a Monthly Progress Report for the
immediately preceding calendar month, certified by the Independent Engineer;
     (c) the Independent Engineer shall have confirmed that all governmental and
third party consents, approvals and permits which are required for the
construction and operation of the Project Expansion (“Necessary Project
Expansion Approvals”) have been obtained, other than consents, approvals and
permits which the Independent Engineer has determined in good faith are readily
obtainable in due course and conditioned only upon the filing of the appropriate
application and the payment of nominal fees, and copies of such Necessary
Project Expansion Approvals shall have been delivered to the Agent;

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     (d) the Agent shall have received a report of the Independent Engineer, in
form and substance satisfactory to the Agent and the Additional Term Loan
Lenders providing the Additional Term Loans, covering the technical and economic
feasibility of the Project Expansion (including, but not limited to a review of
engineering design, equipment selections, actual and projected performance,
Construction Budget (as amended to include expenses related to the Project
Expansion), Construction Schedule (as amended to include rescheduling related to
the Project Expansion), actual and projected performance, adequacy of
contingency, status of construction, relevant additional Project Documents, if
any, status of permits and licenses and compliance with applicable zoning laws)
and covering such other matters as the Agent may request;
     (e) the Agent shall have received a report of the Insurance Consultant, in
form and substance satisfactory to the Agent and the Lenders, covering the
adequacy of the insurance coverage to be maintained with respect to the Project
Expansion and such related matters as the Agent may request;
     (f) the Agent shall have received confirmation that the Land O’Lakes
Agreements have been amended to include the additional canola oil and canola
meal production capacity resulting from the Project Expansion;
     (g) the Agent shall have received copies of all invoices and other
supporting information with respect to the amount for which such Additional Term
Loans are requested;
     (h) the Agent shall have received an Additional Term Loan Amendment which
shall have been executed and delivered by all parties thereto and shall be in
form and substance satisfactory to the Agent and the Additional Term Lenders;
     (i) the Agent shall have received an amendment to the Mortgage increasing
the maximum principal amount secured by the Mortgage by the amount of the
Additional Term Loans (“Additional Term Loan Mortgage Amendment”) which shall
have been executed and delivered by all parties thereto and shall be in form and
substance satisfactory to the Agent and the Additional Term Lenders;
     (j) the Agent shall have received confirmation that all additional mortgage
taxes with respect to the Additional Term Loan Mortgage Amendment have been
paid;
     (k) the Agent shall have received an endorsement to the Project Title
Insurance Policy, which endorsement shall (i) bring forward the date of the
Project Title Insurance Policy, including all endorsements thereto, to the
effective date of the Additional Term Loan Mortgage Amendment, (ii) modify the
description of the Mortgage to mean the Mortgage as amended by the Additional
Term Loan Mortgage Amendment, (iii) increase the amount of the Project Title
Insurance Policy by the amount of the Additional Term Loan, (iv) confirm that
each of the existing endorsements to the Project Title Insurance Policy cover
the Project Expansion, and (v) include such additional endorsements as may be
required by the Agent and available in the jurisdiction in which the Project is
located, in each case in form and substance satisfactory to the Agent; and

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     (l) if requested by the Agent, the Agent shall have received certified
copies of resolutions of the Borrower and the Parent Guarantor, authorizing the
Additional Term Loans and the execution, delivery and performance of the
Additional Term Loan Amendment, the Additional Term Loan Mortgage Amendment and
such other Loan Documents related thereto as may be required, together with such
opinions of counsel to the Borrower and the Parent Guarantor as the Agent may
request with respect thereto, each of which shall be in form and substance
satisfactory to the Agent.
     SECTION 4.5 Conditions to Disbursement of Funds in Cost Overrun Account.
Without duplication of any conditions precedent required to be satisfied
pursuant to Section 4.1 and Section 4.2, the obligations of the Agent to provide
any Disbursement Instruction shall be subject to the satisfaction of each of the
additional conditions precedent set forth in this Section 4.5:
     (a) the Agent shall have received a certification from the Borrower that no
event has occurred that could reasonably be expected (i) to result in a Cost
Overrun, or (ii) to result in a Project Delay;
     (b) the Agent shall have received a Monthly Progress Report for the
immediately preceding calendar month, certified by the Independent Engineer;
     (c) the Agent shall have received evidence satisfactory to it that (i) the
Borrower has received all equity contributions needed as of that time to satisfy
the equity contribution requirements set forth in the Agreement to Contribute
Capital, and such contributions shall have been deposited into the Cost Overrun
Account, and (ii) the amount of the disbursement requested in the Borrowing
Request for such Disbursement Instruction does not exceed the amount of
Construction Expenses then due and payable;
     (d) the Agent shall have received copies of all invoices and other
supporting information with respect to the amount for which such Disbursement
Instruction is requested; and
     (e) if requested by the Agent, the Agent shall have received a title
continuation with respect to, or an endorsement of, the Project Title Insurance
Policy, updating the date of the Project Title Insurance Policy to the date of
the disbursement requested in the Borrowing Request for such Disbursement
Instructions, in each case in form and substance satisfactory to the Agent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES, ETC.
     In order to induce the Lenders and the Agent to enter into this Agreement,
to engage in the transactions contemplated herein and in the other Loan
Documents and to make the Loans and cause the issuance of Letters of Credit, the
Borrower represents and warrants to the Agent and each Lender as set forth in
this Article 5. Each and all of the representations and warranties set forth in
this Article 5 shall be true and correct, assuming and after giving effect to
the

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consummation of the transactions contemplated by this Agreement, the other Loan
Documents and the Project Documents.
     SECTION 5.1 Organization, Power, Authority, Etc. Each of the Loan Parties
(i) is a corporation or limited liability company validly organized and existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, (ii) is duly qualified to do business and is in good standing as a
foreign corporation or limited liability company in each jurisdiction where the
failure to so qualify could reasonably be expected to result in a Material
Adverse Change, Project Delay or Cost Overrun, and (iii) has full corporate or
limited liability power and authority, and holds all governmental licenses,
permits, registrations and other approvals required under all Requirements of
Law, to own and hold under lease its property, to construct and operate the
Project, and to conduct its business as contemplated on and after the Closing
Date, including, without limitation, all Approvals, except where the failure to
do so could not reasonably be expected to result in a Material Adverse Change,
Project Delay or Cost Overrun. Each Loan Party has full corporate or limited
liability company power and authority to enter into, incur and perform its
Obligations under this Agreement, the Notes and each other Loan Document
executed or to be executed by it and to obtain Loans and other extensions of
credit hereunder.
     SECTION 5.2 Due Authorization. The execution and delivery by each Loan
Party of this Agreement, the Notes and each other Loan Document executed or to
be executed by it, and the incurrence and performance by each Loan Party of its
Obligations have been duly authorized by all necessary corporate or limited
liability company action, do not require any Approval (except those Approvals
already obtained), do not and will not conflict with, result in any violation
of, or constitute any default under, any provision of any Organizational
Document or Contractual Obligation of any Loan Party or any law or governmental
regulation or court decree or order, and will not result in or require the
creation or imposition of any Lien on any Loan Party’s properties pursuant to
the provisions of any Contractual Obligation of any Loan Party other than the
Loan Documents.
     SECTION 5.3 Validity, Etc. This Agreement, the Notes and each other Loan
Document executed by any Loan Party constitute the legal, valid and binding
obligations of such Loan Party, enforceable in accordance with their respective
terms subject to the effect of any applicable bankruptcy, insolvency, moratorium
or similar laws affecting creditors’ rights generally, and the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
     SECTION 5.4 Financial Information; Solvency.
     (a) All balance sheets, all statements of operations, stockholders’ or
members’ equity and cash flows (excluding Projections and pro forma financial
information) of the Loan Parties which have been or shall hereafter be furnished
by or on behalf of the Borrower to each Lender and the Agent for the purposes of
or in connection with this Agreement or any transaction contemplated hereby,
have been prepared in accordance with GAAP consistently applied throughout the
periods involved and present fairly in all material respects the matters
reflected therein subject, in the case of unaudited statements, to changes
resulting from normal year-end audit adjustments and except as to the absence of
footnotes; provided, however, that financial

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statements delivered by the Borrower to the Lenders and the Agent pursuant to
Section 6.1.1(c) have not been prepared in accordance with GAAP. As of the date
hereof, no Loan Party has material contingent liabilities or material
liabilities for taxes, long-term leases or unusual forward or long-term
commitments other than those arising under the Major Project Documents or those
reflected on such Loan Party’s financial statements (whether or not such items
are required to be disclosed on a financial statement). The Projections that
have been or shall hereafter be furnished by or on behalf of the Borrower to
each Lender and the Agent are based upon estimates and assumptions stated
therein, all of which the Borrower believes to be reasonable and fair in light
of the then current conditions and current facts and reflect the good faith and
reasonable estimates of the Borrower of the future financial performance of the
Borrower and the other information projected therein for the time periods set
forth therein.
     (b) Each of the Loan Parties is Solvent, and each of the Loan Parties will
have adequate capital to carry on its business and will be able to pay its
anticipated liabilities as and when they become due.
     (c) None of the transactions with respect to the Loan Documents are being
entered into with the intent to delay, hinder or defraud any of the creditors of
Borrower or its Subsidiaries.
     SECTION 5.5 Material Adverse Change. Since the Closing Date, there has been
no Material Adverse Change.
     SECTION 5.6 Absence of Default. No Loan Party is in default in the payment
of (or in the performance of any obligation applicable to) any Indebtedness, or
is in default under any regulation of any Governmental Authority or court decree
or order, or is in default under any Requirements of Law which default in any
such case could reasonably be expected to result a Material Adverse Change,
Project Delay or Cost Overrun.
     SECTION 5.7 Litigation, Legislation, Etc. There is no pending or, to the
knowledge of the Borrower, threatened litigation, arbitration or governmental
investigation, proceeding or inquiry by or against any Loan Party, or to the
knowledge of the Borrower, any other Person, including, without limitation, any
condemnation action, that could reasonably be expected to result in a Material
Adverse Change, Project Delay or Cost Overrun. To the knowledge of Borrower,
there is no legislation, governmental regulation or judicial decision that could
reasonably be expected to result in a Material Adverse Change, a Project Delay
or a Cost Overrun.
     SECTION 5.8 Regulations T, U and X. No Loan Party is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying Margin Stock (as defined in F.R.S. Board
Regulation U), and no assets of any Loan Party consist of Margin Stock. The
Loans and other extensions of credit hereunder will not be used for a purpose
which violates, or would be inconsistent with, F.R.S. Board Regulation T, U or
X.
     SECTION 5.9 Government Regulation. No Loan Party is an “investment company”
within the meaning of the Investment Holding Company Act of 1940, as amended, or
subject to

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regulation under the Federal Power Act, the Interstate Commerce Act or any other
federal or state law limiting its ability to incur Indebtedness or to execute,
deliver or perform the Loan Documents to which it is party.
     SECTION 5.10 Taxes. Except as disclosed in Schedule 5.10 (“Taxes”), each of
the Loan Parties has filed all material tax returns and reports required by law
to have been filed by it and has paid all taxes and Charges thereby shown to be
owing, except any such taxes or Charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
     SECTION 5.11 Pension and Welfare Plans.
     (a) Except as set forth on Schedule 5.11, (a) no Loan Party has assumed any
liability under any employee benefit plan, fund, program, arrangement, agreement
or commitment maintained by or on behalf of or contributed to by or on behalf of
any entity or trade or business which, together with any of such corporations,
is treated as a single employer under Sections 414(b), (c), (m) or (o) of the
IRC, and (b) no Loan Party will be subject (directly or indirectly) to any
liability, tax or penalty whatsoever to any person whomsoever with respect to
any such employee benefit plan, fund, program, arrangement, agreement or
commitment.
     (b) No Reportable Event which could result in a Material Adverse Change has
occurred during the six-year period prior to the date as of which this
representation is made or deemed made with respect to any Single Employer Plan.
Each Loan Party, each Commonly Controlled Entity, Subsidiary, each Plan, and
each trust maintained pursuant to any such Plan have complied in all respects
with the applicable provisions of ERISA, the IRC, and any other applicable laws.
The present value of all “benefit liabilities” (within the meaning of
Section 4001(a)(16) of ERISA) under each Single Employer Plan (based on those
assumptions that would be used in a termination of each such Plan, did not, as
of the last annual valuation date for which an actuarial valuation report has
been done), did not, as of such date, exceed the value of the assets of such
Plan as of such date. No Loan Party nor any Commonly Controlled Entity has
incurred any liability to the PBGC or to any other Person under Section 4062,
4063 or Section 4064 of ERISA on account of the termination of, or its
withdrawal from, a Single Employer Plan, and no Lien has been imposed on the
assets of any Loan Party or any Commonly Controlled Entity under Section 4068 of
ERISA. To the knowledge of the Borrower, there does not exist any event or
condition which would permit the institution of proceedings to terminate any
Single Employer Plan pursuant to Section 4042 of ERISA. No Pension Plan has
failed to satisfy the minimum funding standard applicable to it for any plan
year (within the meaning of Section 302 of ERISA or Section 412 of the IRC),
whether or not waived, exists with respect to any Pension Plan. The Loan Parties
and each Commonly Controlled Entity have timely made in full each quarterly
installment payment to any Pension Plan required under Section 303(j) of ERISA
or Section 430 of the IRC and have also made full and timely payment of any
other costs or expenses related to such a Plan. The Loan Parties and all
Commonly Controlled Entities have made full and timely payment of all
contributions to Multiemployer Plans required under ERISA, the IRC or applicable
collective bargaining agreements. No Loan Party nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Pension
Plan and the liability to which such Loan Party or Commonly Controlled Entity
would become subject under ERISA if such Loan Party or any such Commonly
Controlled Entity were

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to withdraw completely from all Multiemployer Pension Plans as of the valuation
date most closely preceding the date hereof is not in excess of $250,000. No
such Multiemployer Pension Plan has been terminated or is in Reorganization or
Insolvent, nor is any such Multiemployer Pension Plan likely to be terminated or
to become in Reorganization or Insolvent. No Multiemployer Plan has failed to
satisfy the minimum funding standard applicable to it for any plan year (within
the meaning of Section 302 of ERISA or Section 412 of the IRC), whether or not
waived. The present value (determined using assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
aggregate liability of the Loan Parties and any Commonly Controlled Entities for
post-retirement benefits to be provided to their current and former employees
under all Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) is not in excess of $250,000. No written notice of liability has been
received with respect to the Loan Parties, or any Plan for any “prohibited
transaction” (within the meaning of Section 4975 of the IRC or Section 406 of
ERISA), nor has any such prohibited transaction resulting in liability to the
Loan Party occurred. No Loan Party or Commonly Controlled Entity will, as a
result of consummating the transactions contemplated by this Agreement (pursuant
to the provisions of the Agreement, by operation of law or otherwise) (i) have
incurred or become liable for any tax assessed by the Internal Revenue Service
for any alleged violations of Section 4975 of the IRC or any civil penalty
imposed by the Department of Labor for any alleged violations of Section 406 of
ERISA, (ii) have caused or permitted to occur any “prohibited transaction”
within the meaning of such Section 4975 of the IRC or Section 406 of ERISA with
respect to any Plan for which no exemption is available or (iii) have incurred
any liability to the PBGC (other than ordinary and usual PBGC premium liability)
or any liability for complete or partial withdrawal to any Multiemployer Pension
Plan. No Loan Party is subject (directly or indirectly) to, and no facts exist
which could subject any Loan Party (directly or indirectly) to, any other
liability, penalty, tax or lien whatsoever, which could result in a Material
Adverse Change and which is directly or indirectly related to any Plan,
including, but not limited to, liability for any damages or penalties arising
under Title I or Title IV of ERISA, liability for any tax or penalty resulting
from a loss of deduction under Section 404 or 419 of the IRC, any tax or penalty
under chapter 43 of the IRC, or any taxes or penalties under any other
applicable law.
     SECTION 5.12 Labor Controversies. There are no labor controversies pending
or, to the best knowledge of the Borrower, threatened, relating to any Loan
Party which could reasonably be expected to result in a Material Adverse Change,
Project Delay or Cost Overrun. There is (i) no unfair labor practice complaint
pending against any Loan Party or, to the best knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any Loan Party or, to the best
knowledge of the Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage is pending against any Loan Party or, to the best
knowledge of the Borrower, threatened against any Loan Party, and (iii) no union
representation question existing with respect to the employees of any Loan
Party, in each case, which could reasonably be expected to result in a Material
Adverse Change, Project Delay or Cost Overrun. Each Loan Party is in compliance
in all material respects with all collective bargaining agreements to which it
is subject.

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     SECTION 5.13 Ownership of Properties; Collateral.
     (a) Each of the Loan Parties has good title to, or a valid leasehold
interest in, all of its material personal properties and assets of any nature
whatsoever, free and clear of all Liens except as permitted pursuant to
Section 6.2.3. All Liens attaching to property or assets of any Loan Party as of
the Closing Date are identified in Schedule 5.13 (“Existing Liens”) or are
otherwise permitted pursuant to Section 6.2.3.
     (b) The provisions of the Security Documents are effective to create in
favor of the Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in all right, title and interest of the Loan
Parties in the Collateral described therein, and, upon the filing of the
Financing Statements and taking of the other actions described in Section
4.1.13, the Security Documents will create a fully perfected security interest
in all right, title and interest of the Loan Parties in all of the Collateral
subject to no other Liens other than Liens permitted by Section 6.2.3.
     SECTION 5.14 Intellectual Property. Each of the Loan Parties owns or
licenses all such Intellectual Property, and has obtained assignments of all
licenses and other rights, as the Borrower considers necessary for or as are
otherwise material to the conduct of the business of the Loan Parties as now
conducted without, individually or in the aggregate, any infringement upon
rights of other Persons which could reasonably be expected to result in a
Material Adverse Change, Project Delay or Cost Overrun. As of the Closing Date,
all Intellectual Property owned or licensed from third Persons described in this
Section 5.14 is set forth in Schedule 5.14 (“Intellectual Property”).
     SECTION 5.15 Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Loan Parties in writing to
the Agent or any Lender for purposes of or in connection with this Agreement or
any transaction contemplated hereby, taken as a whole, is true and accurate in
every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by the
Agent or such Lender, and such information is not incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which it was furnished.
     SECTION 5.16 Insurance. All policies of insurance in effect of any kind or
nature owned by or issued to the Loan Parties, including policies of fire,
theft, product liability, public liability, property damage, other casualty,
employee fidelity, workers’ compensation, property and liability insurance,
(a) as of the Closing Date are listed in Schedule 5.16 (“Insurance”), (b) are,
together with all policies of employee health and welfare and title insurance,
in full force and effect, (c) comply in all material respects with the
applicable requirements set forth herein and in the Security Documents and
(d) are of a nature and provide such coverage as is customarily carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Loan Parties operate. No Loan Party provides any
of its insurance through self-insurance except as disclosed in Schedule 5.16 and
ordinary course insurance deductibles.

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     SECTION 5.17 Indebtedness. Other than the Obligations and Indebtedness
permitted by the terms of this Agreement, there is no other Indebtedness of the
Loan Parties.
     SECTION 5.18 Environmental Matters. Except as set forth in Schedule 5.18
(“Environmental Matters”), the Loan Parties are in compliance in all material
respects with all applicable Environmental Laws except where noncompliance could
not reasonably be expected to result in Environmental Liabilities and Costs in
excess of $500,000 or in a Material Adverse Change, Project Delay or Cost
Overrun, and there are no conditions or circumstances associated with the
currently or previously owned, operated, used or leased properties of such Loan
Party or current or past operations of such Loan Party or any predecessor
interest of such Loan Party, which could reasonably be expected to give rise to
Environmental Liabilities and Costs in excess of $500,000 or which may
reasonably be expected to give rise to any Lien.
     SECTION 5.19 No Burdensome Agreements. No Loan Party is a party to or has
assumed any indenture, loan or credit agreement or any lease or other agreement
or instrument or is subject to any charter or other corporate restriction that
could reasonably be expected to result in a Material Adverse Change, Project
Delay or Cost Overrun.
     SECTION 5.20 Consents. The Loan Parties have all material permits and
governmental consents and approvals necessary under Requirements of Law or, in
the reasonable business judgment of the Borrower, deemed advisable under
Requirements of Law, in connection with the transactions contemplated hereby or
the ongoing business and operations of the Borrower and its Subsidiaries, except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Change, Project Delay or Cost Overrun.
     SECTION 5.21 Major Project Documents. Set forth in Schedule 5.21 (“Major
Project Documents”) is a complete and accurate list of each Major Project
Document to which any Loan Party is a party, or by which it is bound, as of the
Closing Date. Each Major Project Document is in full force and effect in
accordance with the terms thereof, except to the extent replaced by a
Replacement Contract in accordance with this Agreement. There are no defaults by
any Loan Party or, to the Borrower’s knowledge, any other default in existence
under any Major Project Document, except where such default could not reasonably
be expected to result in a Material Adverse Change, Project Delay or Cost
Overrun. Each of the Loan Parties and, to the Loan Parties’ knowledge, each
other party to the Major Project Document, has duly taken all necessary
organizational action to authorize the execution, delivery and performance of
the Major Project Documents and the consummation of all transactions
contemplated thereby. Each of the representations and warranties contained in
the Major Project Documents made by any Loan Party is true and correct in all
material respects, and to each Loan Party’s knowledge, each of the
representations and warranties contained in the Major Project Documents made by
any Person other than such Loan Party is true and correct in all material
respects.
     SECTION 5.22 Employment Agreements. Set forth in Schedule 5.22 (“Employment
Contracts”) is a complete and accurate list of each employment agreement to
which any Loan Party is a party, or by which it is bound, as of the Closing
Date.
     SECTION 5.23 Condition of Property. All of the assets and properties owned
by, leased to or used by any Loan Party material to the conduct of their
business are in adequate

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operating condition and repair, ordinary wear and tear excepted, and are free
and clear of known defects except for defects which do not substantially
interfere with the use thereof in the conduct of normal operations.
     SECTION 5.24 Subsidiaries. As of the Closing Date, the Borrower has no
Subsidiaries.
     SECTION 5.25 Trade Relations. There exists no actual or, to the best of the
Borrower’s knowledge, threatened termination, cancellation or limitation of, or
any modification or change in, the business relationship of any Loan Party with
any customer or group of customers of any Loan Party or any material supplier of
goods or services to any Loan Party, in each case which could reasonably be
expected to result in a Material Adverse Change, Project Delay or Cost Overrun.
     SECTION 5.26 Leases. Schedule 5.26 (“Existing Leases”) sets forth all
leases of real or personal property of each Loan Party as of the Closing Date.
No Loan Party is in default under or respect to (i) any lease of real property,
or (ii) any lease of personal property.
     SECTION 5.27 Event of Abandonment; Loss. As of the Closing Date, no Event
of Abandonment has occurred and no Loss has occurred.
     SECTION 5.28 Anti-Terrorism Laws. No Loan Party and, to Loan Parties’
knowledge, no Affiliate of any Loan Party (a) is in violation of any
Anti-Terrorism Law; (b) is engaged in or has conspired to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law; (c) is a Blocked Person, or controls, is controlled by, or is under common
control with, a Blocked Person; (d) is acting for or on behalf of a Blocked
Person; (v) is providing material, financial or technological support or other
services to or in support of acts of terrorism of a Blocked Person; (e) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person; or (f) deals in, or
otherwise engages in any transaction relating to, any property or interest in
property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law.
ARTICLE 6
COVENANTS
     SECTION 6.1 Affirmative Covenants. The Borrower agrees that it will
perform, or cause to be performed, the Obligations set forth in this
Section 6.1.
     SECTION 6.1.1 Financial Information, Etc. The Borrower will furnish, or
will cause to be furnished, to each Lender and to the Agent copies of the
following financial statements, reports and information:
     (a) promptly when available and in any event within ninety (90) days after
the close of each Fiscal Year, a consolidated balance sheet and a consolidating
balance sheet for the Parent Guarantor and its Subsidiaries at the close of such
Fiscal Year, and related consolidated and

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consolidating statements of operations, retained earnings, and cash flows for
such Fiscal Year, of the Parent Guarantor and its Subsidiaries (with comparable
information as of the close of and for the prior Fiscal Year beginning with the
Fiscal Year ending December 31, 2011) in each case certified (in the case of
consolidated statements) without qualification by independent public accountants
satisfactory to the Agent, which statements shall be delivered together with a
report from management of the Borrower containing a description of projected
business prospects (including capital expenditures) and management’s discussion
and analysis of financial condition and results of operation of the Parent
Guarantor and its Subsidiaries; and
     (b) promptly when available and in any event within ninety (90) days after
the close of each Fiscal Year, a Compliance Certificate calculated as of the
close of such Fiscal Year;
     (c) promptly when available and in any event within forty-five (45) days
after the close of each calendar month of each Fiscal Year an internally
prepared consolidated and consolidating balance sheet for the Parent Guarantor
and its Subsidiaries as of the close of such month, and internally prepared
consolidated and consolidating statements of operations, retained earnings, and
cash flows for such month and for the period commencing at the close of the
previous Fiscal Year and ending with the close of such month, of the Parent
Guarantor and its Subsidiaries (with comparable information as of the close of
and for the corresponding month of the prior Fiscal Year and for the
corresponding portion of such prior Fiscal Year, beginning with the Fiscal Year
ending December 31, 2011), certified by the chief financial Authorized Officer
of the Borrower;
     (d) within sixty (60) days after the close of each Fiscal Quarter, a
Compliance Certificate calculated as of the close of such Fiscal Quarter and a
brief report containing management’s discussion and analysis of the financial
condition and results of operations of the Parent Guarantor and its Subsidiaries
(together with a report from management of the Borrower containing management’s
discussion and analysis of any changes compared to prior results and the
Projections as updated in accordance with clause (i) of this Section 6.1.1);
     (e) promptly upon request by the Agent from time to time, copies of all
detailed financial and management reports submitted to the Parent Guarantor or
any of its Subsidiaries by its independent public accountants in connection with
each annual or interim audit made by such independent public accountants of the
books of the Parent Guarantor or any Subsidiary;
     (f) within ten (10) days after the end of each Fiscal Year of the Borrower,
(i) a report summarizing the insurance coverage (specifying type, amount and
carrier) in effect for each Loan Party, containing such additional information
as the Agent or any Lender may reasonably request and including a statement that
such insurance is in full force and effect and in compliance with
Schedule 4.1.16, and (ii) written evidence of payment of all premiums with
respect to each policy of such insurance;
     (g) within ten (10) days after the execution thereof, a copy of each Major
Project Document (including any Replacement Contract which constitutes a Major
Project Document) which is executed after the Closing Date, certified by an
Authorized Officer of the Borrower to be true, correct and complete, and, if
requested by the Agent, within thirty (30) days following such request (or such
longer period as the Agent may agree in its sole discretion), a Project Party

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Consent with respect to such Major Project Document executed by each Project
Party which is a party thereto, in form and substance satisfactory to the Agent;
Schedule 5.21 shall be deemed to be amended to include each such additional
Major Project Document as of the date of execution thereof;
     (h) within ten (10) days after the execution thereof, a list of all other
Project Documents, including without limitation, all Contribution Documents,
which are executed after the Closing Date, and if requested by the Agent, copies
of such Project Documents, in each case, certified by an Authorized Officer of
the Borrower as being true, correct and complete;
     (i) within ten (10) days after the end of each month prior to the Project
Construction Completion Date, a Monthly Progress Report;
     (j) quarterly during the period occurring prior to the Project Construction
Completion Date, a report of the Independent Engineer containing a review of the
Construction Budget and the Construction Budget, together with forecasts of
operating expenses and capital expenditures;
     (k) within sixty (60) days after the end of each Fiscal Year of the
Borrower, updates to the Projections containing projected balance sheets,
statements of operations and changes in cash flows of the Parent Guarantor and
its Subsidiaries prepared on a consolidated basis for the current Fiscal Year
and each of the Fiscal Years thereafter through the end of Fiscal Year 2018,
prepared on a monthly basis for the upcoming Fiscal Year and on an annual basis
for such Fiscal Years thereafter, together with (A) supporting details and a
statement of underlying assumptions, (B) a report from management of the
Borrower containing management’s discussion and analysis of the projected
financial condition and results of operations of the Parent Guarantor and its
Subsidiaries, (C) projected trends of business and (D) a detailed schedule of
Capitalized Lease Liabilities and outstanding Indebtedness;
     (l) promptly after approval by the Parent Guarantor’s manager, any material
updates or revisions to any business plan described in the preceding clause
(j) of this Section 6.1.1;
     (m) after the Project Construction Completion Date, promptly when available
and in any event by the close of business on the first and fifteenth days of
each month (or if any such day is not a Business Day, the immediately succeeding
Business Day), a completed Borrowing Base Certificate accurate as of the
immediately preceding Business Day, and upon request of the Agent, all
supporting schedules including but not limited to accounts receivable agings,
schedule of cross-aging, schedule of credits past original due date, schedule of
contra accounts, schedule detailing any other ineligible accounts,
reconciliation of accounts receivable aging to general ledger, reconciliation of
perpetual inventory to general ledger, including general ledger trial balance,
and listing of supporting documentation for all inventory reserves;
     (n) promptly following receipt thereof by the Borrower, copies of (i) any
notice received with respect to any Major Project Document, (ii) all additional
Necessary Project Approvals which have been obtained with respect to the Project
Expansion, and (iii) all proposed or issued Change Orders (and all
recommendations with respect thereto from the General Contractor or the
Independent Engineer);

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     (o) not later than the date the first financial statements required under
this Section 6.1.1 are required to be delivered, and promptly thereafter
following any change in its independent public accountants from time to time,
the Agent shall have received satisfactory evidence that the Borrower has
delivered a letter to its independent public accountants authorizing such public
accountants to discuss the Parent Guarantor’s and its Subsidiaries’ financial
matters with the Agent and each Lender or any of their representatives so long
as a representative of the Borrower has been given the opportunity to be present
at any such discussion;
     (p) promptly (and in any event within three (3) Business Days) following
receipt by the Borrower of information with respect to any Loss or Event of
Abandonment, or the commencement or threat of a condemnation action, a copy of
any notice or other information received by the Borrower with respect to the
occurrence thereof, together with such other information and details as the
Agent, the Insurance Consultant or the Independent Engineer may request;
     (q) promptly (and in any event within three (3) Business Days) following
the occurrence of a Cost Overrun or of the occurrence of any event that could
reasonably be expected to result in a Cost Overrun, copies of all reports and
other information giving details of such Cost Overrun or event;
     (r) on or before the Project Construction Completion Date, copies of all
Sales and Marketing Contracts, in each case, certified by an Authorized Officer
of the Borrower as being true, correct and complete; and
     (s) such other information with respect to the financial condition,
business, property, assets, revenues and operations of the Parent Guarantor and
any of its Subsidiaries as the Agent or any Lender may from time to time
reasonably request.
     SECTION 6.1.2 Maintenance of Corporate Existence, Etc. Except as permitted
by Section 6.2.10, the Borrower will cause to be done at all times all things
necessary to maintain and preserve the existence of the Borrower as a Delaware
limited liability company
     and the Parent Guarantor as a Delaware limited liability company, and shall
maintain the existence of each other Subsidiary.
     SECTION 6.1.3 Foreign Qualification. The Borrower will, and will cause each
Subsidiary to, cause to be done at all times all things necessary to be duly
qualified to do business and be in good standing as a foreign corporation in
each jurisdiction where the failure to so qualify could reasonably be expected
to result in a Material Adverse Change, Project Delay or Cost Overrun.
     SECTION 6.1.4 Payment of Taxes, Etc. The Borrower will, and will cause each
Subsidiary to, pay and discharge, as the same become due and payable, all
Charges against it or on any of its property, as well as claims of any kind
which, if unpaid, could reasonably be expected to become a Lien upon any one of
its properties (other than a Permitted Lien); provided, however, that the
foregoing shall not require the Borrower or any such Subsidiary to pay or
discharge any such Charge or claim so long as it shall be diligently contesting
the validity

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or amount thereof in good faith by appropriate action or proceedings and shall
have set aside on its books adequate reserves in accordance with GAAP.
     SECTION 6.1.5 Insurance. In addition to any insurance required to be
maintained pursuant to any other Loan Document, the Borrower will, and will
cause each Subsidiary to, maintain, or cause to be maintained, insurance
policies meeting the requirements set forth on Schedule 4.1.16 as determined by
the Insurance Consultant in consultation with the Lenders. Such insurance
policies shall be in effect on the Closing Date and the premiums for each such
policy shall be paid as such premiums shall come due. Neither the Borrower nor
any of its Subsidiaries shall borrow upon or otherwise impair its right to
receive the proceeds of such insurance, other than customary financing of annual
premiums. In the event of (a) any Loss resulting from a casualty (other than a
Major Loss or a Total Loss), the Agent shall make available to the Borrower any
insurance proceeds received by the Agent in respect of such Loss for the payment
of Permitted Replacement Expenses to repair or replace the property or asset
which was the subject of such Loss if and to the extent that a mandatory
prepayment of the Loans in the amount of such insurance proceeds is not required
under Section 3.3.1(e) of this Agreement, and (b) any Major Loss, the Agent
shall make available to the Borrower any insurance proceeds received by the
Agent in respect of such Major Loss for the payment of Major Permitted
Replacement Expenses if and to the extent that a mandatory prepayment of the
Loans in the amount of such insurance proceeds is not required under
Section 3.3.1(f) of this Agreement.
     SECTION 6.1.6 Notice of Default, Litigation, Etc. Upon obtaining knowledge
thereof, the Borrower will give prompt written notice (with a description in
reasonable detail) to the Agent of:
     (a) the occurrence of any Default;
     (b) the occurrence of any litigation, arbitration or governmental
investigation or proceeding not previously disclosed in writing by the Borrower
to the Lenders which has been instituted or, to the knowledge of the Borrower,
is threatened against, any Loan Party or to which any of its properties, assets
or revenues is subject which, if adversely determined, could reasonably be
expected to result in a Material Adverse Change, Project Delay or Cost Overrun;
     (c) any material development which shall occur in any litigation,
arbitration or governmental investigation or proceeding previously disclosed by
the Borrower to the Lenders pursuant to Section 5.7 which could reasonably be
expected to result in a Material Adverse Change, Project Delay or Cost Overrun;
     (d) the occurrence of any other circumstance which could reasonably be
expected to result in a Material Adverse Change, a Project Delay or a Cost
Overrun;
     (e) the occurrence of any Loss, any Event of Abandonment or the
commencement or threat of a condemnation action; and
     (f) the occurrence or expected occurrence of any Reportable Event with
respect to any Single Employer Plan (and a statement of the chief financial
Authorized Officer of the Borrower, describing such event and the action, if
any, that the Borrower or any Commonly

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Controlled Entity has taken and proposes to take with respect thereto), or any
withdrawal from, or the termination, Reorganization or Insolvency of any
Multiemployer Pension Plan, the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity or
Subsidiary or any Multiemployer Pension Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Pension Plan, or the receipt of notice by any Loan Party
or any Commonly Controlled Entity that the institution of any such proceedings
or the taking of any such action is under consideration or anticipated, the
institution of any proceedings or other action by the Internal Revenue Service
or the Department of Labor with respect to the minimum funding requirements of
any Pension Plan, or the receipt of notice by any Loan Party or any Commonly
Controlled Entity that the institution of any such proceedings or the taking of
any such action is under consideration or anticipated, the occurrence or
expected occurrence of any event which could result in the incurrence of
unpredictable contingent event benefits under Section 302 of ERISA or
Section 412 of the IRC with respect to any Pension Plan, any event or condition
which could increase the liability of any Loan Party or any Commonly Controlled
Entity with respect to post-retirement welfare benefits under any Plan, or the
occurrence of any other event or condition with respect to any Plan which could
subject the Borrower or any Subsidiary (directly or indirectly) to any tax,
penalty, lien or liability under Title I or Title IV of ERISA, Section 404 or
419 and Chapter 43 of the IRC, or any other applicable laws, and in each case,
such event or condition, together with all other events or conditions, if any,
could subject any Loan Party (directly or indirectly) to any tax, fine, penalty,
lien or other liabilities in amounts which in the aggregate could result in a
Material Adverse Change. The Borrower will deliver to each of the Lenders a true
and complete copy of each annual report (Form 5500) of each Plan (other than a
Multiemployer Plan) required to be filed with the Internal Revenue Service,
promptly after the filing thereof.
     SECTION 6.1.7 Books and Records. The Borrower will, and will cause each
Subsidiary to, keep books and records reflecting all of its business affairs and
transactions in accordance with GAAP and permit the Agent and each Lender or any
of their respective representatives, at reasonable times and reasonable
intervals upon three (3) Business Days notice, to visit all of its offices, to
discuss its financial matters with its officers and independent public
accountants and to examine (and, at the expense of the Borrower, photocopy
extracts from) any of its books or other corporate records. The Agent may
conduct all such field audits of all Inventory and Accounts of the Borrower as
the Agent may reasonably request, all at reasonable times and upon advance
notice to Borrower, all such field audits to be conducted by internal auditors
of the Agent or a Lender or by outside auditors of recognized standing engaged
by the Agent, and in form and substance satisfactory to the Agent and at such
intervals as the Agent shall determine. In addition, the Agent may obtain such
additional appraisals of the Collateral, or updates to previously prepared
appraisals of the Collateral, in form and substance satisfactory to the Agent
and at such intervals as the Agent shall determine. The Borrower shall pay any
fees and expenses, including, without limitation, any fees of its independent
public accountants and internal or external auditors and appraisers incurred in
connection with the Agent’s or any Lender’s exercise of its rights pursuant to
this Section 6.1.7.
     SECTION 6.1.8 Maintenance of Properties, Etc. The Borrower will maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties (real and personal and including all intangible assets),
except obsolete properties which are not used

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or necessary in the conduct of its business, in good working order and
condition, ordinary wear and tear excepted, except where the failure to do so
could not reasonably be expected to result in a Material Adverse Change, Project
Delay or Cost Overrun.
     SECTION 6.1.9 Maintenance of Licenses and Permits. The Borrower will
maintain and preserve, and will cause each of its Subsidiaries to maintain and
preserve, all Intellectual Property, rights, permits, licenses, approvals and
privileges issued under or arising under any Requirements of Law, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Change, Project Delay or Cost Overrun.
     SECTION 6.1.10 Employee Plans. The Borrower will, and will cause each of
its Subsidiaries to, comply in all respects with the provisions of ERISA and the
IRC which are applicable to any of the Plans, except where the failure to do so
could not reasonably be expected to result in a Material Adverse Change.
     SECTION 6.1.11 Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries to, comply with all applicable Requirements of Law, except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Change, Project Delay or Cost Overrun.
     SECTION 6.1.12 Real Estate. If the Borrower or any of its Subsidiaries
shall acquire a fee or leasehold interest in real estate which the Agent
determines to be material to the Borrower or such Subsidiary, then the Borrower
or such Subsidiary, as the case may be, will execute a first priority Mortgage
(subject to Permitted Liens), in form and substance satisfactory to the Required
Lenders, in favor of the Agent, for the benefit of the Secured Parties, and
shall deliver to the Agent such title insurance policies, surveys and landlords’
estoppel agreements with respect thereto as the as the Agent shall reasonably
request.
     SECTION 6.1.13 Deposit Accounts, Securities Accounts and Commodity
Accounts. From and after the Closing Date, the Borrower shall (i) cause all of
its Deposit Accounts at all times to be subject to a Deposit Account Control
Agreement in form and substance satisfactory to the Agent; (ii) cause all of its
Securities Accounts at all times to be subject to a Securities Account Control
Agreement in form and substance satisfactory to the Agent; and (iii) cause all
of its Commodity Accounts at all times to be subject to a Commodity Account
Control Agreement; provided, however, that the Borrower may maintain Deposit
Accounts which are not subject to a Deposit Account Control Agreement or other
control agreement, to the extent permitted under Section 6.2.7(a).
     SECTION 6.1.14 Subsidiary Guaranty, Etc. The Borrower shall cause each of
its Subsidiaries now existing or hereafter formed or acquired to unconditionally
and irrevocably, jointly and severally, guaranty all Obligations, and grant
Liens on all of its assets and properties to secure such guaranty, pursuant to
such instruments and agreements as the Agent shall reasonably request and as
required under the laws of the applicable jurisdiction, and to provide an
opinion of counsel to such Subsidiary with respect thereto.
     SECTION 6.1.15 Hedge Contract. So long as hedging arrangements are
available at commercially reasonable rates and terms, as determined by the
Agent, within ninety (90) days

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after the Closing Date, the Borrower shall obtain, and thereafter shall maintain
for the term of this Agreement, one or more Hedge Contracts for an aggregate
notional principal amount of not less than fifty percent (50%) of the sum of the
Term Loan Facility Commitment Amount and the Working Capital Facility Commitment
Amount from time to time, effectively hedging against increases in the
Eurodollar Rate over rates, and on such terms and with such parties, as shall be
satisfactory to the Agent.
     SECTION 6.1.16 Agricultural Inventory. The provisions of this
Section 6.1.16 shall apply to Borrower’s Inventory.
     (a) Notices from Farm Products Sellers. Borrower represents and warrants to
Agent and Lenders that Borrower has not, within the one-year period immediately
prior to the date hereof, received written notice pursuant to the applicable
provisions of the Food Security Act or pursuant to the Uniform Commercial Code
or any other applicable local laws or otherwise from (i) any of its suppliers or
sellers of Farm Products (individually, a “Farm Products Seller” and
collectively, the “Farm Product Sellers”), (ii) any secured party of any such
Farm Products Seller or (iii) the Secretary of State (or the equivalent
official) of any state in which Farm Products purchased by Borrower are
produced, in any case advising or notifying Borrower of the intention of such
Farm Products Seller or other Person to preserve the benefit of any trust
applicable to any property of Borrower established in favor of such Farm
Products Seller or other Person under the provisions of any law or of the
existence or claim of a Lien in and to any Farm Products that may be or have
been purchased by Borrower or any related or other property of Borrower (all of
the foregoing, together with any such notices as Borrower may at any time
hereafter receive, collectively, the “Food Security Act Notices”). Borrower
shall notify Agent in writing within two (2) Business Days after receipt by
Borrower of any applicable or purportedly applicable Food Security Act Notice or
amendment to a previous Food Security Act Notice or notice of any such other
Lien or other claim and provide Agent with a copy of such Food Security Act
Notice or amendment or notice.
     (b) Compliance with Notices. Borrower shall in all respects comply with all
applicable Food Security Act Notices during their periods of effectiveness under
the Food Security Act, including directions to make payments to the Farm
Products Sellers by issuing payment instruments directly to the Farm Products
Sellers’ secured party or jointly payable to the Farm Products Sellers and the
Farm Products Sellers’ secured party, as specified in the Food Security Act
Notice, so as to terminate or release the security interest in Farm Products
maintained by such Farm Products Seller or any secured party with respect to the
properties of such Farm Products Seller under the Food Security Act.
     (c) Central Registry. If the aggregate purchase price of Farm Products
purchased by Borrower in any Fiscal Year from Persons who produce Farm Products
in any state with a central filing system certified by the U.S. Secretary of
Agriculture exceeds $100,000, Borrower shall register as a buyer with the
Secretary of State of such state (or the designated system operator) within
thirty (30) days after the date on which the aggregate purchase price of such
Farm Products exceeds $100,000. Borrower shall forward promptly to Agent a copy
of each such registration as well as a copy of all relevant portions of the
master list periodically distributed by any such Secretary of State (or the
designated system operator).

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     (d) Farm Product Seller Reports. If the aggregate purchase price of Farm
Products purchased by Borrower from Persons who produce Farm Products in any
state with a central filing system certified by the U.S. Secretary of
Agriculture exceeds $250,000 during the term of this Agreement, the Borrower
shall thereafter deliver to Agent not later than noon New York time twenty
(20) days after the end of each Fiscal Quarter, a schedule of such Farm Product
Sellers which shall (i) be prepared as of the last day of the immediately
preceding Fiscal Quarter, (ii) set forth the complete legal name and address of
each such Farm Product Seller, and (iii) set forth the aggregate purchase price
of all Inventory purchased by Borrower from each such Farm Product Seller during
each of the two immediately preceding Fiscal Quarters.
     (e) Canadian Requirements. Food Security Act Notices (as defined in Section
6.1.16(a) above) shall include all written agreements entered into by Borrower
with producer organizations regarding the withholding of amounts payable to
producers pursuant to section 5(1)(d) of the Advance Payments for Crops Act
(Canada) or any other applicable local laws or otherwise (“Advance Payment
Agreements”). Borrower affirms that its representation and warranty in the first
sentence of Section 6.1.16(a) above also applies to Advance Payment Agreements.
Borrower shall notify Agent in writing within two (2) Business Days after
Borrower enters into an Advance Payment Agreement or an amendment to a previous
Advance Payment Agreement or notice of any such other Canadian Lien or other
claim and provide Agent with a copy of such Advance Payment Agreement or
amendment or notice. Borrower shall in all respects comply with all Advance
Payment Agreements during their periods of effectiveness under the Advance
Payments for Crops Act (Canada) or other applicable legislation, including
directions to make payments to the applicable producer organization or other
parties, as specified in the Advance Payment Agreement, so as to terminate or
release any liens or security interests in Farm Products under the Advance
Payments for Crops Act (Canada) or other applicable legislation.
     SECTION 6.1.17 Major Project Documents. The Borrower shall perform in all
material respects its obligations under, and otherwise comply in all material
respects with, each Major Project Document, other than any Major Project
Document which has been replaced with a Replacement Contract in accordance with
the terms of this Agreement, including without limitation, the terms of this
Section 6.1.17. If any Major Project Document has been replaced with a
Replacement Contract, the Borrower shall perform in all material respects its
obligations under, and otherwise comply in all material respects with, each such
Replacement Contract.
     SECTION 6.1.18 Project Construction Completion Requirements. Promptly after
completion of the Project Construction Completion Requirements (and in any event
not later than the Project Construction Completion Deadline), the Borrower shall
deliver to the Agent a certificate signed by the Independent Engineer stating
that each of the Project Construction Completion Requirements has been
satisfied, which shall be in form and substance satisfactory to the Agent.
     SECTION 6.1.19 Debt Service Reserve Account. On or prior to the Project
Construction Completion Date, the Borrower shall establish the Debt Service
Reserve Account in the name of the Agent and shall deposit or cause to be
deposited not less than an amount equal to the Debt Service Reserve Amount. At
all times thereafter, the Borrower shall maintain in the Debt Service Reserve
Account an amount not less than the Debt Service Reserve Amount. For

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the avoidance of doubt, the Borrower may elect to fund the Debt Service Reserve
Account on the Project Construction Completion Date from the proceeds of a Term
Loan.
     SECTION 6.2 Negative Covenants. The Borrower agrees that it will perform
the Obligations set forth in this Section 6.2.
     SECTION 6.2.1 Business Activities. The Borrower will not, and will not
permit any Subsidiary to, engage in any business activity, except the
construction, operation and maintenance of the Project, and the processing,
storage, marketing, and sale of canola seed, canola oil, canola meal and other
canola products and such research, development and other activities as may be
incidental or related thereto. The Parent Guarantor will not engage in any
business activities other than to hold the membership interests of the Borrower
and activities as may be incidental or related thereto.
     SECTION 6.2.2 Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist or otherwise become or
be liable in respect of any Indebtedness other than:
     (a) Indebtedness in respect of the Loans, Letters of Credit and other
Obligations;
     (b) Indebtedness in respect of liabilities resulting from (i) endorsements
of negotiable instruments in the ordinary course of business; and (ii) appeal,
surety or performance bonds issued for the account of the Borrower or any of its
Subsidiaries in the ordinary course of business;
     (c) Indebtedness existing on the Closing Date and secured by Liens set
forth on Schedule 5.13 (“Existing Liens”);
     (d) Permitted Hedge Contracts;
     (e) Sponsor Temporary Working Capital Loans;
     (f) any Sponsor Loan;
     (g) unsecured Indebtedness not to exceed in the aggregate at any one time
outstanding, $1,000,000;
     (h) Capitalized Lease Liabilities and Purchase Money Indebtedness, in
addition to the Indebtedness permitted under clause (c) of this Section 6.2.2,
in an amount not to exceed $500,000 in the aggregate at any time outstanding;
and
     (i) Indebtedness secured by Liens permitted by Section 6.2.3(k).
     SECTION 6.2.3 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its
property, revenues or assets, whether now owned or hereafter acquired, except:
     (a) Liens securing the Obligations;

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     (b) Liens identified in Schedule 5.13 (“Existing Liens”) evidencing rights
of lessors in leased equipment and/or purchase money liens on specific items of
equipment, and any extensions, renewals or replacements of any such Liens
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the
property originally encumbered thereby.
     (c) Liens for taxes, assessments or other governmental charges or levies
not at the time delinquent or thereafter payable with penalty or being contested
in good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;
     (d) Liens of carriers, warehousemen, mechanics, landlords and materialmen
and other similar liens imposed by law incurred in the ordinary course of
business for sums not overdue for more than thirty (30) days or being contested
in good faith by appropriate action or proceedings (which action or proceedings
have the effect of preventing the forfeiture or sale of the asset subject to
such Lien) and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
     (e) Liens (other than Liens arising under ERISA or Section 430(k) of the
IRC) incurred in the ordinary course of business in respect of deposits made in
connection with workmen’s compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety, performance or appeal bonds;
     (f) judgment Liens with respect to judgments to the extent such judgments
do not constitute an Event of Default described in Section 7.1.9;
     (g) Liens which arise by operation of law under Article 2 of the UCC in
favor of unpaid sellers of goods, or Liens in items or any accompanying
documents or proceeds arising by operation of law under Article 4 of the UCC in
favor of a collecting bank;
     (h) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of property, which do
not materially detract from the value of such property or impair the use
thereof;
     (i) Liens securing Indebtedness permitted under clause (e) of
Section 6.2.2;
     (j) Liens arising from precautionary UCC Financing Statement filings with
respect to operating leases which are otherwise permitted hereunder;
     (k) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into in the ordinary course
of business;
     (l) Liens on canola seed Inventory securing Sponsor Temporary Working
Capital Loans;

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     (m) customary offset rights of commodity intermediaries with respect to
Commodity Accounts arising under applicable laws or under the terms of any
commodity account agreements with respect to such Commodity Accounts, to the
extent consented to in writing by the Agent pursuant to the terms of any
Commodity Account Control Agreement with respect to such Commodity Accounts or
otherwise; and
     (n) other Liens securing Indebtedness in aggregate principal amount not to
exceed at any one time outstanding $500,000.
     SECTION 6.2.4 Financial Covenants. The Borrower hereby covenants and agrees
as set forth below:
     (a) Debt to Adjusted Capitalization Ratio. The Borrower will not permit its
Debt to Adjusted Capitalization Ratio as of the last day of any Fiscal Quarter
to be more than 0.60 to 1.00.
     (b) Debt Service Coverage Ratio. The Borrower will not permit its Debt
Service Coverage Ratio to be less than 1.75 to 1.00 as of the last day of any
Fiscal Quarter, beginning with the second full Fiscal Quarter ending after the
Project Construction Completion Date, calculated for the four consecutive Fiscal
Quarter period ending on each such date.
     (c) Minimum Net Worth of Borrower. The Borrower will not permit its Net
Worth on any date to be less than $60,000,000.
     SECTION 6.2.5 Capital Expenditures. No Loan Party will, or will permit any
Subsidiary to, make or commit to make any Consolidated Capital Expenditures,
except that (a) the Borrower and its Subsidiaries may make and commit to make
Consolidated Capital Expenditures consisting of Construction Expenses, and
(b) in addition to the Consolidated Capital Expenditures permitted under clause
(a) of this Section 6.2.5, following the Project Construction Completion Date
the Borrower and its Subsidiaries may make Consolidated Capital Expenditures
during each Fiscal Year in an amount not to exceed $1,800,000 for any given
Fiscal Year; provided, that in the event that the Borrower and its Subsidiaries
do not make Consolidated Capital Expenditures in any given Fiscal Year in such
amount, in addition to such amount for the immediately following Fiscal Year,
the Borrower and its Subsidiaries shall be permitted to make in the immediately
following Fiscal Year Consolidated Capital Expenditures in the amount by which
Consolidated Capital Expenditures set forth below for such preceding Fiscal Year
exceeded Consolidated Capital Expenditures made or committed to be made during
such preceding Fiscal Year (but such additional permitted amount shall not
increase any of the amounts set forth below or otherwise form the basis for any
increase in permitted Consolidated Capital Expenditures for any subsequent
Fiscal Years).
     SECTION 6.2.6 Lease Obligations. Except for (a) leases in existence on the
Closing Date and described in Schedule 5.26 and any extensions or renewals of
Existing Leases in accordance with their terms (“Existing Leases”), (b) any
lease of real or personal property entered into by the Borrower or any
Subsidiary after the Closing Date in the ordinary course of business and on fair
and reasonable terms provided that the aggregate rent payable during any Fiscal
Year under all such leases does not exceed $250,000, and (c) any capital lease,
provided

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the Capitalized Lease Liabilities incurred thereunder are permitted under clause
(f) of Section 6.2.2, the Borrower will not, and will not permit any Subsidiary
to, create or suffer to exist any obligation for the payment of rent for any
property under any lease or agreement to lease having a term of one year or
more; provided, however, that no such lease shall by its terms subject the
Borrower or any Subsidiary to Environmental Liabilities and Costs.
     SECTION 6.2.7 Investments. No Loan Party will, or will permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person except:
     (a) Cash Equivalent Investments, provided that the Borrower shall not
maintain more than $250,000 in aggregate value of Cash Equivalent Investments in
deposit accounts or securities accounts that are not subject to a control
agreement in favor of the Agent for the benefit of the Secured Parties;
     (b) deposits for utilities, security deposits under leases, insurance
premium deposits and similar prepaid expenses;
     (c) accounts receivable arising in the ordinary course of business;
     (d) deposit accounts and investment accounts established or required to be
maintained under this Agreement; and
     (e) Investments consisting of Permitted Hedge Contracts.
     SECTION 6.2.8 Restricted Payments, Etc. The Borrower will not declare, pay
or make any dividend or distribution (in cash, property or obligations) on any
shares or units of any class of Stock (now or hereafter outstanding) of the
Borrower or on any warrants, options or other rights in respect of any class of
Stock (now or hereafter outstanding) of the Borrower or apply, or permit any
Subsidiary to apply, any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any shares or units of any class
of Stock (now or hereafter outstanding) of the Borrower or any rights, options
or warrants to subscribe for or purchase any shares or units of any class of
Stock of the Borrower or make any deposit for any of the foregoing; provided,
however, that so long as (i) no Event of Default has occurred and is continuing,
(ii) the Borrower is in compliance with all financial covenants as determined on
a pro forma basis after giving effect to such distributions, and (iii) after
giving effect to such distribution, the Borrower’s Liquidity is not less than
$3,000,000, then (A) so long as the Borrower is a Pass-Through Entity and the
direct or indirect owners of its Stock are directly responsible for the payment
of taxes on income of the Borrower (such direct or indirect owners of the
Borrower’s stock responsible for the payment of such taxes, the “Borrower’s
Tax-Paying Entities”), the Borrower may make distributions from time to time to
the owners of its Stock (for subsequent distribution in the event that such
owners of the Borrower’s stock are not Borrower’s Tax-Paying Entities) in an
amount up to the lesser of (x) the “Tax Distributions” as described in
Section 5.6 of the Parent Guarantor’s LLC Agreement, (y) the estimated income
tax liability of the Borrower’s Tax-Paying Entities with respect to the income
of the Borrower (calculated based on a tax rate equal to the highest effective
marginal combined federal, state and local income tax rate of an assumed
taxpayer paying taxes in the jurisdictions(s) in which the Borrower’s Tax-Paying
Entities are taxable (as reported by the Borrower to the Agent each year and
consistent

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with any applicable provisions of the Borrower’s Organizational Documents)
taking into account the deductibility of state and local income taxes for
federal income tax purposes) arising solely as a result of the net income of the
Borrower attributable to the Borrower’s Tax-Paying Entities, and (z) forty-one
percent (41%) of the adjusted taxable income of the Borrower with respect to
which the Borrower’s Tax-Paying Entities are responsible for paying income taxes
(such distributions, “Permitted Tax Distributions”), provided that such
distributions are made quarterly not more than five (5) Business Days prior to
the deadline for such owners of Stock to file their quarterly estimated income
tax returns with the Internal Revenue Service, and (B) on or after the Project
Completion Date the Borrower may make distributions to the owners of its Stock,
solely from amounts on deposit in the Cost Overrun Account, in an aggregate
amount not to exceed the amount by which the amount on deposit in the Cost
Overrun Account on the Project Construction Completion Date exceeds the sum of
(i) the amount of all obligations owed with respect to Construction Expenses
which have not yet been paid, and (ii) an amount equal to the Borrower’s
reasonable estimate as approved by the Independent Engineer of the costs to
complete the items described on the Punch List Certificate.
     SECTION 6.2.9 Take or Pay Contracts; Sale/Leasebacks.
     (a) No Loan Party will enter into or be a party to any arrangement for the
purchase of materials, supplies, other property or services if such arrangement
by its express terms requires that payment be made by such Loan Party regardless
of whether or not such materials, supplies, other properties or services are
delivered or furnished to it; and
     (b) No Loan Party will enter into any arrangement with any Person providing
for the leasing by such Loan Party of any property or assets, which property or
assets have been or are to be sold or transferred by such Loan Party to such
Person.
     SECTION 6.2.10 Consolidation, Merger, Subsidiaries, Etc.
     (a) No Loan Party will liquidate or dissolve, consolidate with, or merge
into or with, any other Person, or purchase or otherwise acquire all or
substantially all of the assets of any Person (or of any division or business
unit thereof) or otherwise make or agree to make acquisitions; provided,
however, that any Subsidiary of the Borrower may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any other
wholly-owned Subsidiary (so long as the Borrower or such wholly-owned Subsidiary
is the surviving Person).
     (b) No Loan Party will create or acquire any Subsidiary or transfer any
assets to any Subsidiary.
     SECTION 6.2.11 Asset Dispositions, Etc. No Loan Party will sell, transfer,
lease or otherwise dispose of, or grant options, warrants or other rights with
respect to, any of its assets to any Person (excluding Liens permitted by
Section 6.2.3), unless (a) such disposition constitutes a disposition of
obsolete, surplus or retired assets not used in the business of such Loan Party,
(b) such disposition constitutes the sale of Inventory in the ordinary course of
such Loan Party’s business, or (c) such disposition constitutes the sale of
Accounts and related rights pursuant to the Land O’Lakes Agreements, or (d) the
disposition is in the ordinary course of business and the net book value of the
asset to be disposed, together with the net book value of all other assets

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disposed by all Loan Parties pursuant to this clause (c) during the term of this
Agreement, does not exceed $1,000,000.
     SECTION 6.2.12 Modification of Organizational Documents, Etc. No Loan Party
will consent to any amendment, supplement or other modification of any of the
terms or provisions contained in its Organizational Documents that would
adversely effect the Agent’s or the Lender’s rights under the Loan Documents or
such Loan Party’s capacity or ability to meet its obligations under this
Agreement or any Loan Document.
     SECTION 6.2.13 Transactions with Affiliates. No Loan Party will enter into,
or cause, suffer or permit to exist (a) any management contract or arrangement,
consulting agreement or arrangement, contract or arrangement relating to the
allocation of revenues, expenses or similar contract or arrangement requiring
any payments to be made by any Loan Party to any Affiliate, or (b) any other
transaction, arrangement or contract with any of its Affiliates which is on
terms which are less favorable to such Loan Party than are obtainable from any
Person which is not one of its Affiliates.
     SECTION 6.2.14 Inconsistent Agreements. No Loan Party will enter into any
material agreement containing any provision which would be violated or breached
in any material respect by any Loan or Letter of Credit or by the performance by
such Loan Party of its obligations hereunder or under any Loan Document.
     SECTION 6.2.15 Change in Accounting Method. No Loan Party will make any
change in accounting treatment and reporting practices except as required by
GAAP.
     SECTION 6.2.16 Change in Fiscal Year End. No Loan Party will change its
Fiscal Year.
     SECTION 6.2.17 Compliance with ERISA. No Loan Party will take or fail to
take any action with respect to a Plan, including, but not limited to,
establishing, amending, or terminating or withdrawing from any Plan, engaging in
any prohibited transaction (within the meaning of Section 4975 of the IRC or
Section 406 or ERISA), or causing any occurrence of any Reportable Event, or
failing to satisfy the minimum funding standard applicable to the Plan for any
plan year within the meaning of Section 412 of the IRC or Section 302 of ERISA),
or engaging or failing to engage in any other activity, which could result in
any liabilities under the IRC, ERISA or any other applicable law, which
individually or in the aggregate could result in a Material Adverse Change.
     SECTION 6.2.18 Amendments to, and Replacement of, Project Documents. The
Borrower (i) will not, and will not permit any Subsidiary to, enter into any
amendment, restatement, replacement or other modification to any Project
Document; provided, however, that the Borrower may, and may permit any
Subsidiary to, enter into a Permitted Amendment or a Replacement Contract, in
either case with respect to a Project Document (other than a Project Document
which is a Loan Document), and (ii) will not, and will not permit any Subsidiary
to, terminate any Project Document; provided, however, that no termination of a
Project Document (other than a Project Document which is a Loan Document) shall
constitute a Default or an Event of Default if replaced with a Replacement
Contract within sixty (60) days of such termination.

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     SECTION 6.2.19 Change Orders. The Borrower will not enter into any Change
Order with respect to the Construction Contracts without the prior written
consent of the Agent, unless the Borrower certifies, and the Independent
Engineer confirms, that (i) such Change Order is technically feasible, and
(ii) such Change Order could not reasonably be expected to result in a Material
Adverse Change, a Project Delay, or a Cost Overrun.
     SECTION 6.2.20 Anti-Terrorism Laws. No Loan Party will directly or
indirectly, knowingly enter into any material agreements with any person listed
on the OFAC Lists. The Borrower shall notify the Agent as soon as possible if
the Borrower has knowledge that the Borrower or any of its Affiliates or agents
acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is or becomes a Blocked Person, or (a) is
convicted on, (b) pleads nolo contendere to, (c) is indicted on or (d) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. No Loan Party will, directly or indirectly,
(i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making or receiving of any contribution of funds,
goods or services to or for the benefit of any Blocked Person, (ii) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law, or (iii) engage or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in Executive Order
No. 13224 or other Anti-Terrorism Law.
ARTICLE 7
EVENTS OF DEFAULT
     SECTION 7.1 Events of Default. The term “Event of Default” means any of the
events set forth in this Section 7.1.
     SECTION 7.1.1 Non-Payment of Obligations. Any Loan Party shall default:
     (a) in the payment or prepayment when due of any principal of any Loan;
     (b) in the reimbursement when due of any drawing on any Letter of Credit;
or
     (c) in the payment when due of the interest payable in respect of any Loan,
the fees required under Section 2.3 hereof, any letter of credit fees required
under Section 3.10.4 hereof, or any other Obligations and such default shall
continue unremedied for a period of five (5) Business Days.
     SECTION 7.1.2 Non-Performance of Certain Covenants. Any Loan Party shall
default in the due performance and observance of any of its obligations under
Section 6.1 (other than Sections 6.1.13 or 6.1.18) and such default shall
continue unremedied for a period of thirty (30) days; or the Borrower shall
default in the due performance or observation of any of its obligations under
Sections 6.1.13 and 6.1.18 or Section 6.2; provided, however, that if with
respect to one single fiscal period occurring during the term of this Agreement
and following the Project Construction Completion Date the Borrower fails to
comply with the covenants in Sections 6.2.4 and the Sponsor has made a Financial
Covenant Default Contribution to the

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Borrower, the proceeds of which have been deposited into the Debt Service
Reserve Account, then such failure shall not constitute an Event of Default.
     SECTION 7.1.3 Defaults Under Other Loan Documents; Non-Performance of Other
Obligations. Any “Event of Default” shall occur under the other Loan Documents;
or any Loan Party shall default in the due performance and observance of any
other obligation, covenant or agreement contained herein or in any other Loan
Document which the Agent determines is of a type that can be cured and such
default shall continue unremedied for a period of twenty (20) days.
     SECTION 7.1.4 Bankruptcy, Insolvency, Etc. Any Loan Party or the Sponsor
shall:
     (a) become insolvent or generally fail to pay, or admit in writing its
inability to pay, its debts as they become due;
     (b) apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator or other custodian for such Loan Party or any substantial
part of its property of any thereof, or make a general assignment for the
benefit of creditors;
     (c) in the absence of such application, consent or acquiescence, permit or
suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for such Loan Party or for a substantial part of its property, and
such trustee, receiver, sequestrator or other custodian shall not be discharged
within sixty (60) days;
     (d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, with respect to such Loan Party or the Sponsor, and, if such case or
proceeding is not commenced by it, such case or proceeding shall be consented to
or acquiesced in by such Loan Party or the Sponsor or shall result in the entry
of an order for relief or shall remain for sixty (60) days undismissed; or
     (e) take any corporate or company action authorizing, or in furtherance of,
any of the foregoing.
     SECTION 7.1.5 Breach of Warranty. Any representation or warranty of any
Loan Party hereunder or in any other Loan Document or in any other writing
furnished by or on behalf of any Loan Party to the Agent or any Lender for the
purposes of or in connection with this Agreement or any such Loan Document is or
shall be incorrect when made in any material respect.
     SECTION 7.1.6 Default on Other Indebtedness, Etc. (a) Any Indebtedness of
any Loan Party in an aggregate principal amount exceeding $500,000 (i) shall be
duly declared to be or shall become due and payable prior to the stated maturity
thereof, or (ii) shall not be paid as and when the same becomes due and payable
including any applicable grace period; or (b) there shall occur and be
continuing any event which constitutes an event of default under any Instrument
relating to any Indebtedness of any Loan Party in an aggregate principal amount
exceeding $500,000 the effect of which is to permit the holder or holders of
such Indebtedness, or a trustee, agent or other representative on behalf of such
holder or holders, to cause such Indebtedness to

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become due prior to its stated maturity; or (c) there shall occur under any
Hedge Contract an Early Termination Date (as defined in such Hedge Contract)
resulting from (A) any event of default under such Hedge Contract as to which a
Loan Party is the Defaulting Party (as defined in such Hedge Contract) or
(B) any Termination Event (as so defined) under such Hedge Contract as to which
a Loan Party is an Affected Party (as so defined) and, in either event, the
Hedge Termination Value owed by such Loan Party as a result thereof is greater
than $500,000.
     SECTION 7.1.7 Failure of Valid, Perfected Lien; Unenforceability of Loan
Documents. The Lien on any Collateral having an aggregate value in excess of
$500,000 at any time shall cease to be valid or perfected at any time after the
Closing Date, the Sponsor or any Loan Party shall assert the invalidity of any
Loan Document, or any Loan Document shall be determined by a court of competent
jurisdiction to be unenforceable.
     SECTION 7.1.8 Employee Plans. Any of the following events shall occur with
respect to any Plan: (i) any Person shall engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan and such “prohibited transaction” could result in a Material Adverse
Change, (ii) any failure to satisfy the minimum funding standard applicable to
the Plan for any plan year (within the meaning of Section 412 of the Code or
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Single Employer Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the opinion of the Required Lenders, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, (iv) a notice of intent to
terminate any Single Employer Plan for purposes of Title IV of ERISA is issued
by the plan administrator thereof without the prior written consent of the
Required Lenders, or the PBGC shall commence proceedings to terminate any Single
Employer Plan, (v) any Loan Party or any Commonly Controlled Entity shall, or in
the opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency, Reorganization or
termination of, a Multiemployer Plan, (vi) any Loan Party or any Commonly
Controlled Entity shall fail to make any quarterly installment payment to a
Pension Plan required under Section 303(j) of ERISA or Section 430 of the Code,
(vii) any Loan Party or any Commonly Controlled Entity shall fail to make any
contribution to a Multiemployer Plan which is required under ERISA, the Code or
applicable collective bargaining agreements, or (viii) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (viii) above, such event or condition, together with all
other such events or conditions, if any, could subject any Loan Party (directly
or indirectly) to any tax, penalty or other liabilities under Title I or Title
IV of ERISA, Section 404 or 419 and Chapter 43 of the IRC or any other
applicable law which in the aggregate could result in a Material Adverse Change.
     SECTION 7.1.9 Judgments. A final judgment which, with other such
outstanding final judgments against any Loan Party (in each case to the extent
not covered by insurance), exceeds an aggregate of $1,000,000, shall be entered
against any Loan Party and, within thirty (30) days after entry thereof, such
judgment shall not have been discharged or execution thereof shall have been
stayed pending appeal, or, within thirty (30) days after the expiration of any
such stay, such judgment shall not have been discharged.

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     SECTION 7.1.10 Divestiture. Any order for the breaking up or divestiture of
any Loan Party or any material portion of the assets of any Loan Party shall be
entered by the Department of Justice, the Federal Trade Commission or any other
Governmental Authority.
     SECTION 7.1.11 Loss of Permits, Etc. The expiration, loss, termination,
cancellation, revocation, forfeiture, suspension, diminution, impairment of or
failure to obtain or renew any Intellectual Property, right, permit, license or
approval, which could reasonably be expected to result in a Material Adverse
Change, a Project Delay or a Cost Overrun; or the entry of any order of a court
enjoining, restraining or otherwise preventing the Borrower from constructing or
operating the Project or preventing any Loan Party from conducting all or any
material part of its business affairs; or the cessation of business or
dissolution of any Loan Party.
     SECTION 7.1.12 Event of Abandonment. An Event of Abandonment shall have
occurred.
     SECTION 7.1.13 Material Loss. Either (i) a Loss shall have occurred and the
amount of such Loss uncompensated by insurance shall exceed $2,000,000, (ii) a
Major Loss shall have occurred for which the Borrower has undertaken to
accomplish a Major Replacement and the Major Replacement Construction
Requirements shall not have been satisfied by the Major Replacement Construction
Deadline, or (iii) a Total Loss shall have occurred.
     SECTION 7.1.14 Force Majeure. There shall occur an event of force majeure
under any Major Project Document and the effect of such event of force majeure
is that a Project Party is excused from performing under such Major Project
Document for a period of sixty (60) days or more if the failure of such Project
Party to perform its obligations under such Major Project Document during such
period could reasonably be expected to result in a Material Adverse Change, a
Project Delay or a Cost Overrun, unless a Replacement Contract is entered into
within sixty (60) days of such event.
     SECTION 7.1.15 Default by Third Parties under Project Documents; Insolvency
of Project Party; Termination or Unenforceability of Project Document. (A) A
default by any Person (other than the Borrower) shall occur under any of the
Project Documents and such default is not cured within any applicable cure
period, and (i) if occurring prior to the Project Construction Completion Date,
such default could reasonably be expected to result in a Material Adverse
Change, a Project Delay or a Cost Overrun, or (ii) if occurring on or after the
Project Construction Completion Date, such default could reasonably be expected
to result in a Material Adverse Change, (B) either (i) Land O’Lakes shall become
subject to a bankruptcy, insolvency or other similar proceeding, or (ii) any
Project Party (other than Land O’Lakes) shall become subject to a bankruptcy,
insolvency or other similar proceeding prior to the Project Construction
Completion Date, or (C) any Project Document is, or is reasonably determined to
be, unenforceable, in each case described in clauses (A), (B) and (C) unless
(a) a Replacement Contract is entered into within sixty (60) days of such
default, proceeding or determination, and (b) after giving effect to any such
Replacement Contract, (x) if such Replacement Contract is entered into prior to
the Project Construction Completion Date, it could not reasonably be expected to
result in a Material Adverse Change, a Project Delay or a Cost Overrun based on
the terms of such Replacement Contract, and (y) if such Replacement Contract is
entered into on or

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after the Project Construction Completion Date, it could not reasonably be
expected to result in a Material Adverse Change.
     SECTION 7.1.16 Default by Borrower under Major Project Documents. The
Borrower shall fail to perform any material obligation, covenant or agreement
contained in any Major Project Document and such default is not cured within any
applicable cure period.
     SECTION 7.1.17 Default by Sponsor under Contribution Documents. The Sponsor
shall fail to perform any material obligation, covenant or agreement contained
in any Contribution Document.
     SECTION 7.1.18 Major Environmental Event. A Major Environmental Event shall
occur.
     SECTION 7.1.19 Project Delay. A Project Delay shall have occurred.
     SECTION 7.1.20 Change in Control. A Change in Control shall have occurred.
     SECTION 7.1.21 Minimum Tangible Net Worth of Sponsor. The Tangible Net
Worth of the Sponsor on any date shall not be less than $427,000,000.
     SECTION 7.2 Action if Bankruptcy. If any Event of Default described in
Section 7.1.4 shall occur, the outstanding principal amount of all outstanding
Loans and all other Obligations automatically shall be and become immediately
due and payable, without notice or demand, and the Borrower will deposit with
the Agent, as cash collateral, an amount equal to 105% of the aggregate undrawn
stated amount of all Letters of Credit, which Loan, Obligations and amounts
automatically shall become immediately due and payable by the Borrower and to
the extent paid by the Borrower shall constitute a prepayment under this
Agreement, and the Agent may, and upon the direction of the Required Lenders
shall, exercise any and all rights and remedies available under this Agreement
or any other Loan Document, or available at law or in equity, at any time, in
any order and in any combination.
     SECTION 7.3 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 7.1.4) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the Agent may, and
upon the direction of the Required Lenders, shall (a) declare all or any portion
of the outstanding principal amount of the Loans to be due and payable and any
or all other Obligations to be due and payable, whereupon the full unpaid amount
of such Loans and any and all other Obligations which shall be so declared due
and payable shall be and become immediately due and payable, without further
notice, demand, or presentment, (b) demand that the Borrower deposit with the
Agent, as cash collateral, an amount equal to 105% of the aggregate undrawn
stated amount of all Letters of Credit, which amount shall become immediately
due and payable by the Borrower and to the extent paid by the Borrower shall
constitute a prepayment under this Agreement, (c) to the extent permitted under
any Letter of Credit, require the beneficiary thereof to draw upon the undrawn
stated amount thereof, and (d) exercise any and all rights and remedies
available under this Agreement or any other Loan Document, or available at law
or in equity, at any time, in any order and in any combination.

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     SECTION 7.4 Application of Proceeds Following Default. Notwithstanding
anything to the contrary set forth in this Agreement, following the occurrence
of an Event of Default and the acceleration of the Obligations pursuant to
Section 7.2 or Section 7.3, all proceeds of Collateral and other payments made
by any Loan Party, or received from any other source, shall be applied as
follows:
     (a) first, to the payment of all fees, indemnities and expenses of the
Agent then due hereunder or under any of the other Loan Documents until paid in
full;
     (b) second, to the payment of all fees of issuers of Letters of Credit then
due under clause (b) of the first sentence in Section 3.10.4 until paid in full;
     (c) third, to the payment of all indemnities and expenses then due to other
Secured Parties, pro rata based on the outstanding amount of indemnities and
expenses then due to Secured Parties until paid in full;
     (d) fourth, pari passu to the payment of (i) all principal and accrued
interest on the Loans, Letter of Credit Obligations (to be held by the Agent as
cash collateral in the amount of 105% of the then outstanding Letter of Credit
Obligations), and accrued fees payable to or for the account of the Lenders
(with amounts under this clause (i) applied first to the payment of accrued
interest and fees and then to principal and Letter of Credit Obligations), and
(ii) all Obligations in respect of Secured Hedge Contracts then due to the
applicable Qualified Counterparties, until all such Obligations are paid in full
(with amounts under this clause (ii) applied pro rata based on the outstanding
amount of such Obligations in respect of Secured Hedge Contracts); and
     (e) fifth, to pay all other Obligations until all such other Obligations
are paid in full, pro rata based on the outstanding amount of such Obligations;
provided, however, that (i) amounts on deposit in the Debt Service Reserve
Account, the Cost Overrun Account and any other cash collateral accounts held by
the Agent or for which the Agent serves as secured party shall first be applied
to the payment of Obligations, other than Obligations under the Qualified
Commodity Hedge Contract, unless the Agent or the Lenders shall then be
precluded by injunction or other legal process from so applying such amounts and
(B) if the Qualified Counterparty to the Qualified Commodity Hedge Contract
shall then be entitled, under the terms of the Qualified Commodity Hedge
Contract and any letter of credit or cash furnished to the Qualified
Counterparty to the Qualified Commodity Hedge Contract in support of the
obligations of any Loan Party under the Qualified Commodity Hedge Contract, to
draw on such letter of credit or apply such cash collateral, such Qualified
Counterparty shall first have then drawn on such letter of credit or applied
such cash in the maximum amount then permitted unless (x) such Qualified
Counterparty shall then be precluded by injunction or other legal process from
so drawing or (y) the issuer of such letter of credit shall then be subject to
bankruptcy or insolvency proceedings or shall have disavowed, repudiated or
dishonored its obligations under such letter of credit.

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ARTICLE 8
THE AGENT
     SECTION 8.1 Actions. Each Lender authorizes the Agent to act on behalf of
such Lender under this Agreement and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent, to exercise such powers hereunder and thereunder as
are specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. Each
Lender (including, without limitation, ING in its capacity as a Lender) agrees
(which agreement shall survive any termination of this Agreement) to indemnify
the Agent, severally but not jointly, pro rata according to such Lender’s
aggregate percentage of the Commitments from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement, the Notes, or any other Loan
Document, including the reimbursement of the Agent for all out-of-pocket
expenses (including attorneys’ fees) incurred by the Agent hereunder or in
connection herewith or in enforcing the Obligations of the Loan Parties under
this Agreement or any other Loan Document, in all cases as to which the Agent is
not reimbursed by the Loan Parties; provided that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
determined by a court of competent jurisdiction in a final proceeding to have
resulted primarily from the Agent’s gross negligence or willful misconduct.
Notwithstanding any other provision of this Agreement to the contrary, the Agent
shall not be required to take any action hereunder or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement or any
other Loan Document, unless it is indemnified to its satisfaction by the Lenders
against loss, costs, liability and expense. If any indemnity in favor of the
Agent shall become impaired, it may call for additional indemnity and cease to
do the acts indemnified against until such additional indemnity is given.
     SECTION 8.2 Funding Reliance, Etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New
York City time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Term Loan Percentage of the Term
Loans and its Working Capital Facility Percentage of the Working Capital
Facility Loans on the date specified therefor, the Agent may assume that such
Lender has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount; provided,
however, that the Agent shall have no obligation to do so. If such amount is
made available by such Lender to the Agent on a date after the date of such
Borrowing, such Lender shall pay to the Agent on demand interest on such amount
at the Federal Funds Rate for the number of days from and including the date of
such Borrowing to the date on which such amount becomes immediately available to
the Agent, together with such other compensatory amounts as may be required to
be paid by such Lender to the Agent pursuant to the Rules for Interbank
Compensation of the Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from time to time. A
statement of the Agent submitted to any Lender with respect to any amounts owing
under this Section 8.2 shall be conclusive, in the absence of manifest error. If
such amount is not in fact made available to the Agent by such Lender within
three (3) Business Days after the date of such Borrowing, the Agent shall be
entitled to recover

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such amount, with interest thereon at the rate per annum then applicable to the
Loans comprising such Borrowing, within five (5) Business Days after demand,
from the Borrower.
     SECTION 8.3 Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement, the Notes, or any Loan
Document, or in connection herewith or therewith, except for its own willful
misconduct or gross negligence. The Agent shall not be responsible to any Lender
for any recitals, statements, representations or warranties herein or in any
certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectability, or sufficiency of any of the Loan Documents, the
financial condition of any Loan Party or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of any of the Loan
Documents, the financial condition of or any Loan Party or the existence or
possible existence of any Default. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which it believes to be genuine and to have
been presented by a proper Person.
     SECTION 8.4 Successor. The Agent may resign as such at any time upon at
least thirty (30) days prior notice to the Borrower and all Lenders, such
resignation not to be effective until a successor Agent is in place. If the
Agent at any time resigns, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within thirty (30) days after the retiring
Agent’s giving notice of resignation, then the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent, which shall be one of the Lenders or a
financial institution reasonably acceptable to the Borrower organized under the
laws of the United States and having a combined capital and surplus of at least
$500,000,000, and which shall not be a Defaulting Lender. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges, and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement and the other Loan Documents.
     SECTION 8.5 Loans and other Transactions by the Agent and its Affiliates.
The Agent shall have the same rights and powers with respect to (a) the Loans
made by it or any of its Affiliates, and (b) the Notes held by it or any of its
Affiliates, as any Lender and may exercise the same as if it were not the Agent.
ING and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower and its Subsidiaries or any Person who may do business with or own
securities of the Borrower, all as if ING were not the Agent and without any
duty to account therefor to the Lenders.
     SECTION 8.6 Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such financial
information and such other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend its Commitments, to
make the Loans. Each Lender also acknowledges

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that it will, independently of the Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
     SECTION 8.7 Copies, Etc. The Agent shall give prompt notice to each Lender
of each notice or request required or permitted to be given to the Agent by the
Borrower pursuant to the terms of this Agreement. The Agent will distribute to
each Lender each Instrument received for its account and copies of all other
communications received by the Agent from the Borrower for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.
Notwithstanding anything herein contained to the contrary, all notices to and
communications with the Borrower under this Agreement and the other Loan
Documents shall be effected by the Lenders through the Agent.
     SECTION 8.8 Collateral Matters.
     Each of the Secured Parties hereby appoints the Agent to act as its
collateral agent with respect to all matters relating to the Collateral and the
Security Documents. Each of the Secured Parties hereby authorizes the Agent to
act on behalf of such Secured Party under this Agreement and the Security
Documents and, in the absence of other written instructions from the Required
Lenders received from time to time by the Agent, to exercise such powers
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each reference herein to the Agent, to the extent
such reference relates to the Collateral, and each reference to the Agent in the
Security Documents, shall refer to the Agent in its capacity as collateral agent
to the Secured Parties. Each of the Secured Parties irrevocably authorizes the
Agent, at its option and in its discretion,
     (a) to release any Lien on any Collateral granted to or held by the Agent
under any Security Document (i) upon termination of the Commitments and each
Qualified Commodity Hedge Contract and payment in full of all Obligations under
the Loan Documents and the Qualified Commodity Hedge Contracts and the
expiration or termination of all Letters of Credit, (ii) that is transferred or
to be transferred as part of or in connection with any asset disposition
permitted hereunder or under any other Loan Document, or (iii) as approved in
accordance with Section 9.1;
     (b) to release or subordinate any Lien on any Collateral granted to or held
by the Agent under any Security Document if such Collateral constitutes property
of the Borrower with respect to which a Lien is permitted under clauses (b),
(i) or (l) of Section 6.2.3; and
     (c) to execute, deliver and perform its obligations under the Qualified
Commodity Hedge Intercreditor Agreement (and each Secured Party irrevocably
acknowledges and agrees that upon such execution and delivery by the Agent, such
Secured Party shall be bound by the terms thereof).

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Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent’s authority to release or subordinate its interest in
particular types or items of property pursuant to this Section 8.8.
ARTICLE 9
MISCELLANEOUS
     SECTION 9.1 Waivers, Amendments, Etc.
     (a) The provisions of this Agreement and of each other Loan Document may
from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and, (x) in the case of an amendment or
modification, is consented to by the Borrower and the Required Lenders or (y) in
the case of a waiver of any obligation of any Loan Party or of compliance by any
Loan Party with any prohibition contained in this Agreement or any other Loan
Document, is consented to by the Required Lenders; provided, however, that no
such amendment, modification or waiver:
     (i) which would modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be effective unless
consented to by each Lender;
     (ii) which would modify this Section 9.1, change the definition of
“Required Lenders,” increase the Working Capital Facility Commitment Amount or
the Term Loan Facility Commitment Amount, change the Working Capital Facility
Percentage or the Term Loan Percentage for any Lender, as applicable, reduce any
fees payable to the Lenders described in Article 2 and Article 3, extend the
Term Loan Maturity Date or the Working Capital Facility Maturity Date, or
subject any Lender to any additional obligations shall be made without the
consent of each Lender;
     (iii) which would extend the due date for, or reduce the amount of, any
payment of principal on the Term Loans under Section 3.3.1(c), or any interest
payable on any Loan, or any fees payable under this Agreement, or which would
reduce the principal amount of or rate of interest on any Loan or rate of fees
accruing under this Agreement, in each case other than any interest and fees to
the extent accruing or payable at the Post-Default Rate, shall be made without
the consent of each Lender affected thereby;
     (iv) which would release or permit the release of all or substantially all
of the Collateral (and the release of Collateral the absence of which would
prevent the Borrower from operating the Project substantially in accordance with
the Project Construction Completion Requirements shall be deemed to constitute a
release of all or substantially all of the Collateral) shall be effective unless
consented to by each Lender and by each Qualified Counterparty to a Qualified
Commodity Hedge Contract;
     (v) which would affect adversely the interests, rights, compensation or
obligations of the Agent shall be made without the consent of the Agent; or

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     (vi) which is (A) a Qualified Hedge Related Amendment or (B) an amendment
to a Security Document that disproportionately and adversely affects the rights
of a Qualified Hedge Counterparty (or the Qualified Hedge Counterparties as a
class) under such Security Document relative to the Lenders (provided that such
Qualified Hedge Counterparty notifies the Agent of such disproportionately
adverse effect reasonably promptly after receiving written notice of such
proposed amendment, modification or waiver), shall be effective unless consented
to by each Qualified Counterparty to a Qualified Commodity Hedge Contract; or
     (vii) which is a Secured Hedge Related Amendment shall be effective unless
consented to by each Qualified Counterparty.
     (b) No failure or delay on the part of the Agent, any Lender or the holder
of any Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, modification or waiver
hereunder or under any other Loan Document, nor shall any amendment,
modification or waiver hereunder or under any other Loan Document require the
consent or approval of, or execution and delivery by, any Defaulting Lender in
order for such amendment, modification or waiver to be binding upon such
Defaulting Lender, except that the Commitment of such Defaulting Lender may not
be increased or extended without the consent of such Lender.
     (c) If, in connection with any proposed amendment, modification, waiver or
termination pursuant to Section 9.1(a) requiring the consent of all affected
Lenders, the consent of the Required Lenders is obtained, but the consent of
other Lenders whose consent is required is not obtained within ten (10) Business
Days after notice from the Agent (any such Lender whose consent is not obtained
being referred to as a “Non-Consenting Lender”), then, so long as Agent is not a
Non-Consenting Lender, at Borrower’s request, Agent, or a Person reasonably
acceptable to Agent, shall have the right (but shall have no obligation) to
purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees
that it shall sell and assign to Agent or such Person, all of the Commitments
and Obligations of such Non-Consenting Lender for an amount equal to the
principal balance of all Loans and unreimbursed Letter of Credit Obligations
held by the Non-Consenting Lender and all accrued interest and fees and other
obligations owing with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed Transfer Supplement.
     (d) Neither any Lender nor the Agent shall be under any obligation to
marshal any assets in favor of the Borrower or any other party or against or in
payment of any or all of the Obligations. Recourse for security shall not be
required at any time. To the extent that the Borrower makes a payment or
payments to the Agent or the Lenders, or the Agent or the Lenders

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enforces their security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently for any reason invalidated, set aside or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
     (e) Notwithstanding subsection (a) of this Section 9.1, the provisions of
this Agreement and each other Loan Document may be amended pursuant to an
Additional Term Loan Amendment or an Additional Working Capital Facility
Commitment Amendment without the consent of the Required Lenders, but in
accordance with Section 2.1.3 and Section 2.1.5, respectively.
     (f) Except as otherwise expressly provided in Section 9.1(a), no Qualified
Counterparty, in its capacity as a Qualified Counterparty, shall have any rights
in connection with any amendment, modification or waiver of this Agreement or
any of the other Loan Documents or the management, enforcement, or release of
any Liens on the Collateral; provided, however, that the Qualified Counterparty
to the Qualified Commodity Hedge Contract shall be entitled to participate in
the management, enforcement and release of any Liens on the Collateral, in each
case as if such Qualified Counterparty were a Lender holding a Commitment and
outstanding principal amount of Loans equal to either (i) prior to the
occurrence of a termination of the Qualified Commodity Hedge Contract, the net
amount that would be payable by the Borrower to such Qualified Counterparty if
the Qualified Commodity Hedge Contract were terminated as of the date its
consent is requested or provided, but in no event shall the amount determined
under this clause (i) be deemed to be less than $10,000,000, or (ii) after a
termination of the Qualified Commodity Hedge Contract, the net termination
amount then payable by the Borrower to such Qualified Counterparty thereunder
(and for purposes of making any determination of Required Lenders the aggregate
amount of Commitments and Loans outstanding shall be deemed to be the amount of
Commitments and Loans then outstanding plus the amount of Commitments and Loans
deemed to be held by such Qualified Counterparty under clauses (i) or (ii) above
as applicable). In order to be entitled to the rights granted under this
Section 9.1(f), the Qualified Counterparty to the Qualified Commodity Hedge
Contract shall provide a certificate to the Agent as to the amount determined
under clauses (i) or (ii) of the immediately preceding sentence, and the Agent
may conclusively rely on such certificate in making any determination of
Required Lenders or other requisite consent of Lenders under this Agreement or
any Security Document.
     (g) Notwithstanding subsection (a) of this Section 9.1, and notwithstanding
any other provision of this Agreement and each other Loan Document, neither the
Sponsor nor any Affiliate of the Sponsor, in its capacity as a Lender (in such
capacity, a “Sponsor Lender”) shall have the right (i) to consent to any
amendment, modification, waiver, consent or other action with respect to any of
the terms of this Agreement or any other Loan Document (and no Sponsor Lender
shall (nor shall any amount of the Loans held by any Sponsor Lender) be included
for purposes of making a determination of (A) any Lender whose consent would
otherwise be required under subsection (a) of this Section 9.1, (B) the Required
Lenders, or (C) any other number or percentage of Lenders entitled to consent to
any amendment, waiver, modification or

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action hereunder); (ii) to require the Agent or any other Lender to undertake
any action (or refrain from taking any action) with respect to this Agreement or
any other Loan Document or exercise any remedy (including, without limitation,
any right of set-off) in its capacity as a Lender; (iii) to otherwise vote on
any matter related to this Agreement or any other Loan Document; (iv) to attend
any meeting or participate in any conference call, in each case, with the Agent
or any Lender (including with respect to the exercise of rights and remedies
under any Loan Document); (v) to receive any document, notice, information or
communication from the Agent or any Lender (including documents, information or
communications such Lender would otherwise be entitled to receive under the
terms of the Loan Documents in its capacity as Lender); (vi) to make or bring
any claim, in its capacity as a Lender, against the Agent or any Lender with
respect to the duties and obligations of the Agent or any Lender under the Loan
Documents; (vii) to exercise any remedies or take other actions against any Loan
Party (other than collectively with the other Lenders); or (viii) to enforce any
right it has under this Agreement as a Lender; provided, however,
notwithstanding the provisions of this subsection (f), no amendment,
modification or waiver pursuant to this Section 9.1 shall (w) deprive any
Sponsor Lender of its share of any payments which the Lenders are entitled to
share on a pro rata basis under the Loan Documents, (x) increase the Commitments
of any Sponsor, or extend the due date for, or reduce the principal of or the
rate of interest (other than interest accruing at the Post-Default Rate) on,
Loans owing to any Sponsor Lender, or fees or other amounts payable hereunder or
under any other Loan Document to any Sponsor Lender, (y) without the consent of
the Sponsor Lender, if such consent would otherwise be required under this
Section 9.1, release the Borrower from its obligations under this Agreement; or
(z) without the consent of the Sponsor Lender, if such consent would otherwise
be required under this Section 9.1, release all or substantially all of the
Collateral (other than in connection with the exercise of remedies).
     (h) Each Sponsor Lender, solely in its capacity as a Lender, hereby agrees
that, if any Loan Party shall be subject to any voluntary or involuntary
proceeding commenced under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect (“Bankruptcy
Proceedings”), (i) such Sponsor Lender shall not challenge the limitations on
its right to vote or participate in such Bankruptcy Proceeding set forth in the
Loan Documents or take any step or action in such Bankruptcy Proceeding to
object to, impede, or delay the exercise of any right or the taking of any
action by the Agent (or the taking of any action by a third party that is
supported by the Agent) in relation to such Sponsor Lender’s claim with respect
to its Loans and Letter of Credit Obligations (a “Claim”) (including, without
limitation, objecting to any debtor-in-possession financing, use of cash
collateral, grant of adequate protection, sale or disposition of assets,
compromise, or plan of reorganization), (ii) such Sponsor Lender’s Claim shall
be non-voting under Sections 1126 and 1129 of the Bankruptcy Code; (iii) with
respect to any matter requiring the vote of the Lenders during the pendency of a
Bankruptcy Proceeding (including, without limitation, voting on any plan of
reorganization), the Loans and Letter of Credit Obligations held by such Sponsor
Lender (and any Claim with respect thereto) shall be deemed to be voted by such
Sponsor Lender in the same proportion as the allocation of voting with respect
to such matter by Lenders who are not a Sponsor Lender, so long as each Sponsor
Lender is treated in connection with the exercise of such right or taking of
such action on the same or better terms as the other Lenders. For the avoidance
of doubt, the Lenders and each Sponsor Lender agree and acknowledge that the
provisions set forth in this Section 9.1(g) constitute a “subordination
agreement” as such term is contemplated by, and utilized in, Section 510(a) of
the Bankruptcy Code, and, as such, would be enforceable for all

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purposes in any case where a Loan Party has filed for Protection under any
Bankruptcy Proceeding application to such Loan Party.
     SECTION 9.2 Notices. Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder or under any other Loan
Document shall be in writing (including by facsimile transmission). All such
written notices shall be mailed, faxed or delivered to the applicable address or
facsimile number, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:

     
If to the Agent:
  ING Capital LLC
1325 Avenue of the Americas
New York, NY 10019
Attention: Daniel W. Lamprecht
Managing Director
Facsimile No.: 646-424-6390
Telephone No.: 646-424-6871
 
   
with a copy to (which shall not constitute notice):
  King & Spalding LLP
1180 Peachtree Street, NE
Atlanta, GA 30309
Attention: Hector E. Llorens, Jr., Esq.
Facsimile No.: 404-572-5128
Telephone No. 404-572-3523
 
   
If to the Borrower or the Parent Guarantor:
  PICO Northstar Hallock, LLC
PICO Northstar, LLC
15 Broadway, Suite 600
Fargo, North Dakota 58102
Attention: Neil Juhnke
                 President
Facsimile No.: 701-866-9059
Telephone No. 701-478-5848
 
   
with a copy to (which shall not constitute notice):
  PICO Holdings, Inc.
7979 Ivanhoe Ave.
La Jolla, CA 92037
Attention: John Hart
                 Chief Executive Officer
Facsimile No.: 858-456-6480
Telephone No. 858-456-6022
 
   
with a copy to (which shall not constitute notice):
  DLA Piper LLP (US)
4365 Executive Drive, Suite 1100
San Diego, CA 92121037
Attention: Marty Lorenzo, Esq.
Facsimile No.: 858-638-5030
Telephone No. 858-677-1430

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If to any other Lender:
  To the address, facsimile number, or telephone
number specified in its Administrative Questionnaire
 
   
If to the Qualified Counterparty to the Qualified Commodity Hedge Contract:
  To the address, facsimile number, or telephone
number specified in or as otherwise provided in the Qualified Commodity Hedge
Intercreditor Agreement

or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when
received, if deposited in the mail, postage prepaid; when transmission is
verified, if telecopied; and on the next Business Day, if timely delivered to an
air courier guaranteeing overnight delivery.
     SECTION 9.3 Costs and Expenses. The Borrower agrees to pay all reasonable
out-of-pocket expenses of the Agent and the Lead Arranger in connection with the
negotiation, preparation, execution, and delivery of this Agreement and each
other Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements, terminations, releases or other modifications to
this Agreement or any other Loan Document as may from time to time hereafter be
required (including the reasonable fees and expenses of counsel for the Agent
and the Lead Arranger), or of any consultants or other experts retained by the
Agent and the Lead Arranger from time to time in connection therewith) whether
or not the transactions contemplated hereby are consummated, and to pay all
expenses of the Agent and the Lead Arranger (including reasonable fees and
expenses of counsel to the Agent and the Lead Arranger, or of any consultants or
other experts retained by the Agent and the Lead Arranger) incurred in
connection with the preparation and review of the form of any Instrument
relevant to this Agreement, the Notes or any other Loan Document. The Borrower
also agrees to pay and hold the Agent, the Lead Arranger and the Lenders
harmless from any stamp, documentary, intangibles, transfer or similar taxes or
charges, and all recording or filing fees with respect to the Loan Documents or
any payments to be made thereunder and all title insurance premiums, surveyors
costs and valuation fees. The Borrower also agrees to reimburse the Agent, the
Lead Arranger and each Lender upon demand for all out-of-pocket expenses
(including attorneys’ fees and expenses) incurred by the Agent, the Lead
Arranger or such Lender in enforcing the Obligations of the Loan Parties or the
Sponsor under this Agreement or any other Loan Document or in connection with
any restructuring or “work-out” of any Obligations.
     SECTION 9.4 Indemnification. In consideration of the execution and delivery
of this Agreement by the Agent and each Lender and the extension of the
Commitments, each of the Borrower and the Parent Guarantor hereby indemnifies,
exonerates and holds the Agent, and each Lender, their respective successors and
assigns, each of their respective officers, directors, employees, partners,
attorneys and agents and each of their respective successors and assigns
(collectively, the “Lender Parties”) free and harmless from and against any and
all actions, causes of action, suits, losses, costs, liabilities (including, but
not limited to, Environmental

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Liabilities and Costs), damages and expenses (irrespective of whether such
Lender Party is a party to the action for which indemnification hereunder is
sought), including attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Lender Parties or any of them or asserted or
awarded against the Lender Parties or any of them by any third party or by the
Borrower or any of its Subsidiaries or Affiliates as a result of, or arising out
of, or relating to:
     (a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or Letter of Credit;
     (b) the use of any of the proceeds of any Loan or Letter of Credit by the
Borrower or any of its Subsidiaries or any beneficiary of a Letter of Credit for
any other purpose;
     (c) any information furnished by the Borrower in connection with the
syndication of this Agreement;
     (d) the making of any claim by any investment banking firm, broker or third
party in each case claiming through the Borrower or any of its Subsidiaries or
as a result of their relationship to such parties that it is entitled to
compensation from the Agent or any Lender in connection with this Agreement;
     (e) the entering into and performance of this Agreement and any other Loan
Document by any of the Lender Parties (other than the breach by such Lender
Party of this Agreement);
     (f) the existence of any contaminant, in, under, on or otherwise affecting
any property owned, used, operated, or leased by Borrower or any Subsidiary in
the past, present, or future or any surrounding areas affected by such property,
regardless of whether the existence of the contaminant is related to the past,
present, or future operations of the Borrower and its Subsidiaries, or their
predecessors in interest or any other Person; any Environmental Liabilities and
Costs related to any property owned, used, operated, or leased by Borrower or
any Subsidiary in the past, present, or future; any Environmental Liabilities
and Costs related to the past, present, or future operations of the Borrower or
any Subsidiaries; any alleged violations of any Environmental Law related to any
property owned, used, operated, or leased by Borrower or any Subsidiary in the
past, present, or future; any alleged violations of any Environmental Law
related to the past, present, or future operations of the Borrower or any
Subsidiaries; the performance of any remedial action that is related to any
property owned, used, operated, or leased by Borrower or any Subsidiaries in the
past, present, or future; the performance of any remedial action that is related
to the past, present, or future operations of the Borrower or any Subsidiaries;
and the imposition of any Lien on any property affected by this Agreement or any
of the other Loan Documents arising from any Environmental Liabilities or Costs;
     (g) the breach in any material respect by any Loan Party of any
representation or warranty set forth in this Agreement or any Loan Document;
     (h) the failure of any Loan Party to comply in any material respect with
any term, condition, or covenant set forth in this Agreement or any Loan
Document; or

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     (i) any claim, litigation, investigation or proceeding relating to any of
the foregoing, whether or not the Agent or any Lender (or any of their
respective officers, directors, partners, employees or agents) is a party
thereto;
except for any such Indemnified Liabilities arising for the account of a
particular Lender Party by reason of the relevant Lender Party’s (or its
agent’s, employee’s, representative’s or Affiliate’s) gross negligence or
willful misconduct as determined by a final and nonappealable decision of a
court of competent jurisdiction. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The foregoing
indemnity shall become effective immediately upon the execution and delivery
hereof and shall remain operative and in full force and effect notwithstanding
the consummation of the transactions contemplated hereunder, the repayment of
any of the Loans made hereunder, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of any Lender or the Agent.
     SECTION 9.5 Termination; Survival. All covenants, agreements,
representations and warranties contained herein and in the certificates and
instruments delivered in connection with or pursuant to this Agreement shall
continue in full force and effect as long as the principal of or any accrued
interest on the Notes or any fee or any other amounts payable under this
Agreement is outstanding and unpaid and so long as the Commitments have not
expired or terminated. The obligations of the Borrower under Sections 2.5, 3.5,
9.3 and 9.4 in each case survive any termination of this Agreement and the
payment in full of principal, interest and other amounts payable hereunder and
under the Notes and the other Loan Documents. The representations and warranties
made by the Borrower in this Agreement, the Notes and in each other Loan
Document shall survive the execution and delivery of this Agreement, the Notes
and each such other Loan Document.
     SECTION 9.6 Severability. Any provision of this Agreement, the Notes or any
other Loan Document 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 of this
Agreement, the Notes or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
     SECTION 9.7 Headings. The various headings of this Agreement, the Notes and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement, the Notes or such other
Loan Document or any provisions hereof or thereof.
     SECTION 9.8 Counterparts, Effectiveness, Etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower, the Agent and each Lender shall have
been received by the Agent and notice thereof shall have been given by the Agent
to the Borrower and each Lender.

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     SECTION 9.9 Governing Law; Entire Agreement.
     (a) THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
     (b) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND
EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
THE BORROWER AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO
ANY SUCH ACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER.
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING.
     (c) The Borrower hereby irrevocably designates, appoints and empowers
National Corporate Research, Ltd. (“NCR”), whose present address is 10 East 40th
Street, 10th Floor, New York NY 10016, as its authorized agent to receive, for
and on its behalf and its property, service of process in the State of New York
when and as such legal actions or proceedings may be brought in the courts of
the State of New York or of the United States of America, and such service of
process shall be deemed complete upon the date of delivery thereof to such agent
whether or not such agent gives notice thereof to the Borrower, or upon the
earliest of any other date permitted by applicable law. The Borrower shall
furnish the consent of NCR so to act to the Agent on or prior to the Closing
Date. It is understood that a copy of said process served on such agent will as
soon as practicable be forwarded to the Borrower, at its address set forth
below, but its failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of the Borrower. The Borrower
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of the copies thereof by
certified mail, return receipt requested, postage prepaid, to it at its address
set forth herein, such service to become effective upon the earlier of (i) the
date ten (10) calendar days after such mailing or (ii) any earlier date
permitted by applicable law. The Borrower agrees that it will at all times
continuously maintain an agent to receive service of process in the State of New
York on behalf of itself and its properties and in the event that, for any
reason, the agent named above or its successor shall no longer serve as its
agent to receive service of process in the State of New York on its behalf, it
shall promptly appoint a successor so to serve and shall advise the Agent and
the Lenders thereof (and shall furnish to the Agent the consent of any successor
agent so to act). For the avoidance of doubt, the foregoing appointment of NCR
as the Borrower’s agent to receive service of process in the State of New York
includes, without limitation, service of process for all legal actions or
proceedings relating to this Agreement and to each of the Loan Documents to
which the Borrower is a party. Nothing in this Section 9.9

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shall affect the right of the Agent or any Lender to bring proceedings against
the Borrower in the courts of any other jurisdiction or to serve process in any
other manner permitted by applicable law.
     SECTION 9.10 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of all Lenders; and the rights of sale, assignment and transfer of the Lenders
are subject to Section 9.11.
     SECTION 9.11 Sale and Transfers, Participations, Etc.
     (a) Any Lender may at any time assign, syndicate or sell to one or more
Participants (other than a natural person, a Defaulting Lender, the Sponsor or
any Affiliate or Subsidiary of the Sponsor, the Borrower, any other Loan Party,
or any Affiliate or Subsidiary of the Borrower or any other Loan Party)
participating interests in any Loan owing to such Lender, any Note held by such
Lender, the Commitment of such Lender, any interest of any Lender in any Letter
of Credit Obligations or any other interest of Lender under this Agreement and
any Loan Document. In the event of any such sale by a Lender of participating
interests to a Participant, such Lender’s obligations under this Agreement shall
remain unchanged and such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees that if amounts outstanding under
this Agreement and the Notes are due or unpaid, or shall have been declared or
shall have become due and payable upon the occurrence and continuance of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note, provided
that such right of setoff shall be subject to the approval of the Required
Lenders and to the obligations of such Participant to share with the Lenders,
and the Lenders agree to share with such Participant, as provided in Section 3.7
as if the Participant were a Lender hereunder. The Borrower also agrees that any
Participant shall be entitled to the benefits of (i) Section 9.4 and (ii)
Sections 2.5 and 3.5, with respect to its participation in the Commitments and
the Loans outstanding from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to the Sections referred to in
clause (ii) than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred and each Participant shall be
subject to the obligations of such Lender set forth in such Sections. No Lender
shall grant any participation under which the Participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Loan Document
except to the extent that such amendment or waiver would (i) extend the due date
for, or reduce the amount of, any payment or prepayment of principal of or
interest on the Loans (except in connection with a waiver of interest at the
Post-Default Rate or the increased amount of fees payable with respect to the
Letters of Credit following an Event of Default (it being understood that a
waiver of any Default or Event of Default shall not constitute a change in the
terms of such participation, and that an increase in the Loans shall be
permitted without the consent of any

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Participant if such Participant’s participation is not increased as a result
thereof), (ii) release a substantial part of the Collateral or (iii) consent to
the assignment or transfer by the Borrower of any of its rights or obligations
under this Agreement.
     (b) With the consent of the Agent (and, except as provided in clause
(f) below, prior to the occurrence of an Event of Default, with the consent of
the Borrower which shall not be unreasonably withheld or delayed), any Lender
may at any time sell to any Purchasing Lender all or any part in a minimum
amount of $1,000,000, of its rights and obligations under this Agreement and the
Notes pursuant to a Transfer Supplement in the form of Exhibit H attached hereto
(“Transfer Supplement”), executed by such Purchasing Lender, such transferor
Lender and the Agent. Upon (i) such execution of such Transfer Supplement, and
(ii) delivery of a fully executed copy thereof to the Borrower, such Purchasing
Lender shall for all purposes be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender under this Agreement, to the same
extent as if it were an original party hereto with a Working Capital Facility
Percentage and a Term Loan Percentage as set forth in such Transfer Supplement,
and no further consent or action by the Borrower, the Lenders or the Agent shall
be required. Such Transfer Supplement shall be deemed to amend this Agreement to
the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Working Capital Facility
Percentages and Term Loan Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Notes. Upon the consummation of
any transfer to a Purchasing Lender pursuant to this paragraph (b), the
transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that, if required, replacement Notes are issued to such
transferor Lender and new Notes to the Purchasing Lender in the amount equal to
their respective Commitments and outstanding Loans, as appropriately adjusted
pursuant to such Transfer Supplement.
     (c) The Agent shall maintain at its address referred to herein a copy of
each Transfer Supplement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loans recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
     (d) Upon its receipt of a Transfer Supplement executed by a transferor
Lender, the Agent and a Purchasing Lender together with payment by such
Purchasing Lender to the Agent, for the account of the Agent and not for the
account of the Lenders, of a registration and processing fee of $3,500, and the
Notes subject to such Transfer Supplement, the Agent shall (i) accept such
Transfer Supplement, (ii) record the information therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower.
     (e) If, pursuant to this Section 9.11, any interest in this Agreement or
any Note is transferred to any Participant or Purchasing Lender which is
organized under the laws of any jurisdiction other than the United States or any
State thereof, the Lender shall cause such Participant or Purchasing Lender,
concurrently with the effectiveness of such transfer, (i) to

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represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Borrower) that under applicable law and treaties no taxes will
be required to be withheld by the Agent, the Borrower or the transferor Lender
with respect to any payments to be made to such Participant or Purchasing Lender
in respect of the Loans, (ii) to furnish to the transferor Lender, the Agent and
the Borrower two (2) properly executed original Internal Revenue Service Forms
4224 or 1001 (or any successor forms) and properly executed Internal Revenue
Service Forms W-8 and W-9, as the case may be (wherein such Participant or
Purchasing Lender claims entitlement to complete exemption from the United
States federal withholding tax on all interest payments hereunder and all fees
payable under Section 2.3), and (iii) to agree (for the benefit of the
transferor Lender, the Agent and the Borrower) to provide the transferor Lender,
the Agent and the Borrower new Internal Revenue Service Forms 4224 or 1001 upon
the expiration or obsolescence of any previously delivered form or after the
occurrence of any event requiring a change in the most recent forms delivered by
it to the transferor Lender, the Agent and the Borrower, and comparable
statements in accordance with applicable United States laws and regulations and
amendments duly executed and completed by such Participant or Purchasing Lender,
and to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
     (f) Notwithstanding anything to the contrary set forth in this
Section 9.11, (i) any Lender may sell to any of its Affiliates, to any Related
Fund or to any other Lender or Affiliate of any other Lender all or any part of
its rights and obligations under this Agreement and the Notes, (ii) any Lender
may create a security interest in all or any portion of its rights under this
Agreement (including, without limitation, the Loans owing to it and the Notes
held by it) in favor of the Federal Reserve Bank in accordance with Regulation A
of the F.R.S. Board or in favor of any other central bank having jurisdiction,
and (iii) upon the occurrence and during the continuance of an Event of Default,
any Lender may sell to any Purchasing Lender all or any part of its rights and
obligations under this Agreement and the Notes notwithstanding that the Borrower
does not consent to such sale, provided such Lender has obtained the consent of
the Agent (which consent shall not be unreasonably withheld or delayed) and
otherwise meets the requirements of this Section 9.11. In addition, any Lender
may grant a security interest in favor of the Federal Reserve Bank or any other
central bank having jurisdiction in any Loan Document; provided, however, that
no such grant shall release the Lender from any of its obligations under the
Loan Documents or substitute the beneficiary of such grant as a party to any
Loan Document, and no such grant shall require any payments to be made by any
Loan Party or grant to any Person any more extensive rights than those required
to be made or granted to such Lender under the Loan Documents.
     SECTION 9.12 Other Transactions. Nothing contained herein shall preclude
the Agent or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
     SECTION 9.13 Confidentiality. The Lenders and the Agent shall hold all
non-public, proprietary or confidential information (which has been identified
as such by the Borrower) obtained pursuant to the requirements of this Agreement
in accordance with their customary procedures for handling confidential
information of this nature and in accordance with safe and

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sound lending practices; however, the Lenders and the Agent may make disclosure
of any such information to its examiners, Affiliates, outside auditors, counsel,
consultants, operators and other professional advisors in connection with this
Agreement or as required by any proposed syndicate member, transferee or
participant in connection with the contemplated transfer of any Note,
Obligations or Commitments or the contemplating granting of a participation
therein, as required or requested by any governmental, banking, taxation or
other regulatory authority or similar body, the rules of any relevant stock
exchange or pursuant to any applicable law or regulation, or in connection with
the enforcement hereof or of any other Loan Document or pursuant to legal
process, or to any beneficiary of the grant described in Section 9.11(f);
provided, however, that any such proposed syndicate member or proposed
transferee or participant shall have agreed in writing for the Borrower’s
benefit to be bound by the terms of this Section 9.13. In no event shall any
Lender or the Agent be obligated or required to return any materials furnished
to it by the Borrower or any of its Subsidiaries.
     SECTION 9.14 Change in Accounting Principles. If any changes in accounting
principles from those used in the preparation of the financial statements
referred to in clause (a) of Section 5.4 hereafter occur as a result of the
promulgation of rules, regulations, pronouncements or opinions by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) result in
a change in the method of calculation of financial covenants, standards or terms
found in this Agreement, the parties hereto agree to enter into negotiations
(and such parties shall act in good faith in such negotiations) in order to
amend such financial covenants, standards or terms so as to equitably reflect
such changes with the desired result that the evaluations of the Borrower’s
financial condition shall be the same after such changes as if such changes had
not been made; provided, however, that, until the parties hereto have reached a
definitive agreement on such amendments the Borrower shall not change its Fiscal
Year and the Borrower’s financial condition and operations shall continue to be
evaluated on the same principles as those used in the preparation of the
financial statements referred to in clause (a) of Section 5.4.
     SECTION 9.15 Immunity. To the extent that any Loan Party has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each of the Loan Parties hereby irrevocably and unconditionally
waives such immunity in respect of its obligations under the Loan Documents and,
without limiting the generality of the foregoing, agrees that the waivers set
forth in this Section 9.15 shall have the fullest scope permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States and are intended
to be irrevocable for purposes of such Act.
     SECTION 9.16 Waiver of Jury Trial, Etc. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE AGENT, SUCH LENDERS OR THE
BORROWER.

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THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERS ENTERING
INTO THIS AGREEMENT.
     SECTION 9.17 Limitation of Liability. Neither the Agent, the Lenders nor
any Affiliate thereof shall have any liability with respect to, and THE BORROWER
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON, ANY CLAIM FOR ANY SPECIAL,
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY THE BORROWER
IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH.
     SECTION 9.18 Usury Savings Clause. Notwithstanding anything to the contrary
in this Agreement or any other Loan Document, if at any time any rate of
interest accruing on any Obligation, when aggregated with all amounts payable by
any Loan Party under any of the Loan Documents that are deemed or construed to
be interest accrued or accruing on such Obligation under applicable law, exceeds
the highest rate of interest permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable to such
Lender with respect to such Obligation (each a “Maximum Lawful Rate”), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, such
rate of interest shall be reduced to the Maximum Lawful Rate; provided that if
at any time thereafter such rate of interest accruing on Obligations held by
such Lender is less than the Maximum Lawful Rate, the Borrower shall continue to
pay interest to such Lender at the Maximum Lawful Rate until such time as the
total interest received by such Lender in respect of the Obligations held by it
is equal to the total interest which such Lender would have received had
interest on all Obligations held by such Lender (but for the operation of this
Section 9.18) accrued at the rate otherwise applicable under this Agreement and
the other Loan Documents. Thereafter, interest payable to such Lender in respect
of the Obligations held by it shall accrue at the applicable rate set forth in
this Agreement or other Loan Documents unless and until such rate again exceeds
the Maximum Lawful Rate, in which event this Section 9.18 shall again apply. In
no event, shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount which such Lender could lawfully have received had
interest been calculated for the full term of this Agreement at the Maximum
Lawful Rate. In the event that the Maximum Lawful Rate is calculated pursuant to
this Section 9.18, (a) if required by applicable law, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made, and (b) if
permitted by applicable law, the Borrower and such Lender shall (i) characterize
any non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Loans so that interest
for the entire term of the Loans shall not exceed the Maximum Lawful Rate. In
the event that a court of competent jurisdiction, notwithstanding the provisions
of this Section 9.18 shall make a final determination that such Lender has
received interest in excess of the Maximum Lawful Rate, such Lender shall, to
the extent permitted by applicable law, promptly apply such excess, first to any
interest due and outstanding under this Agreement and the other Loan Documents,
second to any principal due and payable under this Agreement and the Notes,
third to the remaining principal amount of

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the Notes and fourth to other unpaid Obligations held by such Lender, and
thereafter shall refund any excess to the Borrower or as a court of competent
jurisdiction may otherwise order.
     SECTION 9.19 Notice from Agent. Agent hereby notifies the Loan Parties that
pursuant to the requirements of the USA Patriot Act and Agent’s policies and
procedures in regard thereto, Agent is required to obtain, verify and record
certain information and documentation that identifies the Loan Parties, which
information includes the name and address of each Loan Party and such other
information that will allow Lender to identify each Loan Party properly in
accordance with the USA Patriot Act.
     Sponsor Non-Recourse. To induce the Sponsor to deliver the Agreement to
Contribute Capital, each of the Agent and the Lenders, for itself and its
successors and assigns, acknowledges and agrees that the Sponsor is not a party
to this Agreement and is a legal entity separate from the Loan Parties, and that
the Sponsor has not, and does not, assume any obligations of the Loan Parties
and has no obligation to contribute capital, or otherwise provide financial
support, to the Loan Parties, except as expressly set forth in the Agreement to
Contribute Capital or as otherwise agreed in writing from time to time.
Accordingly, except as set forth in the Agreement to Contribute Capital or as
otherwise agreed in writing from time to time, each of the Agent and the Lenders
is electing to enter into this Agreement without reliance upon the
creditworthiness of the Sponsor for repayment of the Loans and other Obligations
and without reliance upon any undertakings by the Sponsor in respect of any of
the Project or the Project Improvements. The Sponsor is a third party
beneficiary of this Section 9.20 and is entitled to rely on and enforce this
Section 9.20 against the parties to this Agreement. For the purpose of this
Section 9.20, “Sponsor” means and includes the Sponsor and each of its
Affiliates (other than the Parent Guarantor, the Borrower or their respective
Subsidiaries, if any). Notwithstanding anything to the contrary contained in
this Section 9.20, the Sponsor shall be fully liable to the Agent and the
Lenders for any deficiency, loss or damage suffered by any Secured Party under
the Loan Documents because of (a) obligations arising under the Agreement to
Contribute Capital or as otherwise agreed in writing from time to time,
(b) liability arising from the commission by the Sponsor or any of its
Affiliates (other than the Parent Guarantor, the Borrower or their respective
Subsidiaries, if any) of a criminal act, (c) liability arising from acts
involving deliberate malfeasance, misappropriation of funds, fraud and
fraudulent misrepresentation made by the Sponsor or any Affiliate of the Sponsor
(other than the Parent Guarantor, the Borrower or their respective Subsidiaries,
if any), and (d) payment by the Sponsor to the Agent or any Lender which is held
to be a preference or fraudulent conveyance under applicable bankruptcy laws.
The Sponsor also shall be fully liable to the Agent and the Lenders for any and
all attorneys’ fees and expenses and court costs incurred by the Agent or any
Lender in connection with any of the matters described in clauses (a) through
(d) of the immediately proceeding sentence. For the avoidance of doubt, the
foregoing shall not be construed to limit in any manner the Sponsor’s
obligations under the Agreement to Contribute Capital or any other agreement
entered into by the Sponsor in writing.
[signature pages follow]

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

            PICO NORTHSTAR HALLOCK, LLC,
as the Borrower
      By:           John R. Hart        Chief Executive Officer        PICO
NORTHSTAR, LLC,
as the Parent Guarantor
      By:           John R. Hart        Chief Executive Officer     

[Signature Page to Credit Agreement]

 

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            ING CAPITAL LLC,

as the Agent and a Lender
      By:           Keith Alexander        Managing Director     

[Signature Page to Credit Agreement]

 

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            _____________________________,     as a Lender
      By:           Name:           Title:        

[Signature Page to Credit Agreement]