**Exhibit 10.1**

 

Execution Copy

 

**CREDIT AGREEMENT**

 

 

**Among**

 

**GOLDEN OVAL EGGS, LLC,**

**as a Borrower and as the Borrowers’ Agent,**

 

**MIDWEST INVESTORS OF IOWA, COOPERATIVE**

**as a Borrower,**

 

**COBANK, ACB,**

**as a Lender and as Administrative Agent,**

 

**METROPOLITAN LIFE INSURANCE COMPANY,**

**as a Lender,**

 

**and**

 

**THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO**

 

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**TABLE OF CONTENTS**

 
| ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |                                                             |
|--------------------------------------------|------------------------------------------------------------------|
|                                       |                                                             |   |
| Section 1.1                                | Defined Terms                                                    |   |
| Section 1.2                                | Accounting Terms and Calculations                                |   |
| Section 1.3                                | Computation of Time Periods                                      |   |
| Section 1.4                                | Other Definitional Terms                                         |   |
|                                       |                                                             |   |
| ARTICLE  II TERMS OF THE CREDIT FACILITIES |                                                             |
|                                       |                                                             |   |
| Section 2.1                                | Lending Commitments                                              |   |
| Section 2.2                                | Procedure for Loans                                              |   |
| Section  2.3                               | Notes                                                            |   |
| Section 2.4                                | Conversions and Continuations                                    |   |
| Section 2.5                                | Interest  Rates, Interest Payments and Default Interest          |   |
| Section 2.6                                | Repayment                                                        |   |
| Section 2.7                                | Prepayments                                                      |   |
| Section 2.8                                | Letters of Credit                                                |   |
| Section 2.9                                | Procedures for Letters of Credit                                 |   |
| Section 2.10                               | Terms of Letters of Credit                                       |   |
| Section 2.11                               | Agreement  to Repay Letter of Credit Drawings                    |   |
| Section 2.12                               | Obligations Absolute                                             |   |
| Section 2.13                               | Fees                                                             |   |
| Section 2.14                               | Computation                                                      |   |
| Section 2.15                               | Payments                                                         |   |
| Section 2.16                               | Use of Loan Proceeds                                             |   |
| Section 2.17                               | Interest Rate Not Ascertainable, Etc                             |   |
| Section 2.18                               | Increased Cost                                                   |   |
| Section 2.19                               | Illegality                                                       |   |
| Section 2.20                               | Capital Adequacy                                                 |   |
| Section 2.21                               | Funding  Losses; Quoted Rate and LIBOR Rate Advances             |   |
| Section 2.22                               | Discretion of Lenders as to Manner of  Funding                   |   |
| Section 2.23                               | Prepayment of Term Loans                                         |   |
| Section 2.24                               | Replacement of Certain Lenders                                   |   |
| Section 2.25                               | Taxes                                                            |   |
| Section 2.26                               | Capitalization                                                   |   |
| Section 2.27                               | Security                                                         |   |
|                                       |                                                             |   |
| ARTICLE  III CONDITIONS PRECEDENT          |                                                             |
|                                       |                                                             |   |
| Section 3.1                                | Conditions of Initial Transaction                                |   |
| Section 3.2                                | Conditions  Precedent to the Tranche A2 and Tranch B2 Term Loans |   |

 

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| Section 3.3                               | Conditions  Precedent to All Loans and Letters of Credit |   |
|-------------------------------------------|----------------------------------------------------------|--------|
|                                      |                                                     |   |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES |                                                     |
|                                      |                                                     |   |
| Section 4.1                               | Organization,  Standing, Etc.                            |   |
| Section 4.2                               | Authorization  and Validity                              |   |
| Section 4.3                               | No  Conflict; No Default                                 |   |
| Section 4.4                               | Government  Consent                                      |   |
| Section 4.5                               | Financial  Statements and Condition                      |   |
| Section 4.6                               | Litigation                                               |   |
| Section 4.7                               | Environmental,  Health and Safety Laws                   |   |
| Section 4.8                               | ERISA                                                    |   |
| Section 4.9                               | Federal  Reserve Regulations                             |   |
| Section 4.10                              | Title  to Property; Leases; Liens; Subordination         |   |
| Section 4.11                              | Taxes                                                    |   |
| Section 4.12                              | Trademarks,  Patents                                     |   |
| Section 4.13                              | Burdensome  Restrictions                                 |   |
| Section 4.14                              | Force  Majeure                                           |   |
| Section 4.15                              | Investment  Company Act                                  |   |
| Section 4.16                              | Public  Utility Holding Company Act                      |   |
| Section 4.17                              | Full  Disclosure                                         |   |
| Section 4.18                              | Subsidiaries                                             |   |
| Section 4.19                              | Labor  Matters                                           |   |
| Section 4.20                              | Security  Documents                                      |   |
| Section 4.21                              | Solvency                                                 |   |
| Section 4.22                              | Conversion                                               |   |
| Section 4.23                              | Eligibility                                              |   |
| Section 4.24                              | Material  Contract                                       |   |
| Section 4.25                              | Applicable  Permits                                      |   |
|                                      |                                                     |   |
| ARTICLE V AFFIRMATIVE COVENANTS           |                                                     |
|                                      |                                                     |   |
| Section 5.1                               | Financial  Statements and Reports                        |   |
| Section 5.2                               | Existence                                                |   |
| Section 5.3                               | Insurance                                                |   |
| Section 5.4                               | Payment  of Taxes and Claims                             |   |
| Section 5.5                               | Inspection                                               |   |
| Section 5.6                               | Maintenance  of Properties                               |   |
| Section 5.7                               | Books  and Records                                       |   |
| Section 5.8                               | Compliance                                               |   |
| Section 5.9                               | ERISA                                                    |   |
| Section 5.10                              | Environmental  Matters; Reporting                        |   |
| Section 5.11                              | Further  Assurances                                      |   |
| Section 5.12                              | Compliance  with Terms of Material Contracts             |   |
| Section 5.13                              | Construction                                             |   |

 

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| ARTICLE VI NEGATIVE COVENANTS              |                               |
|--------------------------------------------|------------------------------------|
|                                       |                               |   |
| Section 6.1                                | Merger                             |   |
| Section 6.2                                | Disposition  of Assets             |   |
| Section 6.3                                | Plans                              |   |
| Section 6.4                                | Change  in Nature of Business      |   |
| Section 6.5                                | Subsidiaries                       |   |
| Section 6.6                                | Negative  Pledges                  |   |
| Section 6.7                                | Restricted  Payments               |   |
| Section 6.8                                | Transactions  with Affiliates      |   |
| Section 6.9                                | Accounting  Changes                |   |
| Section 6.10                               | Subordinated  Debt                 |   |
| Section 6.11                               | Investments                        |   |
| Section 6.12                               | Indebtedness                       |   |
| Section 6.13                               | Liens                              |   |
| Section 6.14                               | Contingent  Liabilities            |   |
| Section 6.15                               | Tangible  Net Worth                |   |
| Section 6.16                               | Current  Ratio                     |   |
| Section 6.17                               | Working  Capital                   |   |
| Section 6.18                               | Leverage  Ratio                    |   |
| Section 6.19                               | Fixed  Charge Coverage Ratio       |   |
| Section 6.20                               | Operating  Leases                  |   |
| Section 6.21                               | Risk  Management                   |   |
| Section 6.22                               | Material  Contracts                |   |
| Section 6.23                               | Eligibility                        |   |
|                                       |                               |   |
| ARTICLE VII EVENTS OF DEFAULT AND REMEDIES |                               |
|                                       |                               |   |
| Section 7.1                                | Events  of Default                 |   |
| Section 7.2                                | Remedies                           |   |
| Section 7.3                                | Offset                             |   |
|                                       |                               |   |
| ARTICLE VIII THE ADMINISTRATIVE AGENT      |                               |
|                                       |                               |   |
| Section 8.1                                | Appointment  and Authorization     |   |
| Section 8.2                                | Note  Holders                      |   |
| Section 8.3                                | Consultation  With Counsel         |   |
| Section 8.4                                | Loan  Documents                    |   |
| Section 8.5                                | CoBank  and Affiliates             |   |
| Section 8.6                                | Action  by Administrative Agent    |   |
| Section 8.7                                | Credit  Analysis                   |   |
| Section 8.8                                | Notices  of Event of Default, Etc. |   |
| Section 8.9                                | Indemnification                    |   |
| Section 8.10                               | Payments  and Collections          |   |
| Section 8.11                               | Sharing  of Payments               |   |

 

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| Section 8.12             | Advice  to Lenders                                          |   |
|--------------------------|-------------------------------------------------------------|--------|
| Section 8.13             | Defaulting  Lender                                          |   |
| Section 8.14             | Resignation                                                 |   |
|                     |                                                        |   |
| ARTICLE IX MISCELLANEOUS |                                                        |
|                     |                                                        |   |
| Section 9.1              | Modifications                                               |   |
| Section 9.2              | Expenses                                                    |   |
| Section 9.3              | Waivers,  etc.                                              |   |
| Section 9.4              | Notices                                                     |   |
| Section 9.5              | Taxes                                                       |   |
| Section 9.6              | Successors  and Assigns; Participations; Purchasing Lenders |   |
| Section 9.7              | Confidentiality  of Information                             |   |
| Section 9.8              | Governing  Law and Construction                             |   |
| Section 9.9              | Consent  to Jurisdiction                                    |   |
| Section 9.10             | Waiver  of Jury Trial                                       |   |
| Section 9.11             | Survival  of Agreement                                      |   |
| Section 9.12             | Indemnification                                             |   |
| Section 9.13             | Captions                                                    |   |
| Section 9.14             | Entire  Agreement                                           |   |
| Section 9.15             | Counterparts                                                |   |
| Section 9.16             | Borrower  Acknowledgements                                  |   |
| Section 9.17             | Appointment  of and Acceptance by Borrowers’ Agent     |   |
| Section 9.18             | Relationship  Among Borrowers                               |   |
| Section 9.19             | Interest  Rate Limitation                                   |   |
|                     |                                                        |   |
|                     |                                                        |   |
| Annexes                  |                                                        |   |
| Annex I                  | Pricing Grid                                                |   |
| Annex II                 | Risk Management Grid                                        |   |
|                     |                                                        |   |
| Schedules                |                                                        |   |
| Schedule  3.1(a)         | Landlord/Bailee  Locations                                  |   |
| Schedule  3.1(k)         | Material  Contracts                                         |   |
| Schedule 3.1(l)          | Applicable  Permits                                         |   |
| Schedule 4.6             | Litigation                                                  |   |
| Schedule 4.7             | Environmental  Matters                                      |   |
| Schedule  6.11           | Existing  Investments                                       |   |
| Schedule  6.12           | Existing  Indebtedness                                      |   |
| Schedule  6.13           | Existing  Liens                                             |   |
| Schedule  6.14           | Existing  Contingent Obligations                            |   |

 

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| Exhibits    | ** ** |                                |
|-------------|------------|-------------------------------------|
| Exhibit A-1 |       | Form of  Revolving Note             |
| Exhibit A-2 |       | Form of Term  Notes                 |
| Exhibit B   |       | Form of  Security Agreement         |
| Exhibit C   |       | Form of  Mortgage                   |
| Exhibit D   |       | Thompson  Complex Site Description  |
| Exhibit E   |       | Borrowing Base  Formula             |
| Exhibit F   |       | Form of  Borrowing Base Certificate |
| Exhibit G   |       | Form of  Compliance Certificate     |
| Exhibit H   |       | Form of  Assignment Agreement       |
| Exhibit I   |       | Form of  Environmental Indemnity    |
| Exhibit J   |       | Form of  Contract Assignment        |

 

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Execution Copy

 

**CREDIT AGREEMENT**

 

THIS CREDITAGREEMENT, dated as of September 13, 2004, is by and between GOLDEN OVAL EGGS,LLC, a limited liability company organized under the laws of the State ofDelaware, and MIDWEST INVESTORS OF IOWA, COOPERATIVE, a cooperative organizedunder the laws of the State of Iowa (individually, a “Borrower” and,collectively, the “Borrowers”), the banks and other financialinstitutions or entities which are signatories hereto (individually, a “Lender”and, collectively, the “Lenders”), COBANK, ACB, a federally chartedinstrumentality under the Farm Credit Act of 1971, as amended, one of theLenders, as agent for the Lenders (in such capacity, the “AdministrativeAgent”), and METROPOLITAN LIFE INSURANCE COMPANY, as a Lender.

 

**ARTICLE I**

**DEFINITIONS AND ACCOUNTING TERMS**

 

Section 1.1 Defined Terms.  As used in this Agreement the following termsshall have the following respective meanings (and such meanings shall beequally applicable to both the singular and plural form of the terms defined,as the context may require):

 

“AdjustedLIBOR Rate”:  With respect to eachday, the rate (rounded upward, if necessary, to the next one sixteenth of onepercent) determined by dividing the LIBOR Rate in effect on such day by 1.00minus the LIBOR Reserve Percentage.

 

“AdjustedDividend Accrual”:  For any period ofdetermination, fifty percent (50%) of the consolidated net income of theBorrowers’ Agent, as adjusted from time to time to reflect actual dividends orcash patronages.

 

“AdministrativeAgent”:  As defined in the openingparagraph hereof.

 

“Advance”:  Any portion of the outstanding RevolvingLoans or Term Loans by a Lender as to which one of the available interest rateoptions and, if pertinent, an Interest Period, is applicable.  Subject to the terms and conditions hereof,an Advance may be a Tranche A Advance, a Quoted Rate Advance, a LIBOR RateAdvance or a Base Rate Advance.

 

“Affiliate”:  When used with reference to any Person, (a)each Person that, directly or indirectly, controls, is controlled by or isunder common control with, the Person referred to, (b) each Person whichbeneficially owns or holds, directly or indirectly, five percent or more of anyclass of voting Equity Interests of the Person referred to, (c) each Person,five percent or more of the voting Equity Interests (or if such Person is not acorporation, five percent or more of the equity interest) of which isbeneficially owned or held, directly or indirectly, by the Person referred to,and (d) each of such Person’s officers, directors, joint venturers andpartners.  The term control (includingthe terms “controlled by” and “under common control with”) means thepossession, directly, of the power to direct or cause the direction of themanagement and policies of the Person in question.

 

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“AggregateRevolving Commitment Amounts”:  As ofany date, the sum of the Revolving Commitment Amounts of all the RevolvingLenders.

 

“ApplicableCommitment Fee Percentage”:  TheApplicable Margin at which the Revolving Commitment Fees accrue.

 

“ApplicableLending Office”:  For each Lender andfor each type of Advance, the office of such Lender identified as such Lender’sApplicable Lending Office on the signature pages hereof or such other domesticor foreign office of such Lender (or of an Affiliate of such Lender) as suchLender may specify from time to time, by notice given pursuant to Section 9.4,to the Administrative Agent and the Borrowers’ Agent as the office by which itsAdvances of such type are to be made and maintained.

 

“ApplicableMargin”: Subject to the last sentence of this definition, with respect tocomputation of the applicable interest rate or the Applicable Commitment FeePercentage on Advances or Commitments under the Revolving Loans or Tranche BTerm Loans or the Letter of Credit Fee, as the case may be, the margin payableby the Borrowers with respect thereto, as set forth and described in Annex I,established as of the first day of each Fiscal Quarter after the ComplianceCertificate required by Section 5.1 is delivered as of the last day of the nextpreceding Fiscal Quarter (i.e. adjustments shall be made one Fiscal Quarter inarrears); provided, however, that any adjustment in theApplicable Margin shall not become effective until the Administrative Agentshall have received the Compliance Certificate and related financial statementsrelating to the last day of such next preceding Fiscal Quarter pursuant to Sections5.1(c) and (d) hereof.  If aCompliance Certificate and related financial statements of the Borrowers’ Agentand a related certification of the Borrowers’ Agent pursuant to Sections5.1(c) and (d) necessary to establish the Applicable Marginhereunder are not received by the Administrative Agent on or prior to the daterequired pursuant to Sections 5.1(c) and (d) hereof, theApplicable Margin shall be determined at the highest level described in AnnexI and shall remain in effect until one Business Day after such time as therequired financial statements are received.

 

“ApplicablePermits”: Any permit, license or similar authorization of or from agovernmental agency or political subdivision that is necessary to be obtainedby or on behalf of a Borrower at the time the determination is made toconstruct, operate, maintain, own or lease the Thompson Complex, including withrespect to the Phase II Thompson Construction and the Phase III ThompsonConstruction.

 

“Assignees”:As defined in Section 9.6(c).

 

“AssignmentAgreement”: As defined in Section 9.6(c).

 

“Base Rate”:  The rate of interest per annum from time totime established by CoBank as its “CoBank Base Rate.” CoBank may lend to itscustomers at rates that are at, above or below the Base Rate.  For purposes of determining any interest ratehereunder or under any other Loan

 

2

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Document whichis based on the Base Rate, such interest rate shall change as and when the BaseRate shall change.

 

“Base RateAdvance”:  An Advance with respect towhich the interest rate is determined by reference to the Base Rate.

 

“BearStearns Interest Rate Swap Agreement”: That certain Fixed Income Derivative Amended Confirmation, ReferenceNE87521, dated May 17, 2000 between Bear Stearns and Borrowers’ Agent.

 

“Board”:  The Board of Governors of the Federal ReserveSystem or any successor thereto.

 

“Borrower”:  As defined in the opening paragraph hereof.

 

“Borrowers’Agent”:  Golden Oval Eggs, LLC, alimited liability company organized under the laws of the State of Delaware.

 

“BorrowingBase”:  As determined in accordancewith the formula set forth in Exhibit E hereto.

 

“BorrowingBase Certificate”:  A certificate inthe form of Exhibit F hereto.

 

“BorrowingBase Deficiency”:  At the time of anydetermination, the amount, if any, by which Total Revolving Outstandings exceedthe Borrowing Base.

 

“BusinessDay”:  Any day (other than aSaturday, Sunday or legal holiday in the State of Colorado or the State ofIowa) on which banks are permitted to be open in Denver, Colorado or DesMoines, Iowa.

 

“Capital Expenditures”:  For any period, the sum of all amounts thatwould, in accordance with GAAP, be included as additions to property, plant andequipment on a consolidated statement of cash flows for the Borrowers’ Agentduring such period, in respect of (a) the acquisition, construction,improvement, replacement or betterment of land, buildings, machinery, equipmentor of any other fixed assets or leaseholds, (b) to the extent related to andnot included in (a) above, materials, contract labor (excluding expendituresproperly chargeable to repairs or maintenance in accordance with GAAP), and (c)other capital expenditures and other uses recorded as capital expenditures orsimilar terms having substantially the same effect, but excluding (i) layerpurchases, (ii) capitalized expenses and (iii) expenditures incurred inconnection with the Phase II Thompson Construction and the Phase III ThompsonConstruction.

 

“CapitalLease”:  A lease of (or otheragreement conveying the right to use) real or personal property with respect towhich at least a portion of the rent or other amounts thereon constituteCapital Lease Obligations.

 

3

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“CapitalLease Obligations”:  As to anyPerson, the obligations of such Person to pay rent or other amounts under alease of (or other agreement conveying the right to use) real or personalproperty which obligations are required to be classified and accounted for as acapital lease on a balance sheet of such Person under GAAP (including Statementof Financial Accounting Standards No. 13 of the Financial Accounting StandardsBoard), and, for purposes of this Agreement, the amount of such obligationsshall be the capitalized amount thereof, determined in accordance with GAAP(including such Statement No. 13).

 

“Change ofControl”:  The occurrence, after theClosing Date, of any of the following circumstances: (a) any Person or two ormore Persons acting in concert (other than the current holders of the EquityInterests of the Borrowers’ Agent) acquiring beneficial ownership (within themeaning of Rule 13d-3 of the Securities and Exchange Commission under theSecurities Exchange Act of 1934), directly or indirectly, of Equity Interestsof the Borrowers’ Agent representing 50% or more of the combined voting powerof all Equity Interests of Borrowers’ Agent entitled to vote in the election ofdirectors; or (b) any Person or two or more Persons acting in concert (otherthan the current holders of the Equity Interests of the Borrowers’ Agent)acquiring by contract or otherwise, or entering into a contract or arrangementwhich upon consummation will result in its or their acquisition of, controlover Equity Interests of any Borrower representing 50% or more of the combinedvoting power of all Equity Interests of Borrowers’ Agent entitled to vote inthe election of directors.  For theavoidance of doubt, acquiring membership interests in Borrowers’ Agent pursuantto an offering does not constitute “acting in concert” for purpose of thisdefinition.

 

“Charges”:  As defined in Section 9.19.

 

“ClosingDate”:  Any Business Day between thedate of this Agreement and October 31, 2004 selected by the Borrowers for themaking of the first Loans hereunder; provided, that all the conditionsprecedent to the obligation of the Lenders to make such Loans, as set forth inArticle III, have been, or, on such Closing Date, will be, satisfied.  The Borrowers’ Agent shall give theAdministrative Agent not less than 5 Business Days prior notice of the dayselected as the Closing Date.

 

“CoBank”:  CoBank, ACB in its capacity as one of theLenders hereunder.

 

“CoBankEquities”:  As defined in Section2.27.

 

“Code”:  The Internal Revenue Code of 1986, asamended.

 

“Commitments”:  The Revolving Commitment and the Term LoanCommitments.

 

“ConstructionPlans”:  The plans, constructionbudget and construction schedule for the Phase II Thompson Construction and thePhase III Thompson Construction, as submitted to the Administrative Agent andapproved by the Lenders in accordance with Section 3.1.

 

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“ContingentObligation”:  With respect to anyPerson at the time of any determination, without duplication, any obligation,contingent or otherwise, of such Person guaranteeing or having the economiceffect of guaranteeing any Indebtedness of any other Person (the “primaryobligor”) in any manner, whether directly or otherwise: (a) to purchase or pay(or advance or supply funds for the purchase or payment of) such Indebtednessor to purchase (or to advance or supply funds for the purchase of) any director indirect security therefor, (b) to purchase property, securities, EquityInterests or services for the purpose of assuring the owner of suchIndebtedness of the payment of such Indebtedness, (c) to maintain workingcapital, equity capital or other financial statement condition of the primaryobligor so as to enable the primary obligor to pay such Indebtedness orotherwise to protect the owner thereof against loss in respect thereof, or (d)entered into for the purpose of assuring in any manner the owner of suchIndebtedness of the payment of such Indebtedness or to protect the owneragainst loss in respect thereof; provided, that the term “ContingentObligation” shall not include endorsements for collection or deposit, in eachcase in the ordinary course of business.

 

“ContractAssignment”:  The Assignment ofContracts in the form of Exhibit J executed by the Borrowers’ Agent withrespect to each Material Contract identified on Schedule 3.1(k).

 

“Conversion”:  The conversion of Midwest Investors ofMinnesota, a Minnesota cooperative, to Golden Oval Eggs, LLC, a Delawarelimited liability company.

 

“CurrentAssets”:  As of any date, theconsolidated current assets of the Borrowers’ Agent, determined in accordancewith GAAP.

 

“CurrentLiabilities”:  As of any date, theconsolidated current liabilities of the Borrowers, determined in accordancewith GAAP.

 

“Default”:  Any event which, with the giving of notice(whether such notice is required under Section 7.1, or under another provisionof this Agreement, or otherwise) or lapse of time, or both, would constitute anEvent of Default.

 

“DefaultRate”:  The sum of the interest rateper annum otherwise applicable to an Advance plus five percent (5%).

 

“DefaultingLender”: at any time, any Lender that, at such time (a) has failed to makea Revolving Loan or its Term Loan or any Advances thereunder required pursuantto the terms of this Agreement, including the funding of any participation inaccordance with the terms of this Agreement, (b) has failed to pay to theAdministrative Agent or any Lender an amount owed by such Lender pursuant tothe terms of this Agreement, or (c) has been deemed insolvent or has becomesubject to a bankruptcy, receivership or insolvency proceeding, or to areceiver, trustee or similar official.

 

“EBITDA”:  For any period of determination, theconsolidated net income of the Borrowers’ Agent before extraordinary gains orlosses, deductions for income taxes, Interest Expense, non- layer depreciationand amortization, all as determined in accordance with GAAP.

 

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“EnvironmentalIndemnity”:  The UnsecuredEnvironmental Indemnity by the Borrowers in favor of the Lenders, in the formof Exhibit I.

 

“EquityInterests”: All shares, interests, participation or other equivalents,however designated, of or in a corporation or limited liability company,whether or not voting, including but not limited to common stock, memberinterests, warrants, preferred stock, convertible debentures, and allagreements, instruments and documents convertible, in whole or in part, intoany one or more or all of the foregoing.

 

“ERISA”:  The Employee Retirement Income Security Actof 1974, as amended.

 

“ERISAAffiliate”:  Any trade or business(whether or not incorporated) that is a member of a group of which the Borroweris a member and which is treated as a single employer under Section 414 of theCode.

 

“Event ofDefault”:  Any event described inSection 7.1.

 

“FederalFunds Rate”:  For any period, afluctuating interest rate per annum equal for each day during such period tothe weighted average of the rates on overnight Federal funds transactions, withmembers of the Federal Reserve System arranged by Federal funds brokers, aspublished for such day (or, if such day is not a Business Day, for the nextpreceding Business Day) by the Federal Reserve Bank of New York, or, if suchrate is not so published for any day that is a Business Day, the average of thequotations for such day on such transactions received by the AdministrativeAgent from three Federal funds brokers of recognized standing selected by it.

 

“FinalTranche 2 Advances”:  The third andfinal Advances made by the Tranche A2 Term Lenders or Tranche B2 Term Lendersafter the First Tranche 2 Advances and Second Tranche 2 Advances have beenmade, which Advances shall be in a maximum aggregate amount equal to (i) withrespect to the Tranche A2 Term Loans, the Tranche A2 Term Loan CommitmentAmount minus the First Tranche 2 Advances made by the Tranche A2 TermLenders minus the aggregate amount of the Second Tranche 2 Advances madeby the Tranche A2 Term Lenders, and (ii) with respect to the Tranche B2 TermLoans, the Tranche B2 Term Loan Commitment Amount minus the FirstTranche 2 Advances made by the Tranche B2 Term Lenders minus theaggregate amount of the Second Tranche 2 Advances made by the Tranche B2 TermLenders.

 

“FirstTranche 2 Advance”: The initial Advance of the Tranche A2 Term Loans andthe Tranche B2 Term Loans, which Advances shall be in a maximum amount of$6,700,000 and $3,300,000, respectively.

 

“FiscalQuarter”:  Each three (3) monthperiod ending November 30, February 28 (or 29, as the case may be), May 31, andAugust 31.

 

“FixedCharge Coverage Ratio”:  For anyperiod of determination, the ratio of

 

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(a)                                  EBITDAminus Capital Expenditures not financed with Indebtedness minusEquity Interest re-purchases by the Borrowers’ Agent, minus equity retirementsby the Borrowers’ Agent, minus Adjusted Dividend Accrual,

 

to

 

(b)                                 thesum of Interest Expense and all required principal payments with respect toTotal Liabilities (including but not limited to all payments with respect toCapital Lease Obligations of the Borrowers’ Agent),

 

in each casedetermined for said period on a consolidated basis in accordance with GAAP.

 

“FundedDebt”:  At the time of determination,the amount on a consolidated basis of all Indebtedness of the Borrowers’ Agentfor borrowed money or the deferred purchase price of property, or that bearsinterest on such date, plus the face amount of any letter of credit for whichthe Borrowers’ Agent is the account party.

 

“GAAP”:  Generally accepted accounting principles setforth in the opinions and pronouncements of the Accounting Principles Board ofthe American Institute of Certified Public Accountants and statements andpronouncements of the Financial Accounting Standards Board or in such otherstatements by such other entity as may be approved by a significant segment ofthe accounting profession, which are applicable to the circumstances as of anydate of determination.

 

“ImmediatelyAvailable Funds”:  Funds with goodvalue on the day and in the city in which payment is received.

 

“Indebtedness”:  With respect to any Person at the time of anydetermination, without duplication, all obligations, contingent or otherwise,of such Person which in accordance with GAAP should be classified upon thebalance sheet of such Person as liabilities, but in any event including: (a)all obligations of such Person for borrowed money (including non-recourseobligations), (b) all obligations of such Person evidenced by bonds,debentures, notes or other similar instruments, (c) all obligations of such Personupon which interest charges are customarily paid or accrued, (d) allobligations of such Person under conditional sale or other title retentionagreements relating to property purchased by such Person, (e) all obligationsof such Person issued or assumed as the deferred purchase price of property orservices, (f) all obligations of others secured by any Lien on property ownedor acquired by such Person, whether or not the obligations secured thereby havebeen assumed, (g) all Capital Lease Obligations of such Person, (h) allobligations of such Person in respect of interest rate swap agreements, cap orcollar agreements, interest rate futures or option contracts, currency swapagreements, currency futures or option agreements and other similar contracts,excluding the Bear Stearns Interest Rate Swap Agreement, (i) all obligations ofsuch Person, actual or contingent, as an account party in respect of letters ofcredit or bankers’ acceptances, (j) all obligations of any partnership or jointventure as to which such Person is or may become

 

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personallyliable, (k) all obligations of such Person under any Equity Interests issue bysuch Person, and (l) all Contingent Obligations of such Person.

 

“Indemnitee”: As defined in Section 9.12.

 

“InterestExpense”:  For any period ofdetermination, the aggregate consolidated amount, without duplication, ofinterest paid, accrued or scheduled to be paid in respect of any Indebtednessof the Borrowers’ Agent, including (a) all but the principal component ofpayments in respect of conditional sale contracts, Capital Leases and othertitle retention agreements, (b) commissions, discounts and other fees andcharges with respect to letters of credit and bankers’ acceptance financingsand (c) net costs under interest rate protection agreements, in each casedetermined in accordance with GAAP.

 

“InterestPeriod”:  With respect to each LIBORRate Advance, the period commencing on the date of such Advance or on the lastday of the immediately preceding Interest Period, if any, applicable to anoutstanding Advance and ending one, two, three or six months thereafter, as theBorrowers may elect in the applicable notice of borrowing, continuation orconversion; provided that:

 

(1)                                  AnyInterest Period that would otherwise end on a day which is not a LIBOR BusinessDay shall be extended to the next succeeding LIBOR Business Day unless suchLIBOR Business Day falls in another calendar month, in which case such InterestPeriod shall end on the next preceding LIBOR Business Day;

 

(2)                                  AnyInterest Period that begins on the last LIBOR Business Day of a calendar month(or a day for which there is no numerically corresponding day in the calendarmonth at the end of such Interest Period) shall end on the last LIBOR BusinessDay of a calendar month; and

 

(3)                                  AnyInterest Period that would otherwise end after the Termination Date shall endon the Termination Date.

 

For purposesof determining an Interest Period, a month means a period starting on one dayin a calendar month and ending on the numerically corresponding day in the nextcalendar month; provided, however, that if there is nonumerically corresponding day in the month in which such an Interest Period isto end or if such an Interest Period begins on the last Business Day of acalendar month, then such Interest Period shall end on the last Business Day ofthe calendar month in which such Interest Period is to end.

 

“Investment”:  The acquisition, purchase, making or holdingof any Equity Interests or other security, any loan, advance, contribution tocapital, extension of credit (except for trade and customer accounts receivablefor inventory sold or services rendered in the ordinary course of business andpayable in accordance with customary trade terms), any acquisitions of real orpersonal property (other than real and personal property acquired in theordinary course of business) and any purchase or commitment or option topurchase Equity Interests, securities or

 

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other debt ofor any interest in another Person or any integral part of any business or theassets comprising such business or part thereof and the formation of, or entryinto, any partnership as a limited or general partner or the entry into anyjoint venture.  The amount of anyInvestment shall be the original cost of such Investment plus the cost of alladditions thereto, without any adjustments for increases or decreases in value,or write- ups, write-downs or write-offs with respect to such Investment.

 

“Lender”:  As defined in the opening paragraph hereof.

 

“Letter ofCredit”:  An irrevocable letter ofcredit issued by the Administrative Agent pursuant to this Agreement for theaccount of a Borrower.

 

“Letter ofCredit Bank”:  CoBank, ACB.

 

“Letter ofCredit Commitment Amount”: $2,000,000.00.

 

“Letter ofCredit Fee”:  As defined in Section2.13(d).

 

“LeverageRatio”:  At the time of anydetermination, the ratio of (a) Funded Debt to (b) EBITDA.

 

“LIBORBusiness Day”:  A Business Day whichis also a day for trading by and between banks in United States dollar depositsin the interbank Eurodollar market and a day on which banks are open forbusiness in New York City.

 

“LIBOR Rate”:  With respect to each Interest Periodapplicable to a LIBOR Rate Advance, the average offered rate for deposits inUnited States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%)for delivery of such deposits on the first day of such Interest Period, for thenumber of days in such Interest Period, which appears on Telerate page 3750 asof 11:00 A.M., London time (or such other time as of which such rate appears)two LIBOR Business Days prior to the first day of such Interest Period, or therate for such deposits determined by the Administrative Agent at such timebased on such other published service of general application as shall beselected by the Administrative Agent for such purpose; provided, that inlieu of determining the rate in the foregoing manner, the Administrative Agentmay determine the rate based on rates at which United States dollar depositsare offered to the Administrative Agent in the interbank Eurodollar market atsuch time for delivery in Immediately Available Funds on the first day of suchInterest Period in an amount approximately equal to the Advance by theAdministrative Agent to which such Interest Period is to apply (rounded upward,if necessary, to the nearest 1/16 of 1%). “Telerate page 3750” means the display designated as such on theTelerate reporting system operated by Telerate System Incorporated (or suchother page as may replace page 3750 for the purpose of displaying Londoninterbank offered rates of major banks for United States dollar deposits).

 

“LIBOR RateAdvance”:  An Advance with respect towhich the interest rate is determined by reference to the Adjusted LIBOR Rate.

 

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“LIBORReserve Percentage”:  As of any day,that percentage (expressed as a decimal) which is in effect on such day, asprescribed by the Board for determining the maximum reserve requirement(including any basic, supplemental or emergency reserves) for a member bank ofthe Federal Reserve System, with deposits comparable in amount to those held bythe Lender, in respect of “Eurocurrency Liabilities” as such term is defined inRegulation D of the Board. The rate of interest applicable to any outstandingRevolving Loans shall be adjusted automatically on and as of the effective dateof any change in the LIBOR Reserve Percentage.

 

“Lien”:  With respect to any Person, any securityinterest, mortgage, pledge, lien, charge, encumbrance, title retentionagreement or analogous instrument or device (including the interest of eachlessor under any Capital Lease), in, of or on any assets or properties of suchPerson, now owned or hereafter acquired, whether arising by agreement oroperation of law.

 

“Loan”:A Revolving Loan or a Term Loan.

 

“LoanDocuments”: This Agreement, the Notes, any Rate Protection Agreement andthe Security Documents.

 

“MarginAssignment”:  An Assignment ofHedging Account and Futures Contract in the form of Exhibit B to theSecurity Agreement, executed by the Borrowers’ Agent.

 

“MaterialAdverse Occurrence”:  Any occurrenceof whatsoever nature (including, without limitation, any adverse determinationin any litigation, arbitration, or governmental investigation or proceeding)which could reasonably be expected to materially and adversely affect (a) thefinancial condition or operations of the Borrowers, (b) impair the ability ofany Borrower to perform its obligations under any Loan Document, or any writingexecuted pursuant thereto, (c) the validity or enforceability of the materialobligations of any Borrower under any Loan Document, (d) the rights andremedies of the Lenders or the Administrative Agent against any Borrower, (e)the timely payment of the principal of and interest on the Loans or otheramounts payable by the Borrowers hereunder, or (f) the validity of the jointand several nature of the obligations of the Borrowers with respect to all ofthe Obligations.

 

“MaterialContracts”:  All contracts that arematerial to the ongoing and continued operations of the Borrowers’ Agent’sbusiness operations at the Thompson Complex, including all material productsmarketing agreements (including egg and manure marketing agreements) and allmaterial supply agreements.

 

“MaximumRate”:  As defined in Section 9.19.

 

“Mortgage”:  The Mortgage executed by Midwest Investors ofIowa, Cooperative, in the form of Exhibit C hereto, encumbering, *inter alia*, the Thompson Complex Site.

 

“NetPresent Value”:  With respect to aprepayment of a Term Note, the amount of each prospective payment of principaland interest that, without such prepayment, could otherwise have been receivedby the applicable Lender over the shorter of the remaining contractual life of

 

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its Term Noteor next repricing date, discounted at a rate equal to (i) the yield of U.S.Treasury Notes that shall be imputed, by linear interpolation, from the currentweekly yield of those United States Treasury Notes having a maturity as closeas practicable to that of each specific payment of principal and/or interest,as published in the most recent Federal Reserve Statistical Release H.15 (519)or any successor publication, plus (ii) 0.75%.

 

“Note”:  A Term Note or a Revolving Note.

 

“Obligations”:  The Borrowers’ obligations in respect of thedue and punctual payment of principal and interest on the Notes and UnpaidDrawings when and as due, whether by acceleration or otherwise and all fees(including Revolving Commitment Fees), expenses, indemnities, reimbursementsand other obligations of the Borrowers under this Agreement or any other LoanDocument, and the Rate Protection Obligations, in all cases whether nowexisting or hereafter arising or incurred.

 

“OperatingLease”:  For any Person, a lease ofproperty that would not be classified as a Capital Lease, other than a leaseunder which such Person is the lessor.

 

“Other Taxes”:  As defined in Section 2.25(b).

 

“Participants”:  As defined in Section 9.6(b).

 

“PBGC”:  The Pension Benefit Guaranty Corporation,established pursuant to Subtitle A of Title IV of ERISA, and any successorthereto or to the functions thereof.

 

“PermittedEncumbrances”:  Encumbrancesaffecting the Thompson Complex Site that are permitted in accordance with theterms of the Mortgage and, with respect to any other property of the Borrowers,encumbrances in the nature of zoning restrictions, easements and rights orrestrictions on the use of real property and landlord’s Liens under leases onthe premises rented that do not materially detract from the value of suchproperty or impair the use thereof in the business of a Borrower.

 

“Person”:  Any natural person, corporation, partnership,limited partnership, limited liability company, joint venture, firm,association, trust, unincorporated organization, government or governmentalagency or political subdivision or any other entity, whether acting in an individual,fiduciary or other capacity.

 

“Phase IIThompson Construction”:  As definedin Section 3.2(f)(i).

 

“Phase IIIThompson Construction”:  Theconstruction of commercial facilities at the Thompson Complex, excluding thePhase II Thompson Construction, that is commenced by or on behalf of theBorrowers’ Agent following the Closing Date, as set forth in the ConstructionPlans.

 

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“Plan”:  Each employee benefit plan (whether inexistence on the Closing Date or thereafter instituted), as such term isdefined in Section 3 of ERISA, maintained for the benefit of employees,officers or directors of a Borrower or of any ERISA Affiliate.

 

“PrepaymentEvent”:  Means:

 

(a)                                  anysale, transfer or other disposition (including pursuant to a sale and leasebacktransaction) of any property or asset of any Borrower, other than dispositionsdescribed in clauses (a), (b) and (c) of Section 6.2; or

 

(b)                                 anycasualty or other insured damage to, or any taking under power of eminentdomain or by condemnation or similar proceeding of, any property or asset ofany Borrower, but only to the extent that the net proceeds therefrom have notbeen applied, or committed pursuant to an agreement (including any purchaseorders) to be applied, to repair, restore or replace such property or assetwithin 180 days after such event.

 

“PrepaymentFee”:  As defined in Section 2.23.

 

“QuotedRate”:  The fixed interest rate perannum quoted by CoBank in it its sole discretion and set forth in a Quoted RateOffer that has been accepted by the Borrower, which rate shall apply only tothe specific amounts with the specific maturities set forth in the Quoted RateOffer.

 

“QuotedRate Offer”:  A quote of a fixedinterest rate per annum provided to the Borrowers by CoBank in its solediscretion following the receipt by CoBank of a Quoted Rate Request from theBorrowers’ Agent.  Rates may be fixed byCoBank on such balances and for such periods as determined by CoBank in itssole discretion in each instance, provided that the minimum fixed periodshall be 30 days for any Quoted Rate Advances for Revolving Loans and 180 daysfor any Quoted Rate Advances for Tranche B Term Loans.  The Quoted Rate Offer may, in the solediscretion of CoBank, include the Weekly Quoted Variable Rate.

 

“QuotedRate Request”:  A request byBorrowers’ Agent to CoBank for a Quoted Rate Offer.

 

“RateProtection Agreement”:  Any interestrate swap, cap or option agreement, or any other agreement pursuant to whichany Borrower hedges interest rate risk with respect to a portion of theObligations, entered into by any Borrower with a Rate Protection Provider.

 

“RateProtection Obligations”:  Theliabilities, indebtedness and obligations of any Borrower, if any, to any RateProtection Provider under a Rate Protection Agreement.

 

“RateProtection Provider”:  Any Lender, orany Affiliate of any Lender, that is the counterparty of any Borrower under anyRate Protection Agreement.

 

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“RegulatoryChange”:  Any change after theClosing Date in federal, state or foreign laws or regulations or the adoptionor making after such date of any interpretations, directives or requestsapplying to a class of banks including any Lender under any federal, state orforeign laws or regulations (whether or not having the force of law) by anycourt or governmental or monetary authority charged with the interpretation oradministration thereof.

 

“ReplacedLender”:  As defined in Section 2.24.

 

“ReplacementLender”:  As defined in Section 2.24.

 

“ReportableEvent”:  A reportable event asdefined in Section 4043 of ERISA and the regulations issued under such Section,with respect to a Plan, excluding, however, such events as to which the PBGC byregulation has waived the requirement of Section 4043(a) of ERISA that it benotified within 30 days of the occurrence of such event, provided that afailure to meet the minimum funding standard of Section 412 of the Code and ofSection 302 of ERISA shall be a Reportable Event regardless of the issuance ofany waiver in accordance with Section 412(d) of the Code.

 

“RequiredLenders”:  At any time, Lenders,other than Defaulting Lenders, holding at least 66.67% of the aggregate unpaidprincipal amount of the Notes, excluding Notes held by Defaulting Lenders or,if no Loans are at the time outstanding hereunder, Lenders other thanDefaulting Lenders whose Total Percentages aggregate at least 66.67% (withTotal Percentages being computed without reference to the Revolving CommitmentAmounts and Term Loan Commitment Amounts of Defaulting Lenders), providedthat, if at any date of determination, there are two Lenders, the “RequiredLenders” shall constitute 100% or the Lenders other than Defaulting Lenders.

 

“RestrictedPayments”:  With respect toBorrowers’ Agent, collectively, (a) all dividends or other distributions of anynature (cash, Equity Interests, assets or otherwise), and all payments on anyclass of Equity Interests (including warrants, options or rights therefor)issued by such Borrower, whether such Equity Interests are authorized oroutstanding on the Closing Date or at any time thereafter, or (b) anyredemption or purchase of, or distribution in respect of, any of the foregoing,whether directly or indirectly.

 

“RevolvingCommitment”:  With respect to aRevolving Lender, the agreement of such Lender to make Revolving Loans to theBorrowers in an aggregate principal amount outstanding at any time not toexceed such Revolving Lender’s Revolving Commitment Amount upon the terms and subjectto the conditions and limitations of this Agreement.

 

“RevolvingCommitment Amount”:  With respect toa Revolving Lender, initially the amount set opposite such Revolving Lender’sname on the signature page hereof as its Revolving Commitment Amount, if any.

 

“RevolvingCommitment Fees”:  As defined inSection 2.13(b).

 

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“RevolvingLender”:  Each Lender that has aRevolving Loan or holds a Revolving Commitment.

 

“RevolvingLoan”:  As defined in Section 2.1.

 

“RevolvingLoan Date”:  The date of the makingof any Revolving Loans hereunder.

 

“RevolvingNotes”:  The promissory notes of theBorrowers in the form of Exhibit A-1 hereto, evidencing the obligationof the Borrowers to repay the Revolving Loans, and “Revolving Note” means anyone of such promissory notes issued hereunder without distinction.

 

“SecondTranche 2 Advance”:  The secondAdvances of the Tranche A2 Term Loans and the Tranche B2 Term Loans, whichAdvances shall be in a maximum amount of $6,700,000 and $3,300,000,respectively.

 

“SecurityAgreement”:  The Security Agreementexecuted by the Borrowers in the form of Exhibit B hereto.

 

“SecurityDocuments”:  The Security Agreement,the Contract Assignment, any Margin Assignments, the Mortgage and each otheragreement, document or instrument pursuant to which the Administrative Agent isgranted a Lien to secure the Obligations, as the same may be amended,supplemented, extended, restated or otherwise modified from time to time.

 

“Series2000 Bonds”:  Corporate Bond Series2000 bearing variable interest and due 2002-2015.

 

“SubordinatedDebt”:  Any Indebtedness of anyBorrower, now existing or hereafter created, incurred or arising, which issubordinated in right of payment to the payment of the Obligations in a mannerand to an extent (a) that Required Lenders have approved in writing prior tothe creation of such Indebtedness, or (b) as to any Indebtedness of anyBorrower existing on the date of this Agreement, that Required Lenders haveapproved as Subordinated Debt in a writing delivered by Required Lenders to theBorrowers’ Agent on or prior to the Closing Date.

 

“Subsidiary”:  Any corporation or other entity of whichEquity Interests having ordinary voting power for the election of a majority ofthe board of directors or other Persons performing similar functions are ownedby any Borrower either directly or through one or more Subsidiaries.

 

“TangibleNet Worth”:  As of any date ofdetermination, the sum of the amounts set forth on the balance sheet of theBorrowers as the aggregate equity of the members of the Borrowers, less thebook value of all intangible assets of the Borrowers, including all such itemsas goodwill, trademarks, trade names, service marks, copyrights, patents,licenses, unamortized debt discount and expenses, deferred tax assets and theexcess of the purchase price of the assets of any business acquired by theBorrowers over the book value of such assets.

 

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“TermLenders”:  Collectively, the TrancheA Term Lenders and the Tranche B Term Lenders.

 

“Term Loan”:  Collectively, the Tranche A Term Loans andthe Tranche B Term Loans.

 

“Term LoanCommitment”:  With respect to anyLender, the agreement of such Lender to make a Term Loan to the Borrowers in anamount equal to such Lender’s Term Loan Commitment Amount.

 

“Term LoanCommitment Amount”:  With respect toany Lender, the aggregate amount of such Lender’s Tranche A1 Term LoanCommitment Amount, Tranche A2 Term Loan Commitment Amount, Tranche B1 Term LoanCommitment Amount and Tranche B2 Term Loan Commitment Amount.

 

“Term LoanDate”:  The date of the making of anyTerm Loans hereunder.

 

“Term LoanMaturity Date”:  The later of theTranche A1 Maturity Date, the Tranche A2 Maturity Date, the Tranche B1 MaturityDate and the Tranche B2 Maturity Date.

 

“Term LoanPercentage”:  With respect to anyLender, the percentage equivalent of a fraction, the numerator of which is theamount of the Term Loan Commitment of such Lender and the denominator of whichis the sum of the Term Loan Commitments of all the Lenders.

 

“Term Notes”:  The promissory notes of the Borrowers in theform of Exhibit A-2 hereto, evidencing the obligation of the Borrowersto repay the Term Loans, and “Term Note” means any one of such promissory noteswithout distinction.

 

“TerminationDate”:  The earlier of (a) the oneyear anniversary of the Closing Date, and (b) the date on which the RevolvingCommitments are terminated pursuant to Section 7.2 hereof, provided thatat the written request of the Borrowers’ Agent to the Administrative Agent, theRevolving Commitment may be renewed for any number of successive one-yearperiods in the sole discretion of the Revolving Lenders, in which case theTermination Date shall be extended for a period corresponding to each suchrenewal, if any.

 

“ThompsonComplex”:  The Borrowers’ Agent’slayer facility located on the Thompson Complex Site.

 

“ThompsonComplex Site”:  The approximately240-acre site located in Winnebago County, Iowa, owned in fee simple by MidwestInvestors of Iowa, Cooperative and leased to Borrowers’ Agent, on which theThompson Complex is located, as more particularly described on Exhibit Dhereto.

 

“TotalPercentage”:  With respect to anyLender, the percentage equivalent of a fraction, the numerator of which is thesum of the Revolving Commitment Amount of such Lender and

 

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the Term LoanCommitment Amount of such Lender and the denominator of which is the sum of theRevolving Commitment Amounts and Term Loan Commitment Amounts of all theLenders.

 

“TotalRevolving Outstandings”:  As of anydate of determination, the sum of (a) the aggregate unpaid principal balance ofRevolving Loans outstanding on such date, (b) the aggregate maximum amountavailable to be drawn under Letters of Credit outstanding on such date and (c)the aggregate amount of Unpaid Drawings on such date.

 

“Total TermOutstandings”:  As o f any date ofdetermination, the sum of (a) the aggregate unpaid principal balance of theTerm Loans outstanding on such date and (b) the aggregate unpaid principalbalance of any another term Indebtedness of the Borrowers outstanding on suchdate.

 

“Tranche AAdvances”:  A Tranche A1 Advance or aTranche A2 Advance.

 

“Tranche ATerm Lenders”:  Collectively, theTranche A1 Term Lenders and the Tranche A2 Term Lenders.

 

“Tranche ATerm Loans ”:  Collectively, theTranche A1 Term Loans and the Tranche A2 Term Loans.

 

“Tranche A1Advance”:  An Advance with respect towhich the interest rate is determined by reference to the Tranche A1 Rate.

 

“Tranche A1Maturity Date”:  September 20, 2014.

 

“Tranche A1Rate”:  A rate of interest per annumequal to the sum of 2.40% plus the interpolated yield of a 5.04-YearU.S. Treasury Note as of 12:00 P.M. Central (i) five (5) Business Days prior tothe Closing Date or (ii) such other date not more than 45 days prior to theClosing Date as the Borrowers’ Agent may request.

 

“Tranche A1Term Lender”:  Each Lender that has aTranche A1 Term Loan or holds a Tranche A1 Term Loan Commitment.

 

“Tranche A1Term Loan”:  As defined in Section2.1.

 

“Tranche A1Term Loan Commitment ”:  With respectto any Tranche A1 Term Lender, the agreement of such Lender to make a TrancheA1 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche A1Term Loan Commitment Amount upon the terms and subject to the conditions ofthis Agreement.

 

“Tranche A1Term Loan Commitment Amount”:  Withrespect to a Lender, the amount set opposite such Lender’s name on thesignature pages hereof as its Tranche A1 Term Loan Commitment Amount, if any.

 

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“Tranche A2Advance”:  An Advance with respect towhich the interest rate is determined by reference to the Tranche A2 Rate.

 

“Tranche A2Maturity Date”:  December 20, 2015.

 

“Tranche A2Rate”:  A rate of interest per annumequal to the sum of 2.40% plus the interpolated yield of a 5.76-YearU.S. Treasury Note as of 12:00 P.M. Central (i) five (5) Business Days prior tothe Term Loan Date for the First Tranche 2 Advance in respect of the Tranche A2Term Loans or (ii) such other date not more than 45 days prior to such TermLoan Date as the Borrowers’ Agent may request in writing; provided, however,that, in accordance with Section 3.2(f)(iii)(B), upon the Second Tranche 2Advance and the Final Tranche 2 Advance in respect of the Tranche A2 TermLoans, the interest rate applicable to the Tranche A2 Term Loans shall beadjusted to proportionally blend the then existing Tranche A2 Rate with theTranche A2 Rate for the Second Tranche 2 Advance and, if applicable, the FinalTranche 2 Advance in respect of the Tranche A2 Term Loans in order to providean interest rate applicable thereafter to the aggregate principal amountoutstanding of the Tranche A2 Term Loans. The Tranche A2 Rate shall be determined in accordance with thisAgreement by the Tranche A2 Term Lenders in their absolute discretion absentmanifest error.

 

“Tranche A2Term Lender”:  Each Lender that has aTranche A2 Term Loan or holds a Tranche A2 Term Loan Commitment.

 

“Tranche A2Term Loan”:  As defined in Section2.1.

 

“Tranche A2Term Loan Commitment”:  With respectto any Tranche A2 Term Lender, the agreement of such Lender to make a TrancheA2 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche A2Term Loan Commitment Amount upon the terms and subject to the conditions ofthis Agreement.

 

“Tranche A2Term Loan Commitment Amount”:  Withrespect to a Lender, the amount set opposite such Lender’s name on thesignature pages hereof as its Tranche A2 Term Loan Commitment Amount, if any.

 

“Tranche BTerm Lenders”:  Collectively, the TrancheB1 Term Lenders and the Tranche B2 Term Lenders.

 

“Tranche BTerm Loans”:  Collectively, theTranche B1 Term Loans and the Tranche B2 Term Loans.

 

“Tranche B1Maturity Date”:  September 20, 2014.

 

“Tranche B1Term Lender”:  Each Lender that has aTranche B1 Term Loan or holds a Tranche B1 Term Loan Commitment.

 

“Tranche B1Term Loan”:  As defined in Section2.1.

 

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“Tranche B1Term Loan Commitment”:  With respectto any Tranche B1 Term Lender, the agreement of such Lender to make a TrancheB1 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B1Term Loan Commitment Amount upon the terms and subject to the conditions ofthis Agreement.

 

“Tranche B1Term Loan Commitment Amount”:  Withrespect to a Lender, the amount set opposite such Lender’s name on thesignature pages hereof as its Tranche B1 Term Loan Commitment Amount, if any.

 

“Tranche B2Maturity Date”:  December 20, 2015.

 

“Tranche B2Term Lender”:  Each Lender that has aTranche B2 Term Loan or holds a Tranche B2 Term Loan Commitment.

 

“Tranche B2Term Loan”:  As defined in Section2.1.

 

“Tranche B2Term Loan Commitment”:  With respectto any Tranche B2 Term Lender, the agreement of such Lender to make a TrancheB2 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B2Term Loan Commitment Amount upon the terms and subject to the conditions ofthis Agreement.

 

“Tranche B2Term Loan Commitment Amount”:  Withrespect to a Lender, the amount set opposite such Lender’s name on thesignature pages hereof as its Tranche B2 Term Loan Commitment Amount.

 

“Tranche 2Availability Period”:  The periodcommencing on the later of (i) November 1, 2004 and (ii) the Business Dayimmediately following the day on which the Phase II Thompson Construction hasbeen completed and ending on January 20, 2006.

 

“UnpaidDrawing”:  As defined in Section2.11.

 

“UnusedRevolving Commitment”:  With respectto any Lender as of any date of determination, the amount by which suchLender’s Revolving Commitment Amount exceeds such Lender’s Revolving Percentageof the Total Revolving Outstandings on such date minus the aggregatemaximum amount to be drawn on any Letters of Credit outstanding on such date.

 

“U.S. Taxes”: As defined in Section 2.25(f).

 

“WeeklyQuoted Variable Rate”:  A rate perannum equal at all times to the rate of interested established by CoBank on thefirst Business Day of each week.  Therate established by CoBank shall be effective until the first Business Day ofthe next week.  Each change in the rateshall be applicable to all balances subject to the Weekly Quoted Variable Rateand information about the then current rate shall be made available upontelephonic request by the Borrowers’ Agent.

 

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“WorkingCapital”:  The amount of the excess,if any, of the Current Assets over the Current Liabilities of the Borrowers’Agent on a consolidated basis.

 

Section 1.2                                      AccountingTerms and Calculations. Except as may be expressly provided to the contrary herein, allaccounting terms used herein shall be interpreted and all accountingdeterminations hereunder shall be made in accordance with GAAP.  To the extent any change in GAAP affects anycomputation or determination required to be made pursuant to this Agreement,such computation or determination shall be made as if such change in GAAP hadnot occurred unless the Borrowers and Required Lenders agree in writing on anadjustment to such computation or determination to account for such change inGAAP.

 

Section 1.3                                      Computationof Time Periods.  In thisAgreement, in the computation of a period of time from a specified date to alater specified date, unless otherwise stated the word “from” means “from andincluding” and the word “to” or “until” each means “to but excluding”.

 

Section 1.4                                      OtherDefinitional Terms. The words “hereof,” “herein” and “hereunder” andwords of similar import when used in this Agreement shall refer to thisAgreement as a whole and not to any particular provision of thisAgreement.  References to Sections,Exhibits, schedules and like references are to this Agreement unless otherwiseexpressly provided.  The words “include,”“includes” and “including” shall be deemed to be followed by the phrase“without limitation.”  Unless the contextin which used herein otherwise clearly requires, “or” has the inclusive meaningrepresented by the phrase “and/or.”  Allincorporation by reference of covenants, terms, definitions or other provisionsfrom other agreements are incorporated into this Agreement as if suchprovisions were fully set forth herein, and such incorporation shall includeall necessary definitions and related provisions from such other agreements butincluding only amendments thereto agreed to by the Required Lenders (unlessotherwise provided herein or therein), and shall survive any termination ofsuch other agreements until the obligations of the Borrowers under thisAgreement and the Notes are irrevocably paid in full, all Letters of Credithave expired without renewal or been returned to the Letter of Credit Bank, andthe commitments of any Lender to advance funds to any Borrower are terminated.

 

**ARTICLE II**

**TERMS OF THE CREDIT FACILITIES**

 

Part A —  Terms of Lending

 

Section 2.1                                      LendingCommitments.

 

(a)                                  RevolvingCredit.  Subject to the terms andconditions hereof, each Revolving Lender severally agrees to make a revolvingcredit facility available as loans (each, a “Revolving Loan” and,collectively, the “Revolving Loans”) to the Borrowers, jointly and severally,on a revolving basis at any time and from time to time from the Closing Date tothe Termination Date, during which period the Borrowers may borrow, repay andreborrow in accordance with the provisions hereof, provided, that no

 

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Revolving Loanwill be made in any amount which, after giving effect thereto, would cause theTotal Revolving Outstandings to exceed lesser of (i) the Aggregate RevolvingCommitment Amounts, or (ii) the Borrowing Base. Revolving Loans hereunder shall be made by the several Revolving Lendersratably in the proportion of their respective Revolving CommitmentAmounts.  Revolving Loans may be obtainedand maintained, at the election of the Borrowers’ Agent but subject to the limitationshereof, as Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances orany combination thereof; provided, however, that no more thanfive (5) LIBOR Rate Advances and no more than five (5) Quoted Rate Advances maybe outstanding at any one time.

 

(b)                                 TermLoans.  Subject to the terms andconditions hereof, (a) each Tranche A1 Term Lender severally agrees to make aterm loan (a “Tranche A1 Term Loan”) to the Borrowers, jointly andseverally, on the Closing Date in an amount from each Tranche A1 Term Lenderequal to its Tranche A1 Term Loan Commitment Amount, (b) each Tranche B1 TermLender severally agrees to make a term loan (a “Tranche B1 Term Loan”)to the Borrowers, jointly and severally, on the Closing Date in an amount fromeach Tranche B1 Term Lender equal to its Tranche B1 Term Loan CommitmentAmount, (c) each Tranche A2 Term Lender severally agrees to make term loans(each, a “Tranche A2 Term Loan” and, collectively, the “Tranche A2Term Loans”) to the Borrowers, jointly and severally, from time to timeduring the Tranche 2 Availability Period, in an aggregate amount not to exceedits Tranche A2 Term Loan Commitment Amount, and (d) each Tranche B2 Term Lenderseverally agrees to make term loans (each, a “Tranche B2 Term Loan” and,collectively, the “Tranche B2 Term Loans”) to the Borrowers, jointly andseverally, from time to time during the Tranche 2 Availability Period, in anaggregate amount not to exceed its Tranche B2 Term Loan Commitment Amount.  Tranche A1 Term Loans may be obtained andmaintained only as Tranche A1 Advances. Tranche A2 Term Loans may be obtained and maintained only as Tranche A2Advances.  Tranche B Term Loans may beobtained and maintained, at the election of the Borrowers’ Agent but subject tothe limitations hereof, as Base Rate Advances, LIBOR Rate Advances or QuotedRate Advances, or any combination thereof; provided, however,that no more than five (5) LIBOR Rate Advances and no more than five (5) QuotedRate Advances may be outstanding at any one time.

 

Notwithstandingany provision hereof, this Agreement and the Revolving Commitments shallterminate and no Lender shall have any obligation hereunder if the Tranche A1and Tranche B1 Term Loans hereunder have not been made by November 15, 2004, provided,however, that the obligations of the Borrowers under Section 9.2 shallsurvive any such termination.

 

Section 2.2                                      Procedurefor Loans.

 

(a)                                  Procedurefor Revolving Loans.  Not later than11:00 A.M. (Central time) three LIBOR Business Days prior to the requested RevolvingLoan Date if the Revolving Loans (or any portion thereof) are requested asLIBOR Rate Advances and not later than 11:00 A.M. (Central time) on therequested Revolving Loan Date if the Revolving Loans

 

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are requestedas Quoted Rate Advances or Base Rate Advances, Borrowers’ Agent shall submit tothe Administrative Agent a written or telephonic request for borrowing, providedthat no more than one request for Borrowing may be made on any Business Day.  Each request for Revolving Loans hereundershall be irrevocable and shall be deemed a representation by each Borrower thaton the requested Revolving Loan Date and after giving effect to the requestedRevolving Loans the applicable conditions specified in Article III have beenand will be satisfied.  Each request forRevolving Loans hereunder shall specify (i) the requested Revolving Loan Date,(ii) the aggregate amount of Revolving Loans to be made on such date whichshall be in a minimum amount of $200,000 or, if more, a whole multiple of$100,000 in excess thereof, provided that no minimums shall apply if theRevolving Loans are funded as Quoted Rate Loans for which the Quoted Rate isthe Weekly Quoted Variable Rate, (iii) whether such Revolving Loans are to befunded as Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances (and,if such Revolving Loans are to be made with more than one applicable interestrate choice, specifying the amount to which each interest rate choice isapplicable) and (iv) in the case of LIBOR Rate Advances, the duration of theinitial Interest Period applicable thereto. The Administrative Agent may rely on any telephone request by theBorrowers’ Agent for Revolving Loans hereunder which it believes in good faithto be genuine; and each Borrower hereby waives the right to dispute theAdministrative Agent’s record of the terms of such telephone request.  The Administrative Agent shall promptlynotify each other Revolving Lender of the receipt of such request, the mattersspecified therein, and of such Lender’s ratable share of the requestedRevolving Loans.  On the date of therequested Revolving Loans, each Lender shall provide its share of the requestedRevolving Loans to the Administrative Agent in Immediately Available Funds notlater than 1:00 P.M. (Central time). Unless the Administrative Agent determines that any applicable conditionspecified in Article III has not been satisfied, the Administrative Agent willmake available to the Borrowers at the Administrative Agent’s principal officein Minneapolis, MN in Immediately Available Funds not later than 3:00 P.M.(Central time) on the requested Revolving Loan Date the amount of the requestedRevolving Loans.  If the AdministrativeAgent has made a Revolving Loan to the Borrowers on behalf of a RevolvingLender but has not received the amount of such Revolving Loan from such Lenderby the time herein required, such Lender shall pay interest to theAdministrative Agent on the amount so advanced at the Federal Funds Rate fromthe date of such Revolving Loan to the date funds are received by theAdministrative Agent from such Lender, such interest to be payable with suchremittance from such Lender of the principal amount of such Revolving Loan (provided,however, that the Administrative Agent shall not make any Revolving Loanon behalf of a Lender if the Administrative Agent has received prior noticefrom such Lender that it will not make such Revolving Loan).  If the Administrative Agent does not receivepayment from such Lender by the next Business Day after the date of anyRevolving Loan, the Administrative Agent shall be entitled to recover suchRevolving Loan, with interest thereon at the rate (or rates) then applicable tosuch Revolving Loan, on demand, from the Borrowers, without prejudice to theAdministrative Agent’s and the Borrowers’

 

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rights againstsuch Lender.  If such Lender pays theAdministrative Agent the amount herein required with interest at the FederalFunds Rate before the Administrative Agent has recovered from the Borrowers,such Lender shall be entitled to the interest payable by the Borrowers withrespect to the Revolving Loan in question accruing from the date theAdministrative Agent made such Revolving Loan.

 

(b)                                 Procedurefor Term Loans.  Not later than 11:00A.M. (Central time) three LIBOR Business Days prior to the requested Term LoanDate (which, for Tranche A1 Term Loans and Tranche B1 Term Loans shall be theClosing Date) if the Term Loans are requested as LIBOR Rate Advances and notlater than 11:00 A.M. (Central time) on the requested Term Loan Date (which,for Tranche A1 Term Loans and Tranche B1 Term Loans, shall be the Closing Date)if the Term Loans are requested as Tranche A Advances, Base Rate Advances orQuoted Rate Advances, the Borrowers’ Agent shall submit to the AdministrativeAgent a written request for borrowing. Such request for Term Loans hereunder shall be irrevocable and shall bedeemed a representation by each Borrower that on the requested Term Loan Dateand after giving effect to the requested Term Loans the applicable conditionsspecified in Article III have been and will be satisfied.  Each request for Term Loans hereunder shallspecify (i) the requested Term Loan Date, (ii) the aggregate amount of TermLoans to be made on such date which shall be in a minimum amount of $200,000or, if more, a whole multiple of $100,000 in excess thereof, (iii) the type ofAdvance the Term Loans are to be funded as (and, if such Term Loans are to bemade with more than type of Advance, specifying the amount to which each typeof Advance is applicable) and (iv) in the case of LIBOR Rate Advances, theduration of the initial Interest Period applicable thereto.  The Administrative Agent shall promptlynotify each other Term Lender of the receipt of such request, the mattersspecified therein, and of such Lender’s ratable share of the requested TermLoans.  On the date of the requested TermLoans, each Lender shall provide its share of the requested Term Loans to theAdministrative Agent in Immediately Available Funds not later than 1:00 P.M.(Central time).  Unless theAdministrative Agent determines that any applicable condition specified inArticle III has not been satisfied, the Administrative Agent will makeavailable to the Borrowers at the Administrative Agent’s principal office inMinneapolis, MN in Immediately Available Funds not later than 3:00 P.M.(Central time) on the requested Term Loan Date the amount of the requested TermLoans.  If the Administrative Agent hasmade a Term Loan to the Borrowers on behalf of a Term Lender but has notreceived the amount of such Term Loan from such Lender by the time hereinrequired, such Lender shall pay interest to the Administrative Agent on theamount so advanced at the Federal Funds Rate from the date of such Term Loan tothe date funds are received by the Administrative Agent from such Lender, suchinterest to be payable with such remittance from such Lender of the principalamount of such Term Loan (provided, however, that theAdministrative Agent shall not make any Term Loan on behalf of a Lender if theAdministrative Agent has received prior notice from such Lender that it willnot make such Term Loan).  If theAdministrative Agent does not receive payment from such Lender by the nextBusiness Day after the date of any Term Loan, the Administrative Agent shall beentitled to recover such Term Loan, with interest

 

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thereon at therate (or rates) then applicable to such Term Loan, on demand, from theBorrowers, without prejudice to the Administrative Agent’s and the Borrowers’rights against such Lender.  If suchLender pays the Administrative Agent the amount herein required with interestat the Federal Funds Rate before the Administrative Agent has recovered fromthe Borrowers, such Lender shall be entitled to the interest payable by theBorrowers with respect to the Term Loan in question accruing from the date theAdministrative Agent made such Term Loan.

 

Section 2.3                                      Notes.  The Revolving Loans of each Lender shall beevidenced by a single Revolving Note payable to the order of such Lender in aprincipal amount equal to such Lender’s Revolving Commitment Amount originallyin effect. The Term Loans of each Lender shall be evidenced by Term Notespayable to the order of such Lender in the principal amount equal to suchLender’s Tranche A1 Term Loan Commitment Amount, Tranche A2 Term LoanCommitment Amount, Tranche B1 Term Loan Commitment Amount or Tranche B2 TermLoan Commitment Amount, as applicable. Upon receipt of each Lender’s Notes from the Borrowers, theAdministrative Agent shall mail such Notes to such Lender.  Each Lender shall enter in its ledgers andrecords the amount of its Term Loans and each Revolving Loan, the variousAdvances made, converted or continued and the payments made thereon, and eachLender is authorized by the each Borrower to enter on a schedule attached toits Term Notes or Revolving Note, as appropriate, a record of such Term Loans,Revolving Loans, Advances and payments; provided, however that the failure byany Lender to make any such entry or any error in making such entry shall notlimit or otherwise affect the obligation of the Borrowers hereunder and on theNotes, and, in all events, the principal amounts owing by the Borrowers inrespect of the Revolving Note shall be the aggregate amount of all RevolvingLoans made by the Lenders less all payments of principal thereof made by theBorrowers and the principal amount owing by the Borrowers in respect of theTerm Notes shall be the aggregate amount of all Term Loans made by the Lendersless all payments of principal thereof made by the Borrowers.

 

Section 2.4                                      Conversionsand Continuations.  Tranche AAdvances may not be converted into any other type of Advance and no other typeof Advance may be converted into a Tranche A Advance.  On the terms and subject to the limitationshereof, the Borrowers shall have the option at any time and from time to timeto convert all or any portion of the Advances in respect of the Revolving Loansor the Tranche B Term Loans into Base Rate Advances, LIBOR Rate Advances orQuoted Rate Advances, or to continue a LIBOR Rate Advance or Quoted RateAdvance as such; provided, however that a LIBOR Rate Advance maybe converted or continued only on the last day of the Interest Periodapplicable thereto, a Quoted Rate Advance may be converted or continued only onthe last day of the fixed rate period set forth in the corresponding QuotedRate Offer and no Advance may be converted or continued as a LIBOR Rate Advanceor a Quoted Rate Advance if a Default or Event of Default has occurred and iscontinuing on the proposed date of continuation or conversion.  Advances in respect of the Revolving Loans orTranche B Term Loans may be converted to, or continued as, LIBOR Rate Advancesor Quoted Rate Advances only in integral multiples, as to the aggregate amountof the Advances of all Lenders so converted or continued, of $200,000.  The Borrowers’ Agent shall give theAdministrative Agent written notice of any continuation or conversion of anysuch

 

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Advances andsuch notice must be given so as to be received by the Administrative Agent notlater than 11:00 A.M. (Central time) three LIBOR Business Days prior torequested date of conversion or continuation in the case of the continuationof, or conversion to, LIBOR Rate Advances and not later than 11:00 A.M.(Central time) on the date of the requested continuation of, or conversion to,Quoted Rate Advances or Base Rate Advances. Each such notice shall specify (a) the amount to be continued orconverted, (b) the date for the continuation or conversion (which must be (i)the last day of the preceding Interest Period for any continuation orconversion of LIBOR Rate Advances, (ii) the last day of the fixed rate periodset forth in the corresponding Quoted Rate Offer for any continuation orconversion of a Quoted Rate Advance, (iii) a LIBOR Business Day in the case ofconversions to or continuations as LIBOR Rate Advances, and (iv) a Business Dayin the case of continuations or conversions to Quoted Rate Advances or BaseRate Advances), and (c) in the case of conversions to or continuations as LIBORRate Advances, the Interest Period applicable thereto.  Any notice given by the Borrowers’ Agentunder this Section shall be irrevocable. If the Borrowers’ Agent shall fail to notify the Administrative Agent ofthe continuation of any LIBOR Rate Advances within the time required by thisSection, at the option of the Administrative Agent, such Advances shall, on thelast day of the Interest Period applicable thereto, (A) automatically becontinued as LIBOR Rate Advances with the same principal amount and the sameInterest Period or (B) automatically be converted into Base Rate Advances withthe same principal amount.  If theBorrowers’ Agent shall fail to notify the Administrative Agent of thecontinuation of any Quoted Rate Advances within the time required by this Section,or if CoBank declines to make a Quoted Rate Offer with respect to such QuoteRate Advances and the Borrowers’ Agent has not requested an alternativeAdvance, such Quoted Rate Advances shall, on the last day of the fixed rateperiod applicable thereto, automatically accrue interest at the Weekly QuotedVariable Rate until repaid or converted into another Advance.

 

Section 2.5                                      InterestRates, Interest Payments and Default Interest.

 

(a)                                  TheRevolving Loans.  Interest shallaccrue and be payable on the Revolving Loans as follows:

 

(i)                                     Subjectto paragraph (iv) below, each LIBOR Rate Advance shall bear interest on theunpaid principal amount thereof during the Interest Period applicable theretoat a rate per annum equal to the sum of (A) the Adjusted LIBOR Rate for suchInterest Period, plus (B) the Applicable Margin.

 

(ii)                                  Subjectto paragraph (iv) below, each Quoted Rate Advance shall bear interest on theunpaid principal amount thereof at a rate per annum equal to the Quoted Rate.

 

(iii)                               Subjectto paragraph (iv) below, each Base Rate Advance shall bear interest on theunpaid principal amount thereof at a varying rate per annum equal to the sum of(A) the Base Rate, plus (B) the Applicable Margin.

 

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(iv)                              Uponthe occurrence of any Event of Default, each Advance in respect of theRevolving Loans shall, at the option of the Revolving Lenders, bear interestuntil paid in full at a rate per annum equal to the Default Rate.

 

(v)                                 Interestshall be payable (A) with respect to each LIBOR Rate Advance, on the last dayof the Interest Period applicable thereto (and, in the case of any LIBOR RateAdvance having an Interest Period greater than three months, on the three monthanniversary of the first day of such Interest Period); (B) with respect to anyBase Rate Advance or Quoted Rate Advance, on the twentieth (20th)day of each month; (C) with respect to all Advances, upon any permittedprepayment (on the amount prepaid); and (D) with respect to all Advances, onthe Termination Date; provided that interest under paragraph (a)(iv) ofthis Section shall be payable on demand.

 

(b)                                 TheTerm Loans.  Interest shall accrueand be payable on the Term Loans as follows:

 

(i)                                     Subjectto paragraph (vi) below, each Tranche A1 Advance shall bear interest on theunpaid principal amount thereof at a rate per annum equal to the Tranche A1Rate.

 

(ii)                                  Subjectto paragraph (vi) below, each Tranche A2 Advance shall bear interest on theunpaid principal amount thereof at a rate per annum equal to the Tranche A2Rate.

 

(iii)                               Subjectto paragraph (vi) below, each LIBOR Rate Advance in respect of the Tranche BTerm Loans shall bear interest on the unpaid principal amount thereof duringthe Interest Period applicable thereto at a rate per annum equal to the sum of(A) the Adjusted LIBOR Rate for such Interest Period, plus (B) theApplicable Margin.

 

(iv)                              Subjectto paragraph (vi) below, each Quoted Rate Advance in respect of the Tranche BTerm Loans shall bear interest on the unpaid principal amount thereof at a rateper annum equal to the Quoted Rate.

 

(v)                                 Subjectto paragraph (vi) below, each Base Rate Advance in respect of the Tranche B TemLoans shall bear interest on the unpaid principal amount thereof at a varyingrate per annum equal to the sum of (A) the Base Rate, plus (B) theApplicable Margin.

 

(vi)                              Uponthe occurrence of any Event of Default, each Tranche A Advance shall, uponthirty (30) days notice to the Borrowers from the Tranche A Term Lenders, andeach Advance in respect of the Tranche B Term Loans shall, upon thirty (30)days written notice to the Borrowers from the Tranche B Term

 

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Lenders, bearinterest until paid in full or until such Event of Default is cured at a rateper annum equal to the Default Rate.

 

(vii)                           Interestshall be payable (A) with respect to each LIBOR Rate Advance in respect of theTranche B Term Loans, on the last day of the Interest Period applicable thereto(and, in the case of any LIBOR Rate Advance in respect of the Tranche B TermLoans having an Interest Period greater than three months, on the three monthanniversary of the first day of such Interest Period); (B) with respect to anyBase Rate Advance in respect of the Tranche B Term Loans in arrears, on thetwentieth (20th) day of each month; (C) with respect to allAdvances, upon any permitted prepayment (on the amount prepaid); and (D) withrespect to all Advances, on the Termination Date; provided that interestunder paragraph (a)(iv) of this Section shall be payable on demand.

 

Section 2.6                                      Repayment.

 

(a)                                  RevolvingLoans.  The unpaid principal balanceof all Revolving Notes, together with all accrued and unpaid interest thereon,shall be due and payable on the Termination Date.

 

(b)                                 TermLoans.  The principal of each TermLoan shall be payable monthly as follows:

 

(i)                                     TrancheA1 Term Loans.  The Borrowers shallmake principal payments for application to the Tranche A1 Term Loans in theamount of $122,500 on the twentieth (20th) day of each monthcommencing on October 20, 2004, provided that in the event that anyamount of principal or interest remains unpaid with respect to the Tranche A1Term Loans on the Tranche A1 Maturity Date, such remaining amounts shall be dueand payable in full on such date;

 

(ii)                                  TrancheA2 Term Loans.  The Borrowers shallmake principal payments for application to the Tranche A2 Term Loans in theamount of $127,500 on the twentieth (20th) day of each monthcommencing on January 20, 2006, provided that in the event that anyamount of principal or interest remains unpaid with respect to the Tranche A2Term Loans on the Tranche A2 Maturity Date, such remaining amounts shall be dueand payable in full on such date;

 

(iii)                               TrancheB1 Term Loans.  The Borrowers shallmake principal payments for application to the Tranche B1 Term Loans in theamount of $60,833.33 on the twentieth (20th) day of each monthcommencing on October 20, 2004, provided that in the event that anyamount of principal or interest remains unpaid with respect to the Tranche B1Term Loans on the Tranche B1 Maturity Date, such remaining amounts shall be dueand payable in full on such date; and

 

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(iv)                              TrancheB2 Term Loans.  The Borrowers shallmake principal payments for application to the Tranche B2 Term Loans in theamount of $64,166.66 on the twentieth (20th) day of each monthcommencing on January 20, 2006, provided that in the event that anyamount of principal or interest remains unpaid with respect to the Tranche B2Term Loans on the Tranche B2 Maturity Date, such remaining amounts shall be dueand payable in full on such date.

 

Amounts paid on the Term Notes may not bereborrowed.

 

Section 2.7                                      Prepayments.

 

(a)                                  MandatoryPrepayments for Borrowing Base Deficiency.  If at any time a Borrowing Base Deficiencyexists, the Borrowers shall immediately pay on the principal of the Advances inrespect of the Revolving Loans an amount equal to such Borrowing BaseDeficiency.  Any such payments shall beapplied first against Base Rate Advances and then to Quoted Rate and LIBOR RateAdvances in order starting with the Quoted Rate or LIBOR Rate Advances havingthe shortest time to the end of the applicable Interest Period.  Amounts paid on the Advances under thisparagraph (a) shall be for the account of each Revolving Lender in proportionto its share of outstanding Revolving Loans.

 

(b)                                 MandatoryPrepayments for a Prepayment Event. If at any time a Prepayment Event occurs, the Borrowers shallimmediately pay to the Administrative Agent for the ratable benefit of theLenders the net proceeds realized by such Prepayment Event and any prepaymentfee payable under Section 2.23.  Any suchprepayments shall be applied first, to the Term Loans, and second,to any outstanding Revolving Loans.  Allprepayments applied to the Term Loans shall be applied to the scheduledprincipal payments on the Term Loans in the inverse order of their maturities.

 

(c)                                  OtherMandatory Prepayments.  If at anytime Total Revolving Outstandings exceed the Aggregate Revolving CommitmentAmounts, the Borrowers shall immediately repay to the Administrative Agent forthe account of the Revolving Lenders the amount of such excess.  Any such payments shall be applied first againstBase Rate Advances and then to Quoted Rate and LIBOR Rate Advances in orderstarting with the Quoted Rate or LIBOR Rate Advances having the shortest timeto the end of the applicable Interest Period.

 

(d)                                 OptionalPrepayments.   The Term Loans may beprepaid only in accordance with Section 2.23. The Borrowers may prepay Base Rate Advances in respect of the RevolvingLoans, in whole or in part, at any time, without premium or penalty.  Any such prepayment must be accompanied byaccrued and unpaid interest on the amount prepaid.  Each partial prepayment shall be in a minimumaggregate amount for all the Lenders of $200,000 or a whole integral of$100,000 in excess thereof.  Except uponan acceleration following an Event of Default or upon termination of theRevolving

 

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Commitments inwhole, the Borrowers may pay LIBOR Rate Advances only on the last day of theInterest Period applicable thereto.  TheBorrowers may prepay Quote Rate Advances in respect of the Revolving Loans onlyif permitted by the Quoted Rate Offer. Amounts paid (unless following an acceleration or upon termination ofthe Revolving Commitments in whole) or prepaid on Advances in respect of theRevolving Loans under this paragraph (d) may be reborrowed upon the terms andsubject to the conditions and limitations of this Agreement.  Amounts paid or prepaid on the Advances underthis paragraph (d) shall be for the account of each Revolving Lender inproportion to its share of outstanding Revolving Loans.

 

Part B — Termsof the Letter of Credit Facility

 

Section 2.8                                      Lettersof Credit.  Upon the terms andsubject to the conditions of this Agreement, the Letter of Credit Bank agreesto issue Letters of Credit for the account of the Borrowers from time to timebetween the Closing Date and thirty (30) days prior to the Termination Date insuch amounts as the Borrowers’ Agent shall request up to an aggregate amount atany time outstanding not exceeding the Letter of Credit Commitment Amount; providedthat no Letter of Credit will be issued in any amount which, after givingeffect to such issuance, would cause Total Revolving Outstandings to exceed thelesser of (a) the Aggregate Revolving Commitment Amounts, or (b) the BorrowingBase.

 

Section 2.9                                      Proceduresfor Letters of Credit.  Eachrequest for a Letter of Credit shall be made by the Borrowers’ Agent inwriting, by telex, facsimile transmission or electronic conveyance received bythe Letter of Credit Bank by 11:00 A.M. (Central time) on a Business Day thatis not less than one Business Day preceding the requested date of issuance(which shall also be a Business Day). Each request for a Letter of Credit shall be deemed a representation bythe each Borrower that on the date of issuance of such Letter of Credit andafter giving effect thereto the applicable conditions specified in Article IIIhave been and will be satisfied.  TheLetter of Credit Bank may require that such request be made on such letter ofcredit application and reimbursement agreement form as the Letter of CreditBank may from time to time specify, along with satisfactory evidence of theauthority and incumbency of the officials of the Borrowers’ Agent making suchrequest.  The Letter of Credit Bank shallpromptly notify the other Revolving Lenders of the receipt of the request andthe matters specified therein.  On thedate of each issuance of a Letter of Credit the Letter of Credit Bank shallsend notice to the other Revolving Lenders of such issuance, accompanied by acopy of the Letter or Letters of Credit so issued.

 

Section 2.10                                Termsof Letters of Credit.  Lettersof Credit shall be issued in support of obligations of the Borrowers’ Agent inaccordance with Section 2.16.  Unless theproposed Letter of Credit is cash collateralized, each Letter of Credit mustexpire not later than the Business Day preceding the Termination Date and noLetter of Credit may have a term longer than 12 months.

 

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Section 2.11                                Agreementto Repay Letter of Credit Drawings. If the Letter of Credit Bank has received documents purporting to drawunder a Letter of Credit that the Letter of Credit Bank believes conform to therequirements of the Letter of Credit, or if the Letter of Credit Bank hasdecided that it will comply with the Borrowers’ Agent written or oral requestor authorization to pay a drawing on any Letter of Credit that the Letter ofCredit Bank does not believe conforms to the requirements of the Letter ofCredit, it will notify the Borrowers’ Agent of that fact.  The Borrowers shall reimburse the Letter ofCredit Bank by 9:30 A.M. (Central time) on the day on which such drawing is tobe paid in Immediately Available Funds in an amount equal to the amount of suchdrawing.  Any amount by which theBorrowers have failed to reimburse the Letter of Credit Bank for the fullamount of such drawing by 10:00 A.M. on the date on which the Letter of CreditBank in its notice indicated that it would pay such drawing, until reimbursedby the Borrowers, is an “Unpaid Drawing.”

 

Section 2.12                                ObligationsAbsolute.  The obligation ofthe Borrowers under Section 2.11 to repay the Letter of Credit Bank for anyamount drawn on any Letter of Credit and to repay the Revolving Lenders tocover Unpaid Drawings shall be absolute, unconditional and irrevocable, shallcontinue for so long as any Letter of Credit is outstanding notwithstanding anytermination of this Agreement, and shall be paid strictly in accordance withthe terms of this Agreement, under all circumstances whatsoever, includingwithout limitation the following circumstances:

 

(a)                                  Anylack of validity or enforceability of any Letter of Credit;

 

(b)                                 Theexistence of any claim, setoff, defense or other right which any Borrower mayhave or claim at any time against any beneficiary, transferee or holder of anyLetter of Credit (or any Person for whom any such beneficiary, transferee orholder may be acting), the Letter of Credit Bank or any Lender or any otherPerson, whether in connection with a Letter of Credit, this Agreement, thetransactions contemplated hereby, or any unrelated transaction; or

 

(c)                                  Anystatement or any other document presented under any Letter of Credit proving tobe forged, fraudulent, invalid or insufficient in any respect or any statementtherein being untrue or inaccurate in any respect whatsoever.

 

Neither theLetter of Credit Bank nor any Lender nor officers, directors or employees ofany thereof shall be liable or responsible for, and the obligations of theBorrowers to the Letter of Credit Bank and the Lenders shall not be impairedby:

 

(i)                                     Theuse which may be made of any Letter of Credit or for any acts or omissions ofany beneficiary, transferee or holder thereof in connection therewith;

 

(ii)                                  Thevalidity, sufficiency or genuineness of documents, or of any endorsementsthereon, even if such documents or endorsements should, in fact, prove to be inany or all respects invalid, insufficient, fraudulent or forged;

 

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(iii)                               Theacceptance by the Letter of Credit Bank of documents that appear on their faceto be in order, without responsibility for further investigation, regardless ofany notice or information to the contrary; or

 

(iv)                              Anyother action of the Letter of Credit Bank in making or failing to make paymentunder any Letter of Credit if in good faith and in conformity with U.S. orforeign laws, regulations or customs applicable thereto.

 

Notwithstandingthe foregoing, the Borrowers shall have a claim against the Letter of CreditBank, and the Letter of Credit Bank shall be liable to the Borrowers, to theextent, but only to the extent, of any direct, as opposed to consequential,damages suffered by the Borrowers which were caused by the Letter of CreditBank’s willful misconduct or gross negligence in determining whether documentspresented under any Letter of Credit comply with the terms thereof.

 

Part C  —  General

 

Section 2.13                                Fees.

 

(a)                                  ClosingFees.  The Borrowers shall pay to theAdministrative Agent for the benefit of the Lenders a non-refundable closingfee in the amount of $240,000 (the “Closing Fee”).  Fifty percent (50%) of the Closing Fee shallhave been paid prior to the Closing Date. The remaining fifty percent (50%) shall be due and payable on theClosing Date.

 

(b)                                 RevolvingCommitment Fee.  The Borrowers shallpay to the Administrative Agent for the account of each Revolving Lender fees(the “Revolving Commitment Fees”) in an amount determined by applyingthe Applicable Commitment Fee Percentage to the average daily Unused RevolvingCommitment of such Lender for the period from the Closing Date to theTermination Date.  Such RevolvingCommitment Fees are payable in arrears quarterly on the last day of eachcalendar quarter and on the Termination Date.

 

(c)                                  AdministrativeAgent’s Fees.  On or before the ClosingDate, the Borrowers will pay to the Administrative Agent the fees set forth inthe separate letter agreement dated the date hereof between the AdministrativeAgent and the Borrowers.

 

(d)                                 Letterof Credit Fees.  For each Letter ofCredit issued, the Borrowers shall pay to the Administrative Agent for theaccount of the Revolving Lenders, in advance on the date of issuance, a fee (a“Letter of Credit Fee”) in an amount equal to the greater of (i) $1,000and (ii) the amount determined by applying a per annum rate equal to theApplicable Margin for LIBOR Rate Advances in respect of the Revolving Loansthen in effect to the original face amount of the Letter of Credit for theperiod from the date of issuance to the scheduled expiration date of such Letterof Credit.  In addition to

 

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the Letter ofCredit Fee, the Borrowers shall pay to the Letter of Credit Bank, on demand,all issuance, amendment, drawing and other fees regularly charged by the Letterof Credit Bank to its letter of credit customers and all out-of-pocket expensesincurred by the Letter of Credit Bank in connection with the issuance,amendment, administration or payment of any Letter of Credit.

 

Section 2.14                                Computation. Revolving Commitment Fees, Letterof Credit Fees, interest on Revolving Loans and Term Loans and the Default Rateshall be computed on the basis of actual days elapsed (or, in the case ofLetter of Credit Fees which are paid in advance, actual days to elapse) and ayear of 360 days.

 

Section 2.15                                Payments. Payments and prepayments ofprincipal of, and interest on, the Notes and all fees, expenses and otherobligations under this Agreement payable to the Administrative Agent or theLenders shall be made without setoff or counterclaim in Immediately AvailableFunds not later than 1:00 P.M. (Central time) on the dates called for underthis Agreement and the Notes to the Administrative Agent at its main office inMinneapolis, Minnesota.  Funds receivedafter such time shall be deemed to have been received on the next BusinessDay.  The Administrative Agent willdistribute in like funds to each Lender its ratable share of each such paymentof principal, interest and fees received by the Administrative Agent for theaccount of the Lenders on Business Day or deemed Business Day that such fundswere received by the Administrative Agent. Whenever any payment to be made hereunder or on the Notes shall bestated to be due on a day which is not a Business Day, such payment shall bemade on the next succeeding Business Day and such extension of time, in thecase of a payment of principal, shall be included in the computation of anyinterest on such principal payment; provided, however, that ifsuch extension would cause payment of interest on or principal of a LIBOR RateAdvance to be made in the next following calendar month, such payment shall bemade on the next preceding Business Day.

 

Section 2.16                                Useof Loan Proceeds.  Theproceeds of the Term Loans shall be used for refinancing the Series 2000 Bonds,the Phase II Thompson Construction, the Phase III Thompson Construction andworking capital for the Borrowers’ Agent. The proceeds of the Revolving Loans shall be used for the generalbusiness purposes of the Borrowers’ Agent in a manner not in conflict with anyof the Borrowers’ covenants in this Agreement. In no event shall the Loan proceeds be used (i) to purchase, orrefinance the purchase price of, the Thompson Complex Site, (ii) to purchase orcarry margin stock (as defined in Regulation U of the Board) or to extendcredit to others for the purpose of purchasing or carrying margin stock or torefund Indebtedness originally incurred for such purpose, or (iii) for anypurpose that entail a violation of, or that is inconsistent with, theprovisions of Regulations U or X of the Board.

 

Section 2.17                                InterestRate Not Ascertainable, Etc.  If, on or prior to the date for determiningthe Adjusted LIBOR Rate in respect of the Interest Period for any LIBOR RateAdvance, any Revolving Lender or Term B Lender determines (which determinationshall be conclusive and binding, absent error) that:

 

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(a)                                  depositsin dollars (in the applicable amount) are not being made available to suchLender in the relevant market for such Interest Period, or

 

(b)                                 theAdjusted LIBOR Rate will not adequately and fairly reflect the cost to suchLender of funding or maintaining LIBOR Rate Advances for such Interest Period,

 

such Lendershall forthwith give notice to the Borrowers’ Agent and the other RevolvingLenders or Term B Lenders, as the case may be, of such determination, whereuponthe obligation of such Lender to make or continue, or to convert any Advancesto, LIBOR Rate Advances shall be suspended until such Lender notifies theBorrowers’ Agent and the Administrative Agent that the circumstances givingrise to such suspension no longer exist. While any such suspension continues, all further Advances by such Lendershall be made with an interest rate option to which such suspension does notapply.  No such suspension shall affectthe interest rate then in effect during the applicable Interest Period for anyLIBOR Rate Advance outstanding at the time such suspension is imposed.

 

Section 2.18                                IncreasedCost.  If any RegulatoryChange:

 

(a)                                  shallsubject any Revolving Lender or Term B Lender (or its Applicable LendingOffice) to any tax, duty or other charge with respect to its LIBOR RateAdvances, its Revolving or Term B Note or its obligation to make LIBOR RateAdvances or shall change the basis of taxation of payment to any Lender (or itsApplicable Lending Office) of the principal of or interest on its LIBOR RateAdvances or any other amounts due under this Agreement in respect of its LIBORRate Advances or its obligation to make LIBOR Rate Advances (except for changesin the rate of tax on the overall net income of such Lender or its ApplicableLending Office imposed by the jurisdiction in which such Lender’s principaloffice or Applicable Lending Office is located); or

 

(b)                                 shallimpose, modify or deem applicable any reserve, special deposit or similarrequirement (including, without limitation, any such requirement imposed by theBoard, but excluding any such requirement to the extent included in calculatingthe applicable Adjusted LIBOR Rate) against assets of, deposits with or for theaccount of, or credit extended by, any such Lender’s Applicable Lending Officeor against Letters of Credit issued by the Letter of Credit Bank or shallimpose on any such Lender (or its Applicable Lending Office) or on the UnitedStates market for certificates of deposit or the interbank Eurodollar marketany other condition affecting its LIBOR Rate Advances, its Revolving or Term BNote or its obligation to make LIBOR Rate Advances or affecting any Letter ofCredit;

 

and the resultof any of the foregoing is to increase the cost to such Lender (or itsApplicable Lending Office) of making or maintaining any LIBOR Rate Advance orissuing or maintaining any Letter of Credit, or to reduce the amount of any sumreceived or receivable by such Lender (or its Applicable Lending Office) underthis Agreement or under its Revolving or Term B Note, then, within 30 daysafter demand by such Lender (with a copy to the Administrative Agent), the

 

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Borrowersshall pay to such Lender such additional amount or amounts as will compensatesuch Lender for such increased cost or reduction.  Each Revolving and Term B Lender willpromptly notify the Borrowers’ Agent and the Administrative Agent of any eventof which it has knowledge, occurring after the date hereof, which will entitlesuch Lender to compensation pursuant to this Section and will designate adifferent Applicable Lending Office if such designation will avoid the needfor, or reduce the amount of, such compensation and will not, in the judgmentof such Lender, be otherwise disadvantageous to such Lender.  A certificate of any Revolving and Term BLender claiming compensation under this Section, setting forth the additionalamount or amounts to be paid to it hereunder and stating in reasonable detailthe basis for the charge and the method of computation, shall be conclusive inthe absence of error.  In determiningsuch amount, such Lender may use any reasonable averaging and attributionmethods.  Failure on the part of anyRevolving and Term B Lender to demand compensation for any increased costs orreduction in amounts received or receivable with respect to any Interest Periodshall not constitute a waiver of such Lender’s rights to demand compensationfor any increased costs or reduction in amounts received or receivable in anysubsequent Interest Period.

 

Section 2.19                                Illegality.  If any Regulatory Change shall make itunlawful or impossible for any Revolving and Term B Lender to make, maintain orfund any LIBOR Rate Advance, such Lender shall notify the Borrowers’ Agent andthe Administrative Agent, whereupon the obligation of such Lender to make orcontinue, or to convert any Advances to, LIBOR Rate Advances shall be suspendeduntil such Lender notifies the Borrowers’ Agent and the Administrative Agentthat the circumstances giving rise to such suspension no longer exist.  Before giving any such notice, such Lendershall designate a different Applicable Lending Office if such designation willavoid the need for giving such notice and will not, in the judgment of suchLender, be otherwise disadvantageous to such Lender.  If any Revolving and Term B Lender determinesthat it may not lawfully continue to maintain any LIBOR Rate Advances to theend of the applicable Interest Period, all of the affected Advances shall beautomatically converted to Base Rate Advances as of the date of such Lender’snotice, and upon such conversion the Borrowers shall indemnify such Lender inaccordance with Section 2.23.

 

Section 2.20                                CapitalAdequacy.  In the event thatany Regulatory Change reduces or shall have the effect of reducing the rate ofreturn on any Revolving or Term B Lender’s capital or the capital of its parentcorporation (by an amount such Lender deems material) as a consequence of itsCommitments and/or its Loans and/or any Letters of Credit or any RevolvingLender’s obligations to make Advances to cover Letters of Credit to a levelbelow that which such Lender or its parent corporation could have achieved butfor such Regulatory Change (taking into account such Lender’s policies and thepolicies of its parent corporation with respect to capital adequacy), then theBorrowers shall, within 30 days after written notice and demand from suchLender (with a copy to the Administrative Agent), pay to such Lender additionalamounts sufficient to compensate such Lender or its parent corporation for suchreduction.  Any determination by anyRevolving or Term B Lender under this Section and any certificate as to theamount of such reduction given to the Borrowers’ Agent by such Lender shall befinal, conclusive and binding for all purposes, absent error.

 

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Section 2.21                                FundingLosses; Quoted Rate and LIBOR Rate Advances.  The Borrowers shall compensate each Revolvingor Term B Lender, upon its written request, for all losses, expenses andliabilities (including any interest paid by such Lender to lenders of fundsborrowed by it to make or carry LIBOR Rate Advances to the extent not recoveredby such Lender in connection with the re-employment of such funds and includingloss of anticipated profits) which such Lender may sustain:  (i) if for any reason, other than a defaultby such Lender, a funding of a LIBOR Rate Advance does not occur on the datespecified therefor in the Borrowers’ Agent’s request or notice as to suchAdvance under Section 2.2 or 2.4, or (ii) if, for whatever reason (including,but not limited to, acceleration of the maturity of Advances following an Eventof Default), any repayment of a LIBOR Rate Advance, or a conversion pursuant toSection 2.19, occurs on any day other than the last day of the Interest Periodapplicable thereto.  A Revolving or Term BLender’s request for compensation shall set forth the basis for the amountrequested and shall be final, conclusive and binding, absent error.

 

Section 2.22                                Discretionof Lenders as to Manner of Funding.  Each Revolving and Term B Lender shall beentitled to fund and maintain its funding of LIBOR Rate Advances in any mannerit may elect, it being understood, however, that for the purposes of thisAgreement all determinations hereunder (including, but not limited to,determinations under Section 2.21) shall be made as if such Lender had actuallyfunded and maintained each LIBOR Rate Advance during the Interest Period forsuch Advance through the issuance of its certificates of deposit, or thepurchase of deposits, having a maturity corresponding to the last day of theInterest Period and bearing an interest rate equal to the LIBOR Rate for suchInterest Period.

 

Section 2.23                                Prepaymentof Term Loans.  TheBorrowers may prepay the principal amount of the Term Loans only if suchpayment is accompanied by accrued and unpaid interest on the amount paid and aprepayment fee (the “Prepayment Fee”) equal to (i) the Net Present Valueof such Lender’s Term Note to be prepaid minus (ii) the portion of itsTerm Note to be prepaid.  If theBorrowers fail to pay any Prepayment Fee when due, the amount of suchPrepayment Fee shall thereafter bear interest until paid at the DefaultRate.  Each partial principal prepaymentshall be in a minimum amount of the lesser of (i) $200,000 or a whole integralof $100,000 in excess thereof and (ii) the entire remaining principal balanceof the Term Loans, and shall be applied to the principal installments ininverse order of their maturity.  Exceptupon an acceleration following an Event of Default or upon termination of theTerm Loan Commitments in whole, the Borrowers may pay LIBOR Rate Advances onlyon the last day of the Interest Period applicable thereto.  Amounts paid or prepaid on the Term Notesunder this Section shall be for the account of each Lender in proportion to itsshare of outstanding Term Loans, and shall be paid or prepaid ratably among theTerm A Loans and the Term B Loans. Amounts paid or prepaid on the Term Loans may not be reborrowed.

 

Section 2.24                                Replacementof Certain Lenders.  Ifany Lender shall become affected by any of the changes or events described in****Section 2.17, 2.18, 2.19 or 2.20 (any suchLender hereinafter referred to as a “Replaced Lender”) and shall givenotice to the Borrowers for any increased cost or amounts thereunder, theBorrowers may, so long as no Event of Default has occurred and is continuing,upon at least five (5) Business Days’ notice to the Administrative

 

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Agent and suchReplaced Lender by the Borrowers’ Agent, designate a replacement lender (a “ReplacementLender”) reasonably acceptable to the Administrative Agent, to which suchReplaced Lender shall, subject to its receipt (unless a later date for theremittance thereof shall be agreed upon by the Borrowers and the ReplacedLender) of all amounts due and owing to such Replaced Lender under Section2.17, 2.18, 2.19 or 2.20 assign all (but not less than all) of its rights,obligations, Loans, Revolving Loan Commitment and Term Loan Commitment pursuantto an Assignment Agreement; provided, that all amounts owed to suchReplaced Lender by the Borrowers (except liabilities which by the terms hereofsurvive the payment in full of the Loans and termination of this Agreement)shall be paid in full as of the date of such assignment.  Upon any assignment by any Lender pursuant tothis Section becoming effective, the Replacement Lender shall thereupon bedeemed to be a “Lender” for all purposes of this Agreement and such ReplacedLender shall thereupon cease to be a “Lender” for all purposes of thisAgreement and shall have no further rights or obligations hereunder (other thanpursuant to Section 2.17, 2.18, 2.19 or 2.20 while such Replaced Lender was aLender).  No Prepayment Fee shall bepayable as a result of replacement of a Lender under this Section 2.24.

 

Section 2.25                                Taxes.

 

(a)                                  Anyand all payments by the Borrowers hereunder or under the Notes shall be madefree and clear of and without deduction for any and all present or futuretaxes, levies, imposts, deductions, charges of withholdings, and allliabilities with respect thereto, excluding, in the case of each Lenderand the Administrative Agent, taxes imposed on its overall net income andfranchise taxes imposed on it in lieu of net income taxes (all suchnon-excluded taxes, levies, imposts, deductions, charges, withholdings andliabilities in respect of payments hereunder or under the Notes beinghereinafter referred to as “Taxes”).

 

(b)                                 TheBorrowers agree to pay any present or future stamp or documentary taxes or anyother excise or property taxes, charges or similar levies that arise from anypayment made hereunder or under the Notes or from the execution, delivery orregistration of, performing under, or otherwise with respect to, this Agreementor the Notes (hereinafter referred to as “Other Taxes”).

 

(c)                                  TheBorrowers shall indemnify each Lender and the Administrative Agent for the fullamount of Taxes or Other Taxes imposed on or paid by such Lender or theAdministrative Agent and any penalties, interest and expenses with respectthereto.  Payments on thisindemnification shall be made within 30 days from the date such Lender or theAdministrative Agent makes written demand therefor.

 

(d)                                 Within30 days after the date of any payment of Taxes, the Borrowers shall furnish tothe Administrative Agent, at its address referred to on the signature pagehereof, a certified copy of a receipt evidencing payment thereof.  In the case of any payment hereunder or underthe Notes by or on behalf of the Borrowers through an account or branch outsidethe United States or by or on behalf of the Borrowers by a

 

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payor that isnot a United States person, if the Borrowers determine that no Taxes arepayable in respect thereof, the Borrowers shall furnish or shall cause suchpayor to furnish, to the Administrative Agent, at such address, an opinion ofcounsel reasonably acceptable to the Administrative Agent stating that suchpayment is exempt from Taxes. For purposes of this subsection (d) andsubsection (e), the terms “United States” and “United States person”shall have the meanings specified in Section 7701 of the Internal Revenue Code.

 

(e)                                  EachLender, as of the date in becomes a party hereto, represents to the Borrowersand the Administrative Agent that it is either (i) a corporation organizedunder the laws of the United States or any State thereof or (ii) is entitled tocomplete exemption from United States withholding tax imposed on or withrespect to any payments, including fees, to be made pursuant to this Agreement(x) under an applicable provision of a tax convention to which the UnitedStates is a party or (y) because it is acting through a branch, agency oroffice in the United States and any payment to be received by it hereunder iseffectively connected with a trade or business in the United States.  Each Lender that is not a United Statesperson (as such term is defined in Section 7701(a)(30) of the Code) shallsubmit to the Borrowers’ Agent and the Administrative Agent, on or before theday on which such Lender becomes a Lender, a duly completed and signed copy ofeither Form W-8BEN or Form W-8ECI of the United States Internal RevenueService.  Form W-8BEN shall include theforeign Lender’s United States taxpayer identification number if required underthe current regulations to claim exemption from withholding pursuant to a taxconvention.  Thereafter and from time totime, each such Lender shall submit to the Borrowers’ Agent and theAdministrative Agent such additional duly completed and signed copies of one orthe other of such forms (or such successor forms as shall be adopted from timeto time by the relevant United States taxing authorities) as may be (i)reasonably requested by the Borrowers’ Agent or the Administrative Agent and(ii) required and permitted under then-current United States law or regulationsto avoid United States withholding taxes on payments in respect of all paymentsto be received by such Lender hereunder. Upon the request of the Borrowers’ Agent or the Administrative Agent,each Lender that is a United States person (as such term is defined in Section7701(a)(30) of the Code) shall submit to the Borrowers’ Agent and theAdministrative Agent a certificate on Internal Revenue Service Form W-9 or suchsubstitute form as is reasonably satisfactory to the Borrowers’ Agent and theAdministrative Agent to the effect that it is such a United States person.

 

(f)                                    Ifany Borrower shall be required by law or regulation to make any deduction,withholding or backup withholding of any taxes, levies, imposts, duties, fees,liabilities or similar charges of the United States of America, any possessionor territory of the United States of America (including the Commonwealth ofPuerto Rico) or any area subject to the jurisdiction of the United States ofAmerica (“U.S. Taxes”) from any payments to a Lender pursuant to anyLoan Document in respect of the Obligations payable to such then or thereafteroutstanding, such Borrower shall make such

 

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withholdingsor deductions and pay the full amount withheld or deducted to the relevanttaxation authority or other authority in accordance with applicable law.

 

Section 2.26                                Capitalization.  Borrowers’ Agent agrees to purchasesuch equity in CoBank as CoBank may from time to time require in accordancewith its Bylaws.  However, the maximumamount of equity which each Borrower shall be obligated to purchase inconnection with any Loan may not exceed the maximum amount permitted by theBylaws at the time that Loan is entered into or such Loan is renewed orrefinanced by CoBank.

 

Section 2.27                                Security.  Each party hereto acknowledges thatCoBank has a statutory first Lien on all of the Borrowers’ Agent’s stock andother equities in CoBank (the “CoBank Equities”) pursuant to 12 U.S.C. §2131.  Accordingly, and notwithstandingany other provision of this Agreement or any other Loan Document to thecontrary:

 

(a)                                  CoBank’sstatutory Lien on the CoBank Equities shall be for CoBank’s sole and exclusivebenefit and shall not be subject to this Agreement or any other Loan Documentnor shall the CoBank Equities (or the proceeds thereof) be subject to pro ratasharing hereunder;

 

(b)                                 CoBankshall have no obligation to retire the CoBank equities upon the Borrowers’ defaultor at any other time, either for application to the Obligations or otherwise;and

 

(c)                                  theCoBank Equities shall not be offset against the Obligations to CoBank forpurposes of determining the Lenders’ pro rata shares hereunder.

 

**ARTICLE III**

**CONDITIONS PRECEDENT**

 

Section 3.1                                      Conditionsof Initial Transaction. The making of the Tranche A1 and Tranche B1 Term Loans and the initialRevolving Loans and the issuance of the initial Letter of Credit shall besubject to the prior or simultaneous fulfillment of the following conditions:

 

(a)                                  Documents.  The Administrative Agent shall have receivedthe following in sufficient counterparts (except for the Notes) for eachLender:

 

(i)                                       A Revolving Note, a Tranche A1 Term Note, aTranche A2 Term Note, a Tranche B1 Term Note and a Tranche B2 Term Note drawnto the order of each applicable Lender, executed by a duly authorized officerof the Borrowers and dated the Closing Date.

 

(ii)                                  TheSecurity Documents duly executed by the respective parties thereto and dated theClosing Date.

 

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(iii)                               TheEnvironmental Indemnity duly executed by the Borrowers and dated the ClosingDate.

 

(iv)                              Acertificate of the Secretary or Assistant Secretary (or other appropriateofficer) of each Borrower dated as of the Closing Date and certifying to thefollowing:

 

(A)                              Atrue and accurate copy of the limited liability company or corporateresolutions of such Borrower authorizing the execution, delivery andperformance of the Loan Documents to which such Borrower is a partycontemplated hereby and thereby;

 

(B)                                Theincumbency, names, titles and signatures of the officers of such Borrowerauthorized to execute the Loan Documents to which such Borrower is a party andto request Advances;

 

(C)                                A trueand accurate copy of the Certificate of Formation or Articles of Incorporation(or the equivalent) of such Borrower with all amendments thereto, certified bythe appropriate governmental official of the jurisdiction of organization as ofa date acceptable to the Administrative Agent; and

 

(D)                               Atrue and accurate copy of the operating agreement or bylaws (or otherconstitutive documents) for such Borrower.

 

(v)                                 Acertificate of good standing for each Borrower in the jurisdiction of itsformation or incorporation and, with respect to the Borrowers’ Agent, in theStates of Iowa and Minnesota and each other jurisdiction where the character ofthe properties owned or leased by such Borrower makes such qualificationnecessary, certified by the appropriate governmental officials as of a dateacceptable to the Administrative Agent.

 

(vi)                              Acertificate dated the Closing Date of the chief executive officer or chieffinancial officer of each Borrower certifying as to the matters set forth inSections 3.3 (a) and  (b) below.

 

(vii)                           Theinitial Borrowing Base Certificate, as of the last day of the most recent monthend prior to the Closing Date.

 

(viii)                        Insurancecertificates in form and substance reasonably satisfactory to the Lenderslisting the Administrative Agent as loss payee thereof and indicating that theBorrower has obtained insurance in compliance with Section 5.3 with respect toeach of the businesses and real properties of the Borrowers in such amounts andwith such carriers reasonably acceptable to the Lenders.

 

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(ix)                                Landlord’swaivers and/or bailee’s waivers for locations identified on Schedule 3.1(a).

 

(b)                                 Opinions.  The Administrative Agent shall have receivedan executed legal opinion of Lindquist & Vennum and Belin Lamson McCormickZumbach Flynn, counsel to the Borrowers, dated the Closing Date, delivered tothe Administrative Agent in sufficient counterparts for each Lender and in formand substance reasonably satisfactory to the Lenders.

 

(c)                                  Compliance.  Each Borrower shall have performed andcomplied with all agreements, terms and conditions contained in this Agreementrequired to be performed or complied with by such Borrower prior to orsimultaneously with the Closing Date.

 

(d)                                 LienSearches.  The Administrative Agentshall have received the results of a recent lien search in each of thejurisdictions where the assets of the Borrowers are located, and such searchshall reveal no Liens on any of the assets of the Borrowers except for thoseLiens permitted by Section 6.13 or discharged on or prior to the Closing Datepursuant to a document reasonably satisfactory to the Administrative Agent.

 

(e)                                  EnvironmentalMatters.  The Administrative Agentshall have received a Phase I environmental site assessment with respect to theThompson Complex Site prepared by the Borrowers’ environmental consultant,along with a corresponding reliance letter from such environmental consultant,confirming that no hazardous substances were found in, on or under the ThompsonComplex Site and the Lenders shall otherwise be satisfied in all respects withan environmental due diligence investigation of the Borrowers, including withrespect to the Thompson Complex and the Thompson Complex Site.

 

(f)                                    TitleInsurance.  The Administrative Agentshall have received a commitment for a mortgagee’s title insurance policy ormarked up unconditional binder for such insurance (or equivalent thereofreasonably satisfactory to the Administrative Agent) .  Such policy shall (i) be in an amountreasonably satisfactory to the Lenders; (ii) be issued at ordinary rates; (iii)insure that the Mortgage insured thereby creates a valid first Lien on themortgaged property described therein free and clear of all defects andencumbrances, except as disclosed therein; (iv) name the Administrative Agentfor the benefit of the Lenders as the insured thereunder; (v) be in the form ofALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent thereofreasonably satisfactory to the Administrative Agent); (vi) contain suchendorsements and affirmative coverage as the Administrative Agent mayreasonably request and (vii) be issued by a title company reasonablysatisfactory to the Administrative Agent (including any such title companiesacting as coinsurers or reinsurers, at the option of the AdministrativeAgent).  The Administrative Agent shallhave received evidence reasonably satisfactory to it that all premiums inrespect of each such policy, all charges for mortgage recording tax, and allrelated expenses, if any, have been paid.

 

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(g)                                 A.L.T.A.Survey.  The Administrative Agentshall have received an as-built A.L.T.A. survey of the Thompson Complex Site,reasonably satisfactory in form and substance to the Administrative Agent,reasonably current and certified to the Administrative Agent for the benefit ofthe Lenders and the title company issuing the mortgagee’s title insurancepolicy by a licensed surveyor reasonably satisfactory to the AdministrativeAgent, showing (i) the locations on the Thompson Complex Site of all thebuildings, structures and other improvements and the established buildingsetback lines, (ii) the lines of streets abutting the Thompson Complex Site andwidth thereof, (iii) all access and other easements appurtenant to the ThompsonComplex Site, (iv) all roadways, paths, driveways, easements, encroachments andoverhanging projections and similar encumbrances affecting the Thompson ComplexSite, whether recorded, apparent from a physical inspection of the sites orotherwise known to the surveyor, (v) any encroachments on any adjoiningproperty by the building structures and improvements on the Thompson ComplexSite, (vi) if the Thompson Complex Site is described as being on a filed map, alegend relating the survey to said map, and (vii) the flood zone designations,if any, in which such Thompson Complex Site is located.

 

(h)                                 RiskManagement Policy.  TheAdministrative Agent shall have received a Risk Management Policy for theBorrowers’ Agent that (i) has been approved by the Borrowers’ Agent’s board ofdirectors, (ii) addresses ingredients (corn and soybean meal) utilized in theoperations of the Borrowers’ Agent’s operations and the finished egg productstherefrom and (iii) is in form and substance reasonably satisfactory to theLenders.

 

(i)                                     PricingReport.  The Administrative Agentshall have received a Pricing Report from the Borrowers’ Agent that iseffective as of a date not more than three Business Days prior to the ClosingDate, in form and substance reasonably satisfactory to the Lenders.

 

(j)                                     ConstructionPlans.  The Administrative Agentshall have received a copy of the Construction Plans and such other documentsand information (including, without limitation, Applicable Permits, easementsand other data) relating to the Phase II Thompson Construction and the PhaseIII Thompson Construction as any Lender may reasonably request, all of whichshall be in form and substance reasonably satisfactory to the Lenders.

 

(k)                                  MaterialContracts.  The Borrowers shall havedelivered to the Administrative Agent true and complete copies of each MaterialContract identified on Schedule 3.1(k), including any supplements or amendmentsthereto, and a certificate of an authorized officer of Borrowers’ Agentcertifying that all such Material Contracts are true, complete and correct andare on the Closing Date in full force and effect and that neither the Borrowers’Agent nor, to the Borrowers’ Agent’s knowledge, any other party to any suchMaterial Contract is or, but for the passage of time or giving of notice orboth, will be in breach of any material obligation thereunder.

 

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(l)                                     ApplicablePermits.  The Borrowers shall haveobtained or caused to be obtained all Applicable Permits identified on Part Iof Schedule 3.1(l) and the Borrowers shall have delivered or caused to bedelivered to the Administrative Agent true and correct copies of each suchApplicable Permit and a certificate of an authorized officer of the Borrowers’Agent certifying that all such Applicable Permits have been obtained, and arein full force and effect, not subject to any then current legal proceeding orto any unsatisfied condition that could reasonably be expected to allowmaterial modification or revocation, and all applicable appeal periods with respectthereto shall have expired.

 

(m)                               Filings,Registrations and Recordings.  Eachdocument (including any Uniform Commercial Code or CNS financing statement)required by the Security Documents or under law or reasonably requested by theAdministrative Agent to be filed, registered or recorded in order to create infavor of the Administrative Agent for the benefit of the Lenders, a perfectedLien on the collateral described therein, prior and superior in right to anyother Person (other than with respect to Liens expressly permitted by Section6.13), shall be in proper form for filing, registration or recordation, anypledged collateral shall have been duly delivered to the Administrative Agent,and the priority and perfection of the Liens created by the Security Documentsshall have been established to the satisfaction of the Administrative Agent andits counsel.

 

(n)                                 ExistingIndebtedness.  The AdministrativeAgent shall have received evidence reasonably satisfactory to the Lenders thatall Indebtedness of the Borrowers other than Indebtedness permitted to remainoutstanding after the Closing Date pursuant to this Agreement shall have beenrepaid or will be repaid with the proceeds of the Term A1 Loan and Term B1 Loanand the initial Advance under the Revolving Loan to be made on the ClosingDate.

 

(o)                                 Conversion.  The Administrative Agent shall have receivedevidence reasonably satisfactory to the Lenders that the Conversion has beencompleted, all required filings, notices and approvals related thereto havebeen made, given or received, and all financial, accounting and tax aspects ofthe Conversion shall be reasonably acceptable to the Lenders.

 

(p)                                 NoAdverse Change.  Since May 31, 2004,in the judgment of the Lenders, no Material Adverse Occurrence shall haveoccurred.

 

(q)                                 OtherMatters.  All corporate and legalproceedings relating to the Borrowers and all instruments and agreements inconnection with the transactions contemplated by this Agreement shall besatisfactory in scope, form and substance to the Administrative Agent, theLenders and the Administrative Agent’s counsel, and the Administrative Agentshall have received all information and copies of all documents, includingrecords of corporate proceedings, as any Lender or such counsel may reasonablyhave requested in connection therewith, such documents where appropriate to becertified by proper corporate or governmental authorities.

 

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(r)                                    Feesand Expenses.  The AdministrativeAgent shall have received for itself and for the account of the Lenders allfees and other amounts due and payable by the Borrowers on or prior to theClosing Date, including the reasonable fees and expenses of counsel to theAdministrative Agent payable pursuant to Section 9.2.

 

Any one ormore of the conditions set forth above which have not been satisfied by theBorrowers on or prior to the date of disbursement of the initial Loan underthis Agreement shall not be deemed permanently waived by the AdministrativeAgent or any Lender unless the Administrative Agent or such Lender, as the casemay be, shall waive the same in a writing which expressly states that thewaiver is permanent, and in all cases in which the waiver is not stated to bepermanent the Administrative Agent or any Lender may at any time subsequentthereto insist upon compliance and satisfaction of any such condition as acondition to any subsequent Loan or Letter of Credit hereunder and failure bythe Borrowers to comply with any such condition within five (5) Business Day’swritten notice from the Administrative Agent or any Lender to the Borrowers’Agent shall constitute an Event of Default under this Agreement.

 

Section 3.2                                      ConditionsPrecedent to the Tranche A2 and Tranch B2 Term Loans.  The obligations of the Tranche A Term Lendersand the Tranche B Term Lenders to make the Tranche A2 Term Loans and Tranche B2Term Loans hereunder shall be subject to the fulfillment of the followingconditions:

 

(a)                                  InitialLoans.  The conditions to the makingof the Tranche A1 and Tranche B1 Term Loans and the initial Revolving Loans setforth in Section 3.1 shall have been satisfied or waived by the Lenders and theTranche A1 and Tranche B1 Term Loans shall have been made.

 

(b)                                 NoDefault; Representations and Warranties.  The Administrative Agent shall have received acertificate dated the requested borrowing date of the chief executive officeror chief financial officer of each Borrower certifying as to the matters setforth in Sections 3.3 (a) and  (b) below.

 

(c)                                  Appraisal.  The Administrative Agent shall have receiveda real property appraisal of the Thompson Complex Site, on an as-built basis,which appraisal shall be in form and substance reasonably satisfactory to theLenders.

 

(d)                                 TitlePolicy Endorsement.  The Borrowers’Agent shall provide, or the Administrative Agent shall be adequately assuredthat the title insurer is committed at the time of each Advance in respect ofthe Tranche A2 Term Loans and Tranche B2 Term Loans to issue to theAdministrative Agent a date-down endorsement of the mortgagee’s title policy tothe date of such Advances, insuring or otherwise establishing to thesatisfaction of the Administrative Agent the continuing first priority of theMortgage (subject only to Permitted Encumbrances and Liens permitted inaccordance with Sections 6.13(b), (d) and (e).

 

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(e)                                  LienReleases.  The Borrowers’ Agent shallhave delivered to the Administrative Agent duly executed acknowledgments ofpayments and releases of mechanics’ and materialmen’s liens, in form andsubstance reasonably satisfactory to the Administrative Agent, from eachcontractor and subcontractor thereof for all work, services, materials,including equipment and fixtures of all kinds, done, previously performed orfurnished in connection with the Phase II Thompson Construction or Phase IIIThompson Construction, that has a cost or value of over $5,000.

 

(f)                                    AdditionalAdvance Limitations.  The obligationof the Tranche A Term Lenders and the Tranche B Term Lenders to make the FirstTranche 2 Advances, the Second Tranche 2 Advances and the Final Tranche 2Advances shall be subject to the following additional conditions, asapplicable:

 

(i)                                     Withrespect to the First Tranche 2 Advances, the Administrative Agent shall havereceived evidence reasonably satisfactory to the Lenders that (i) theconstruction of the Layer Barns 51, 52 and 53 at the Thompson Complex has beencompleted and such Layer Barns have been stocked, (ii) the construction of the newfeedmill at the Thompson Complex has been completed and such feedmill isoperational, and (iii) the construction of the new eggshell dryer at theThompson Complex has been completed and such dryer is operational(collectively, the “Phase II Thompson Construction”), in each casesubstantially in accordance with the Construction Plans;

 

(ii)                                  Withrespect to the Second Tranche 2 Advances, the First Trache 2 Advances shallhave been made and the Borrowers’ Agent shall have delivered to theAdministrative Agent three duplicate originals of a USPAP appraisal of theThompson Complex Site (including the Thompson Complex) by the Mentor Group (the“Appraisal”), in form and substance reasonably satisfactory to theLenders, demonstrating that, after giving effect to the requested SecondTranche 2 Advances, the Total Term Outstandings do not exceed 65% of thepro-rata appraised value of the completed portion of the Phase II ThompsonConstruction and the Phase III Thompson Construction;

 

(iii)                               Withrespect to the Final Tranche 2 Advances, the Administrative Agent shall havereceived (A)  evidence reasonablysatisfactory to the Lenders that the Phase III Thompson Construction has beencompleted substantially in accordance with the Construction Plans, (B) copiesof each Applicable Permit not previously delivered to the Administrative Agent,(C) an updated as-built A.L.T.A. survey of the Mortgaged Property showing allimprovements added in connection with the Phase II Thompson Construction andthe Phase III Thompson Construction, and (D) an Appraisal in form and substancereasonably satisfactory to the Lenders, demonstrating that after giving effectto the requested Final Tranche 2 Advances, the Total Term Outstandings do notexceed 65% of the pro-

 

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rata appraisedvalue of the completed portion of the Phase II Thompson Construction and thePhase III Thompson Construction; and

 

(iv)                              Withrespect to the Second Tranche 2 Advances and the Final Tranche 2 Advances inrespect of the Tranche A2 Term Loans, the Borrowers’ Agent shall have selectedthe Business Day upon which the Tranche A2 Rate applicable to the SecondTranche 2 Advance or the Final Tranche 2 Advance, as applicable, in respect ofthe Tranche A2 Term Loans shall be determined by providing written notice tothe Administrative Agent not later than 12:00 P.M. Central on the date soselected, which must be not more than 45 days prior to the date of the SecondTranche 2 Advance or the Final Tranche 2 Advance, as applicable; provided,however, that in the event the Borrowers’ Agent fails to provide suchwritten notice on or prior to the fifth (5th) Business Day prior tothe date of the Second Tranche 2 Advance or the Final Tranche 2 Advance, asapplicable, such interest rate shall be determined as of 1:00 P.M. Central bythe Tranche A2 Term Lenders from an on-line market service determined by theTranche A2 Term Lenders; providedfurther that in either eventthe Borrowers’ Agent shall have, in its request for borrowing deliveredpursuant to Section 2.2(b), acknowledged and unconditionally accepted theTranche A2 Rate applicable to such Second Tranche 2 Advance or Final Tranche 2Advance, as applicable, and such blended Tranche A2 Rate thereafter applicableto the Advances in respect of the Tranche A2 Term Loans.

 

Section 3.3                                      ConditionsPrecedent to All Loans and Letters of Credit.  The obligation of the Lenders to make anyLoans hereunder (including the Term Loans and the initial Revolving Loans) andof the Letter of Credit Bank to issue each Letter of Credit (including theinitial Letter of Credit) shall be subject to the fulfillment of the followingconditions:

 

(a)                                  Representationsand Warranties.  The representationsand warranties contained in Article IV shall be true and correct on and as ofthe Closing Date and on the date of each Revolving Loan or the date of issuanceof each Letter of Credit, with the same force an effect as if made on suchdate.

 

(b)                                 NoDefault.  No Default or Event ofDefault shall have occurred and be continuing on the Closing Date and on thedate of each Revolving Loan, the date of each Term Loan or the date of issuanceof each Letter of Credit or will exist after giving effect to the RevolvingLoans or Term Loans made on such date or the Letters of Credit so issued.

 

(c)                                  Noticesand Requests.  The AdministrativeAgent shall have received the Borrowers’ Agent’s request for such Loans asrequired under Section 2.2 or its application for such Letters of Creditspecified under Section 2.9.

 

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**ARTICLEIV**

**REPRESENTATIONS AND WARRANTIES**

 

To induce theLenders to enter into this Agreement and to make Loans hereunder and to inducethe Letter of Credit Bank to issue Letters of Credit, each Borrower representsand warrants to the Lenders and the Letter of Credit Bank for itself and eachother Borrower:

 

Section 4.1                                      Organization,Standing, Etc.  Midwest Investors ofIowa, Cooperative is a cooperative association duly incorporated and validlyexisting and in good standing under the laws of State of Iowa.  Golden Oval Eggs, LLC is a limited liabilitycompany duly organized and validly existing and in good standing under the lawsof the State of Delaware.  Each Borrowerhas all requisite power and authority to carry on its business as nowconducted, to enter into this Agreement, to issue the Notes and to perform itsobligations under the Loan Documents. Each Borrower (a) holds all certificates of authority, licenses andpermits necessary to carry on its business as presently conducted in eachjurisdiction in which it is carrying on such business, except where the failureto hold such certificates, licenses or permits would not constitute a MaterialAdverse Occurrence, and (b) is duly qualified and in good standing as a foreigncompany or corporation in each jurisdiction in which the character of theproperties owned, leased or operated by it or the business conducted by itmakes such qualification necessary and the failure so to qualify wouldpermanently preclude such Borrower from enforcing its rights with respect toany assets or expose such Borrower to any Material Adverse Occurrence.

 

Section 4.2                                      Authorizationand Validity.  The execution,delivery and performance by each Borrower of the Loan Documents have been dulyauthorized by all necessary corporate or company action by such Borrower.  This Agreement constitutes, and the Notes andother Loan Documents when executed will constitute, the legal, valid andbinding obligations of each Borrower, enforceable against such Borrower inaccordance with their respective terms, subject to limitations as toenforceability which might result from bankruptcy, insolvency, moratorium andother similar laws affecting creditors’ rights generally and subject tolimitations on the availability of equitable remedies.

 

Section 4.3                                      NoConflict; No Default.  The execution,delivery and performance by each Borrower of the Loan Documents will not (a)violate any provision of any law, statute, rule or regulation or any order,writ, judgment, injunction, decree, determination or award of any court,governmental agency or arbitrator presently in effect having applicability tosuch Borrower, (b) violate or contravene any provision of the Certificate ofFormation, Articles of Incorporation, bylaws or limited liability companyagreement, as applicable, of such Borrower, or (c) result in a breach of orconstitute a default under any indenture, loan or credit agreement or any otheragreement, lease or instrument to which such Borrower is a party or by which itor any of its properties may be bound or result in the creation of any Lienthereunder.  No Borrower is in defaultunder or in violation of any such law, statute, rule or regulation, order,writ, judgment, injunction, decree, determination or award or any suchindenture, loan or credit agreement or

 

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otheragreement, lease or instrument in any case in which the consequences of suchdefault or violation could constitute a Material Adverse Occurrence.

 

Section 4.4                                      GovernmentConsent.  No order, consent,approval, license, authorization or validation of, or filing, recording orregistration with, or exemption by, any governmental or public body orauthority is required on the part of any Borrower to authorize, or is requiredin connection with the execution, delivery and performance of, or the legality,validity, binding effect or enforceability of, the Loan Documents, except forany necessary filing or recordation of or with respect to any of the Security Documents.

 

Section 4.5                                      FinancialStatements and Condition.  TheBorrowers’ audited consolidated financial statements as at August 31, 2003 andtheir unaudited financial statements as at May 31, 2004, as heretoforefurnished to the Lenders, have been prepared in accordance with GAAP on aconsistent basis (except for the absence of footnotes and subject to year-endaudit adjustments as to the interim statements) and fairly present thefinancial condition of the Borrowers as at such dates and the results of theiroperations and changes in financial position for the respective periods thenended.  As of the dates of such financialstatements, no Borrower had any material obligation, contingent liability,liability for taxes or long-term lease obligation which is not reflected insuch financial statements or in the notes thereto.  Since February 29, 2004 and after givingeffect to the Conversion, there has been no Material Adverse Occurrence.

 

Section 4.6                                      Litigation.  Except as disclosed on Schedule 4.6,there are no actions, suits or proceedings pending or, to the knowledge of anyBorrower, threatened against or affecting any Borrower or any of theirproperties before any court or arbitrator, or any governmental department,board, agency or other instrumentality which, if determined adversely to anyBorrower, would constitute a Material Adverse Occurrence, and there are nounsatisfied judgments against any Borrower, the satisfaction or payment ofwhich would constitute a Material Adverse Occurrence.

 

Section 4.7                                      Environmental,Health and Safety Laws.  There doesnot exist any violation by any Borrower of any applicable federal, state orlocal law, rule or regulation or order of any government, governmentaldepartment, board, agency or other instrumentality relating to environmental,pollution, health or safety matters which has, will or threatens to impose amaterial liability on a Borrower or which has required or would require amaterial expenditure by a Borrower to cure. No property of any Borrower is used for the production, storage ordisposal of hazardous wastes, substances or materials.  No Borrower has received any notice to theeffect that any part of its operations or properties is not in materialcompliance with any such law, rule, regulation or order or notice that it orits property is the subject of any governmental investigation evaluatingwhether any remedial action is needed to respond to any release of any toxic orhazardous waste or substance into the environment, which non-compliance orremedial action could reasonably be expected to constitute a Material AdverseOccurrence.  Except as set out on Schedule4.7, no Borrower has knowledge that it or its property will become subjectto environmental laws or regulations during the term of this Agreement, compliancewith which

 

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couldreasonably be expected to require Capital Expenditures that could reasonably beexpected to constitute a Material Adverse Occurrence.

 

Section 4.8                                      ERISA.  Each Plan is in substantial compliance withall applicable requirements of ERISA and the Code and with all materialapplicable rulings and regulations issued under the provisions of ERISA and theCode setting forth those requirements.  NoReportable Event has occurred and is continuing with respect to any Plan.  All of the minimum funding standardsapplicable to such Plans have been satisfied and there exists no event orcondition which would reasonably be expected to result in the institution ofproceedings to terminate any Plan under Section 4042 of ERISA.

 

Section 4.9                                      FederalReserve Regulations.  No Borrower isengaged principally or as one of its important activities in the business ofextending credit for the purpose of purchasing or carrying margin stock (asdefined in Regulation U of the Board). The value of all margin stock owned by each Borrower does not constitutemore than 25% of the value of the assets of such Borrower.

 

Section 4.10                                Titleto Property; Leases; Liens; Subordination. Each Borrower has (a) good and marketable title to its real propertiesand (b) good and sufficient title to, or valid, subsisting and enforceableleasehold interest in, its other material properties, including all realproperties, other properties and assets, referred to as owned by a Borrower inthe most recent financial statement referred to in Section 5.1 (other thanproperty disposed of since the date of such financial statements in theordinary course of business).  None ofsuch properties is subject to a Lien, except as allowed under Section6.13.  No Borrower has subordinated anyof its rights under any obligation owing to it to the rights of any otherperson.

 

Section 4.11                                Taxes.  Each Borrower has filed all federal, stateand local tax returns required to be filed and has paid or made provision forthe payment of all taxes due and payable pursuant to such returns and pursuantto any assessments made against it or any of its property and all other taxes,fees and other charges imposed on it or any of its property by any governmentalauthority (other than taxes, fees or charges the amount or validity of which iscurrently being contested in good faith by appropriate proceedings and withrespect to which reserves in accordance with GAAP have been provided on thebooks of such Borrower).  No tax Lienshave been filed and no material claims are being asserted with respect to anysuch taxes, fees or charges.  Thecharges, accruals and reserves on the books of the Borrowers in respect oftaxes and other governmental charges are adequate and the Borrowers know of noproposed material tax assessment against it or any basis therefor.

 

Section 4.12                                Trademarks,Patents.  Each Borrower possesses orhas the right to use all of the patents, trademarks, trade names, service marksand copyrights, and applications therefor, and all technology, know-how,processes, methods and designs used in or necessary for the conduct of itsbusiness, without known conflict with the rights of others.

 

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Section 4.13                                BurdensomeRestrictions.  No Borrower is a partyto or otherwise bound by any indenture, loan or credit agreement or any leaseor other agreement or instrument or subject to any charter, corporate orpartnership restriction which would foreseeably constitute a Material AdverseOccurrence.

 

Section 4.14                                ForceMajeure.  Since the date of the mostrecent financial statement referred to in Section 5.1, the business, propertiesand other assets of the Borrowers have not been materially and adverselyaffected in any way as the result of any fire or other casualty, strike,lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation,riot, civil disturbance, activity of armed forces or act of God.

 

Section 4.15                                InvestmentCompany Act.  No Borrower is an “investmentcompany” or a company “controlled” by an investment company within the meaningof the Investment Company Act of 1940, as amended.

 

Section 4.16                                PublicUtility Holding Company Act.  NoBorrower is a “holding company” or a “subsidiary company” of a holding companyor an “affiliate” of a holding company or of a subsidiary company of a holdingcompany within the meaning of the Public Utility Holding Company Act of 1935,as amended.

 

Section 4.17                                FullDisclosure.  Subject to the followingsentence, neither the financial statements referred to in Section 5.1 nor anyother certificate, written statement, exhibit or report furnished by or onbehalf of the Borrowers in connection with or pursuant to this Agreementcontains any untrue statement of a material fact or omits to state any materialfact necessary in order to make the statements contained therein notmisleading.  Certificates or statementsfurnished by or on behalf of the Borrowers to the Lenders consisting ofprojections or forecasts of future results or events have been prepared in goodfaith and based on good faith estimates and assumptions of the management ofthe Borrower, and the Borrowers have no reason to believe that such projectionsor forecasts are not reasonable.

 

Section 4.18                                Subsidiaries.  No Borrower has any Subsidiaries.

 

Section 4.19                                LaborMatters.  There are no pending orthreatened strikes, lockouts or slowdowns against either Borrower.  No Borrower has been or is in violation inany material respect of the Fair Labor Standards Act or any other applicableFederal, state, local or foreign law dealing with such matters. All paymentsdue from any Borrower on account of wages and employee health and welfareinsurance and other benefits (in each case, except for de minimus amounts),have been paid or accrued as a liability on the books of such Borrower.  The consummation of the transactionscontemplated under the Loan Documents will not give rise to any right oftermination or right of renegotiation on the part of any union under anycollective bargaining agreement to which any Borrower is bound.

 

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Section 4.20                                SecurityDocuments.

 

(a)                                  TheSecurity Agreement, when executed in accordance with this Agreement, iseffective to create in favor of the Administrative Agent for the benefit of theLenders, a legal, valid and enforceable Lien on the collateral describedtherein and the proceeds thereof, and when financing statements in appropriateform are filed with the Secretary of State of Iowa, the Secretary of State ofDelaware and in Minnesota, the Security Agreement shall constitute a fullyperfected Lien on, and security interest in, the collateral described thereinand the proceeds thereof to the extent a security interest may be perfected byfiling under the applicable Uniform Commercial Code, in each case prior andsuperior in right to any other Person (except with respect to Liens permittedby Sections 6.13(b) and Liens permitted by Section 6.13(c) and (g) that havepriority by operation of law).

 

(b)                                 TheMortgage, when executed in accordance with this Agreement, is effective tocreate in favor of the Administrative Agent for the benefit of the Lenders, alegal, valid and enforceable Lien on the mortgaged property described thereinand the proceeds thereof, and when the Mortgage is filed in the applicableoffice of Winnebago County, Iowa, such Mortgage shall constitute a fullyperfected Lien of record on, and security interest in, the mortgaged propertydescribed therein and the proceeds thereof, as security for the Obligations,prior and superior in right to any other Person (except with respect toPermitted Encumbrances and Liens permitted by Sections 6.13(b) and (d)).

 

Section 4.21                                Solvency.  After the making of any Loan and after givingeffect thereto, (a) the fair value of the assets of each Borrower, at a fairvaluation, will exceed its debts and liabilities, subordinated, contingent orotherwise; (b) the present fair saleable value of the property of each Borrowerwill be greater than the amount that will be required to pay the probableliability of its debts and other liabilities, subordinated, contingent orotherwise, as such debts and other liabilities become absolute and matured; (c)each Borrower will be able to pay its debts and liabilities, subordinated,contingent or otherwise, as such debts and liabilities become absolute andmatured; and (d) no Borrower will have unreasonably small capital with which toconduct the business in which it is engaged as such business is proposed to beconducted following the Closing Date.

 

Section 4.22                                Conversion.  (a) The Conversion has been completed, (b) there are no orders, consents,approvals, licenses, authorizations or validations of, or filing, recording orregistration with, or exemption by, any governmental or public body orauthority required in connection with the Conversion that have not beenobtained or made by the Borrowers’ Agent, and (c) the Conversion did not causethe default or loss of status under any order, consent, approval, license,authorization or validation of, or filing, recoding or registration with, orexemption by, any governmental or public body or authority that is necessary ordesirable for the operation of the Borrowers’ Agent’s business or that wouldotherwise constitute a Material Adverse Occurrence.

 

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Section 4.23                                Eligibility.  As of the Closing Date, (i) each Borrower iseligible to borrow from CoBank, and (ii) the percentage of voting control ofthe Borrowers’ Agent held by producers or cooperatives is 100%.

 

Section 4.24                                MaterialContract.  Each Material Contract ineffect on the Closing Date is identified on Schedule 3.1(k) and copies of eachsuch Material Contract have been delivered to the Administrative Agent.  Except as has been previously disclosed tothe Administrative Agent in writing, none of such Material Contracts has beenamended, modified or terminated.

 

Section 4.25                                ApplicablePermits.  There are no permitsrequired for the construction, operation or maintenance of the Thompson Complexother than the Applicable Permits identified on Schedule 3.1(l).  Except as disclosed therein, each ApplicablePermit identified on Part I of Schedule 3.1(l) is in full force and effect andis not subject to any current legal proceeding or any unsatisfied conditionthat could reasonably be expected to allow material modification or revocationof such permit, and all applicable appeal periods with respect thereto shallhave expired.  Each Applicable Permitidentified in Part II of Schedule 3.1(l) is timely obtainable prior to the timethe Borrowers’ Agent requires such permit and is of a type that is routinelygranted upon application.  The Borrowersare in compliance in all material respects with all Applicable Permits.

 

**ARTICLEV**

**AFFIRMATIVE COVENANTS**

 

Until anyobligation of the Lenders hereunder to make the Term Loans and Revolving Loansand of the Letter of Credit Bank to issue Letters of Credit shall have expiredor been terminated and the Notes and all of the other Obligations have beenpaid in full and all outstanding Letters of Credit shall have expired or theliability of the Letter of Credit Bank thereon shall have otherwise beendischarged:

 

Section 5.1                                      FinancialStatements and Reports.  TheBorrowers’ Agent will furnish to the Lenders:

 

(a)                                  Assoon as available and in any event within 90 days after the end of each fiscalyear of the Borrowers’ Agent (including the fiscal year that ended August 31,2004), the consolidated financial statements of the Borrowers’ Agent consistingof at least statements of income, cash flow and changes in the members’ equity,and a consolidated balance sheet as at the end of such year, setting forth ineach case in comparative form corresponding figures from the previous annual audit,certified without qualification by Moore Stephens Frost or another independentcertified public accountants of recognized national standing selected by theBorrowers and reasonably acceptable to the Administrative Agent, together with(a) any management letters, management reports or other supplementary commentsor reports to the Borrowers’ Agent or its board of directors furnished by suchaccountants and (b) a letter from such

 

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accountantsaddressed to the Lenders acknowledging that the Lenders are extending credit inreliance on such financial statements and authorizing such reliance.

 

(b)                                 Togetherwith the audited financial statements required under Section 5.1(a), astatement by the accounting firm performing such audit to the effect that ithas reviewed this Agreement and that in the course of performing itsexamination nothing came to its attention that caused it to believe that anyDefault or Event of Default exists, or, if such Default or Event of Defaultexists, describing its nature.

 

(c)                                  Assoon as available and in any event within 45 days after the end of each month,unaudited consolidated statements of income, cash flow and changes in themembers’ equity for the Borrowers’ Agent for such month and for the period fromthe beginning of such fiscal year to the end of such month, and a consolidatedbalance sheet of the Borrowers’ Agent as at the end of such month, settingforth in comparative form figures for the corresponding period for the precedingfiscal year, accompanied by a certificate signed by the chief financial officerof the Borrowers’ Agent stating that such financial statements present fairlythe financial condition of the Borrowers’ Agent and that the same have beenprepared in accordance with GAAP (except for the absence of footnotes andsubject to year-end audit adjustments as to the interim statements).

 

(d)                                 Assoon as practicable and in any event within 45 days after the end of eachfiscal quarter, a Compliance Certificate in the form attached hereto as ExhibitG signed by the chief financial officer of the Borrowers’ Agentdemonstrating in reasonable detail compliance (or noncompliance, as the casemay be) with Section 6.15, Section 6.16, Section 6.17, Section 6.18, Section6.19 and Section 6.21, as at the end of such quarter and stating that as at theend of such quarter there did not exist any Default or Event of Default or, ifsuch Default or Event of Default existed, specifying the nature and period ofexistence thereof and what action the Borrowers propose to take with respectthereto.

 

(e)                                  Assoon as practicable and in any event within 45 days after the end of eachmonth, a Borrowing Base Certificate signed by the chief financial officer ofthe Borrowers’ Agent, reporting the Borrowing Base as of the last day of themonth just ended.

 

(f)                                    Assoon as practicable and in any event within 90 days after the beginning of eachfiscal year of the Borrowers’ Agent, statements of forecasted consolidatedincome for the Borrowers’ Agent for each fiscal month in such fiscal year and aforecasted consolidated balance sheet of the Borrowers’ Agent, together withsupporting assumptions, as at the end of each fiscal month, all in reasonabledetail and reasonably satisfactory in scope to the Lenders.

 

(g)                                 Immediatelyupon any officer or manager of any Borrower becoming aware of any Default orEvent of Default, a written notice from the Borrowers’ Agent

 

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describing thenature thereof and what action Borrowers propose to take with respect thereto.

 

(h)                                 Immediatelyupon any officer or manager of a Borrower becoming aware of any matter that hasresulted or is reasonably likely to result in a Material Adverse Occurrence, awritten notice from the Borrowers’ Agent describing the nature thereof and whataction Borrowers propose to take with respect thereto.

 

(i)                                     Immediatelyupon any officer or manager of a Borrower becoming aware of (i) thecommencement of any action, suit, investigation, proceeding or arbitrationbefore any court or arbitrator or any governmental department, board, agency orother instrumentality affecting a Borrower or any property of such Person, orto which a Borrower is a party (other than litigation where the insuranceinsures against the damages claimed and the insurer has assumed defense of thelitigation without reservation) and in which an adverse determination or resultcould reasonably be expected to constitute a Material Adverse Occurrence; or(ii) any adverse development which occurs in any litigation, arbitration orgovernmental investigation or proceeding previously disclosed by a Borrowerwhich, if determined adversely to a Borrower, could reasonably be expected toconstitute a Material Adverse Occurrence, a written notice from the Borrowers’Agent describing the nature and status thereof and what action the Borrowerspropose to take with respect thereto.

 

(j)                                     Promptlyupon the mailing or filing thereof, copies of all financial statements, reportsand proxy statements mailed to any Borrower’s members or shareholders, andcopies of all registration statements, periodic reports and other documentsfiled with the Securities and Exchange Commission (or any successor thereto) orany national securities exchange.

 

(k)                                  Fromtime to time, such other information regarding the business, operation andfinancial condition of any Borrower as any Lender may reasonably request.

 

Section 5.2                                      Existence.  Each Borrower will maintain its corporate orcompany existence (as the case may be) in good standing under the laws of itsjurisdiction of organization and its qualification to transact business in eachjurisdiction where failure so to qualify would permanently preclude suchBorrower from enforcing its rights with respect to any material asset or wouldexpose such Borrower to any material liability.

 

Section 5.3                                      Insurance.  Each Borrower shall maintain with financiallysound and reputable insurance companies such insurance as may be required bylaw and such other insurance in such amounts and against such hazards as iscustomary in the case of reputable firms engaged in the same or similarbusiness and similarly situated.

 

Section 5.4                                      Paymentof Taxes and Claims.  Each Borrowershall file all tax returns and reports which are required by law to be filed byit and will pay before they become delinquent all

 

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taxes,assessments and governmental charges and levies imposed upon it or its propertyand all claims or demands of any kind (including but not limited to those ofsuppliers, mechanics, carriers, warehouses, landlords and other like Persons)which, if unpaid, might result in the creation of a Lien upon its property; providedthat the foregoing items need not be paid if they are being contested in goodfaith by appropriate proceedings, and as long as such Borrower’s title to itsproperty is not materially adversely affected, its use of such property in theordinary course of its business is not materially interfered with and adequatereserves with respect thereto have been set aside on such Borrower’s books inaccordance with GAAP.

 

Section 5.5                                      Inspection.  Each Borrower shall permit any Persondesignated by the Administrative Agent or any Lender to visit and inspect anyof the properties, books and financial records of such Borrower, to examine andto make copies of the books of accounts and other financial records of suchBorrower, and to discuss the affairs, finances and accounts of such Borrowerwith, and to be advised as to the same by, its officers and managers at suchreasonable times and intervals as the Administrative Agent or any Lender maydesignate.

 

Section 5.6                                      Maintenanceof Properties.  Each Borrower willmaintain its properties used or useful in the conduct of its business in goodcondition, repair and working order, and supplied with all necessary equipment,and make all necessary repairs, renewals, replacements, betterments andimprovements thereto, all as may be necessary so that the business carried onin connection therewith may be properly and advantageously conducted at alltimes.

 

Section 5.7                                      Booksand Records.  Each Borrower will keepadequate and proper records and books of account in which full and correctentries will be made of its dealings, business and affairs.

 

Section 5.8                                      Compliance.  Each Borrower (a) will comply in all materialrespects with all laws, rules, regulations, orders, writs, judgments,injunctions, decrees or awards to which it may be subject, (b) obtain on orbefore the time required all Applicable Permits identified on Part II ofSchedule 3.1(l) and, (c) will maintain and comply in all material respects withall Applicable Permits; provided, however, that failure to socomply, obtain or maintain shall not be a breach of this covenant if suchfailure cannot reasonably be expected to constitute a Material AdverseOccurrence and such Borrower is acting in good faith and with reasonabledispatch to cure such failure.

 

Section 5.9                                      ERISA.  Each Borrower will maintain each Plan incompliance with all material applicable requirements of ERISA and of the Codeand with all applicable rulings and regulations issued under the provisions ofERISA and of the Code.

 

Section 5.10                                EnvironmentalMatters; Reporting.  Each Borrowerwill observe and comply with all laws, rules, regulations and orders of anygovernment or government agency relating to health, safety, pollution,hazardous materials or other environmental matters to the extent non-compliancecould result in a material liability or otherwise constitute a Material AdverseOccurrence.  No Borrower shall use itsproperty (including any portion of the

 

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ThompsonComplex or the Thompson Complex Site) for the production, storage or disposalof hazardous substances, wastes or materials. The Borrowers’ Agent will give the Administrative Agent prompt writtennotice of any violation as to any environmental matter by any Borrower and ofthe commencement of any judicial or administrative proceeding relating tohealth, safety or environmental matters (a) in which an adverse determinationor result could result in the revocation of or have a material adverse effecton any operating permits, air emission permits, water discharge permits,hazardous waste permits or other permits held by any Borrower which arematerial to the operations of such Borrower, including the Applicable Permits,or (b) which will or threatens to impose a material liability on such Borrowerto any Person or which will require a material expenditure by the Borrower tocure any alleged problem or violation.

 

Section 5.11                                FurtherAssurances.  Each Borrower shallpromptly correct any defect or error that may be discovered in any LoanDocument or in the execution, acknowledgment or recordation thereof.  Promptly upon request by the AdministrativeAgent or the Required Lenders, each Borrower also shall do, execute,acknowledge, deliver, record, re-record, file, refile, register andre-register, any and all deeds, conveyances, mortgages, deeds of trust, trustdeeds, assignments, estoppel certificates, financing statements andcontinuations thereof, notices of assignment, transfers, certificates,assurances and other instruments as the Administrative Agent or the RequiredLenders may reasonable require from time to time in order: (a) to carry outmore effectively the purposes of the Loan Documents; (b) to perfect andmaintain the validity, effectiveness and priority of any security interestsintended to be created by the Loan Documents including, without limitation, thedelivery of a landlord waiver from any landlord required by the AdministrativeAgent or the Required Lenders; and (c) to better assure, convey, grant, assign,transfer, preserve, protect and confirm unto the Lenders the rights granted nowor hereafter intended to be granted to the Lenders under any Loan Document orunder any other instrument executed in connection with any Loan Document orthat any Borrower may be or become bound to convey, mortgage or assign to theAdministrative Agent for the benefit of the Lenders in order to carry out theintention or facilitate the performance of the provisions of any LoanDocument.  The Borrowers’ Agent shallfurnish to the Administrative Agent evidence reasonably satisfactory to theAdministrative Agent of every such recording, filing or registration.

 

Section 5.12                                Compliancewith Terms of Material Contracts. Each Borrower shall make all payments and otherwise perform allobligations in respect of all Material Contracts to which such Borrower is aparty and shall promptly provide the Administrative Agent with copies of anynotices of default under any Material Contract given or received by anyBorrower.

 

Section 5.13                                Construction.  The Borrowers’ Agent shall complete the PhaseII Thompson Construction and the Phase III Thompson Construction in a timelyand diligent manner, substantially in accordance with the Construction Plans.

 

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**ARTICLEVINEGATIVE COVENANTS**

 

Until anyobligation of the Lenders hereunder to make the Term Loans and Revolving Loansand of the Letter of Credit Bank to issue Letters of Credit shall have expiredor been terminated and the Notes and all of the other Obligations have beenpaid in full and all outstanding Letters of Credit shall have expired or theliability of the Letter of Credit Bank thereon shall have otherwise beendischarged:

 

Section 6.1                                      Merger.  No Borrower will merge or consolidate orenter into any analogous reorganization or transaction with any Person orliquidate, wind up or dissolve itself (or suffer any liquidation ordissolution).

 

Section 6.2                                      Dispositionof Assets.  No Borrower will directlyor indirectly, sell, assign, lease, convey, transfer or otherwise dispose of(whether in one transaction or a series of transactions) any property(including accounts and notes receivable, with or without recourse) or enterinto any agreement to do any of the foregoing, except:

 

(a)                                  dispositionsof inventory in the ordinary course of business;

 

(b)                                 dispositionsof used, worn-out or obsolete equipment, furniture, furnishings, machinery orfixtures if (i) such equipment, furniture, furnishings, machinery or fixturesis replaced by property of equal kind and value, or (ii) if the value of suchdisposed equipment, furniture, furnishings, machinery or fixtures at the timeof disposal is less than $150,000 for any single transaction or less than$300,000 in the aggregate in any fiscal year; and

 

(c)                                  otherdispositions of property if the net book value of the disposed property doesnot exceed (i) in any fiscal year, 10% of such Borrower’s total consolidatedassets as shown on its balance sheet as of the end of the immediately precedingfiscal year, or for its most recent prior fiscal quarter, or (ii) in theaggregate during the term of this Agreement, 30% of such Borrower’s totalconsolidated assets as shown on its balance sheet as of the Closing Date, ineach case unless the proceeds from such disposition are reinvested withintwelve (12) months of such disposition to purchase other property useful and intendedto be used in the business of the Borrowers’ Agent.

 

Section 6.3                                      Plans.  No Borrower will permit any event to occur orcondition to exist which would permit any Plan to terminate under anycircumstances which would cause the Lien provided for in Section 4068 of ERISAto attach to any assets of any Borrower.

 

Section 6.4                                      Changein Nature of Business.  No Borrowerwill make any material change in the nature of the business of such Borrower,as carried on at the date hereof.

 

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Section 6.5                                      Subsidiaries.  No Borrower will form or acquire anycorporation which would thereby become a Subsidiary.

 

Section 6.6                                      NegativePledges.  No Borrower will enter intoany agreement, bond, note or other instrument with or for the benefit of anyPerson other than the Lenders which would (i) prohibit such Borrower fromgranting, or otherwise limit the ability of the such Borrower to grant, to theLenders any Lien on any assets or properties of such Borrower, or (ii) requiresuch Borrower to grant a Lien to any other Person if such Borrower grants anyLien to the Lenders.

 

Section 6.7                                      RestrictedPayments.  No Borrower will make anyRestricted Payments if a Default or Event of Default has occurred and iscontinuing or if a Default or Event of Default would occur as a result of suchRestricted Payment.

 

Section 6.8                                      Transactionswith Affiliates.  No Borrower willenter into any transaction with any Affiliate of such Borrower, except uponfair and reasonable terms no less favorable than such Borrower would obtain ina comparable arm’s- length transaction with a Person not an Affiliate.

 

Section 6.9                                      AccountingChanges.  No Borrower will make anysignificant change in accounting treatment or reporting practices, except asrequired by GAAP, or change its fiscal year.

 

Section 6.10                                SubordinatedDebt.  No Borrower will (a) make anyscheduled payment of the principal of or interest on any Subordinated Debt thatwould be prohibited by the terms of such Subordinated Debt and any relatedsubordination agreement; (b) directly or indirectly make any prepayment on orpurchase, redeem or defease any Subordinated Debt or offer to do so (whethersuch prepayment, purchase or redemption, or offer with respect thereto, isvoluntary or mandatory); (c) amend or cancel the subordination provisionsapplicable to any Subordinated Debt; (d) take or omit to take any action if asa result of such action or omission the subordination of such SubordinatedDebt, or any part thereof, to the Obligations might be terminated, impaired oradversely affected; or (e) omit to give the Administrative Agent prompt noticeof any notice received from any holder of Subordinated Debt, or any trusteetherefor, or of any default under any agreement or instrument relating to any SubordinatedDebt by reason whereof such Subordinated Debt might become or be declared to bedue or payable.

 

Section 6.11                                Investments.  No Borrower will acquire for value, make,have or hold any Investments, except:

 

(a)                                  Investmentsexisting on the date of this Agreement and described on Schedule 6.11.

 

(b)                                 Traveladvances to management personnel and employees in the ordinary course ofbusiness.

 

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(c)                                  Investmentsin readily marketable direct obligations issued or guaranteed by the UnitedStates or any agency thereof and supported by the full faith and credit of theUnited States.

 

(d)                                 Certificatesof deposit or bankers’ acceptances issued by any commercial bank organizedunder the laws of the United States or any State thereof which has (i) combinedcapital and surplus of at least $100,000,000, and (ii) a credit rating withrespect to its unsecured indebtedness from a nationally recognized ratingservice that is reasonably satisfactory to the Administrative Agent.

 

(e)                                  Commercialpaper given the highest rating by a nationally recognized rating service.

 

(f)                                    Repurchaseagreements relating to securities issued or guaranteed as to principal andinterest by the United States of America with a term of not more than seven (7)days; provided all such agreements shall require physical delivery ofthe securities securing such repurchase agreement, except those deliveredthrough the Federal Reserve Book Entry System

 

(g)                                 Otherreadily marketable Investments in debt securities which are reasonablyacceptable to the Required Lenders.

 

(h)                                 Anyother Investment if the aggregate consideration therefor does not exceed$500,000.

 

AnyInvestments under clauses (c), (d), (e) or (f) above must mature within oneyear of the acquisition thereof by the Borrower.

 

Section 6.12                                Indebtedness.  The Borrower will not incur, create, issue,assume or suffer to exist any Indebtedness, except:

 

(a)                                  TheObligations.

 

(b)                                 CurrentLiabilities, other than for borrowed money, incurred in the ordinary course ofbusiness.

 

(c)                                  Indebtednessexisting on the date of this Agreement and disclosed on Schedule 6.12,but not including any extension or refinancing thereof.

 

(d)                                 Indebtednesssecured by Liens permitted under Section 6.13 hereof.

 

Section 6.13                                Liens.  No Borrower will create, incur, assume orsuffer to exist any Lien, or enter into, or make any commitment to enter into,any arrangement for the acquisition of any property through conditional sale,lease-purchase or other title retention agreements, with respect to anyproperty now owned or hereafter acquired by the Borrower, except:

 

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(a)                                  Liensgranted to the Administrative Agent and the Lenders under the SecurityDocuments to secure the Obligations.

 

(b)                                 Liensexisting on the date of this Agreement and disclosed on Schedule 6.13.

 

(c)                                  Depositsor pledges to secure payment of workers’ compensation, unemployment insurance,old age pensions or other social security obligations, in the ordinary courseof business of the Borrower.

 

(d)                                 Liensfor taxes, fees, assessments and governmental charges not delinquent or to theextent that payment therefor shall not at the time be required to be made inaccordance with the provisions of Section 5.4.

 

(e)                                  Liensof carriers, warehousemen, mechanics and materialmen, and other like Liensarising in the ordinary course of business, for sums not due or to the extentthat payment therefor shall not at the time be required to be made inaccordance with the provisions of Section 5.4.

 

(f)                                    Liensincurred or deposits or pledges made or given in connection with, or to securepayment of, indemnity, performance or other similar bonds.

 

(g)                                 Liensarising solely by virtue of any statutory or common law provision relating tobanker’s liens, rights of set-off or similar rights and remedies as to depositaccounts or other funds maintained with a creditor depository institution; providedthat (i) such deposit account is not a dedicated cash collateral accountand is not subject to restriction against access by a Borrower in excess ofthose set forth by regulations promulgated by the Board, and (ii) such depositaccount is not intended by the Borrower to provide collateral to the depositoryinstitution.

 

(h)                                 PermittedEncumbrances.

 

(i)                                     Theinterest of any lessor under any Capital Lease entered into after the ClosingDate or purchase money Liens on property acquired after the Closing Date;provided, that, (i) the Indebtedness secured thereby is otherwise permitted bythis Agreement and (ii) such Liens are limited to the property acquired and donot secure Indebtedness other than the related Capital Lease Obligations or thepurchase price of such property.

 

(j)                                     CoBank’sstatutory Lien on the CoBank Equities.

 

Section 6.14                                ContingentLiabilities.  No Borrower will be orbecome liable on any Contingent Obligations except Contingent Obligationsexisting on the date of this Agreement and described on Schedule 6.14 andContingent Obligations for the benefit of the Lenders.

 

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Section 6.15                                TangibleNet Worth.  The Borrower’s Agent willnot permit its Tangible Net Worth at any time to be less than $28,800,000 plusforty percent (40%) of net earnings for such period plus one hundredpercent (100%) of equity contributed at any time.

 

Section 6.16                                CurrentRatio.  The Borrower’s Agent will notpermit the ratio of its Current Assets to its Current Liabilities to be lessthan 1.25 to 1.0 at any time.

 

Section 6.17                                WorkingCapital. The Borrower’s Agent will not permit its Working Capital to beless than $7,000,000 at any time.

 

Section 6.18                                LeverageRatio.  The Borrower’s Agent will notpermit the Leverage Ratio, as of the last day of any fiscal quarter for thefour consecutive fiscal quarters ending on that date, to be more than (a) forthe period from the Closing Date to May 31, 2006, 4.25 to 1.0, or (b) for theperiod from the June 1, 2006 to the Term Loan Maturity Date, 4.00 to 1.0.

 

Section 6.19                                FixedCharge Coverage Ratio.  The Borrower’sAgent will not permit the Fixed Charge Coverage Ratio, as of the last day ofany fiscal quarter for the four consecutive fiscal quarters ending on thatdate, to be less than 1.15 to 1.0.

 

Section 6.20                                OperatingLeases.  No Borrower will enter intoany Operating Lease that would cause the aggregate lease payments for allOperating Leases of the Borrowers to exceed $500,000 on a consolidated basisper fiscal year of the Borrowers’ Agent, provided that rents paid by anyBorrower for real property consisting solely of land shall not be included insuch calculation.

 

Section 6.21                                RiskManagement.  From and after the firstfiscal quarter following the date on which the Final Tranche 2 Advances havebeen made, the Borrowers’ Agent shall not fail to have the minimum requiredpercentage of finished egg products under contract as set forth and describedon Annex II, established as of the first day of each fiscal quarterafter the Compliance Certificate required by Section 5.1 is delivered.

 

Section 6.22                                MaterialContracts.  No Borrower shall amendor modify a Material Contract in any material respect, or terminate a MaterialContract, without the prior written consent of the Required Lenders.

 

Section 6.23                                Eligibility.  No Borrower will take any action that causesit to become ineligible to borrow from CoBank.

 

**ARTICLEVII**

**EVENTS OF DEFAULT AND REMEDIES**

 

Section 7.1                                      Eventsof Default.  The occurrence of anyone or more of the following events shall constitute an Event of Default:

 

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(a)                                  TheBorrowers shall fail to make when due, whether by acceleration or otherwise,any payment of principal of any Note.

 

(b)                                 TheBorrowers shall fail to make when due, whether by acceleration or otherwise,any payment of interest on any Note or on or of any other Obligation requiredto be made to the Administrative Agent, the Letter of Credit Bank or any Lenderpursuant to this Agreement and such failure to pay shall continue for five (5)Business Days after the date on which such payment was due.

 

(c)                                  Anyrepresentation or warranty made by or on behalf of any Borrower in thisAgreement or any other Loan Document or by or on behalf of any Borrower in anycertificate, statement, report or document herewith or hereafter furnished toany Lender or the Administrative Agent pursuant to this Agreement or any otherLoan Document shall prove to have been false or misleading in any materialrespect on the date as of which the facts set forth are stated or certified.

 

(d)                                 AnyBorrower shall fail to comply with Sections 2.16, 5.2 or 5.3 hereof or anySection of Article VI hereof.

 

(e)                                  AnyBorrower shall fail to comply with any other agreement, covenant, condition,provision or term contained in this Agreement (other than those hereinabove setforth in this Section 7.1) and such failure to comply shall continue for 30calendar days after whichever of the following dates is the earliest:  (i) the date any Borrower or the Borrowers’Agent gives notice of such failure to the Lenders, (ii) the date any Borrowershould have given notice of such failure to the Administrative Agent pursuantto Section 5.1, or (iii) the date the Administrative Agent or any Lender givesnotice of such failure to the Borrower.

 

(f)                                    Anydefault (however denominated or defined) shall occur under any SecurityDocument.

 

(g)                                 AnyBorrower shall become insolvent or shall generally not pay its debts as theymature or shall apply for, shall consent to, or shall acquiesce in theappointment of a custodian, trustee or receiver of such Borrower or for asubstantial part of the property thereof or, in the absence of suchapplication, consent or acquiescence, a custodian, trustee or receiver shall beappointed for any Borrower or for a substantial part of the property thereofand shall not be discharged within 45 days, or any Borrower shall make anassignment for the benefit of creditors.

 

(h)                                 Anybankruptcy, reorganization, debt arrangement or other proceedings under anybankruptcy or insolvency law shall be instituted by or against any Borrower,and, if instituted against any Borrower, shall have been consented to oracquiesced in by such Borrower, or shall remain undismissed for 60 days, or anorder for relief shall have been entered against such Borrower.

 

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(i)                                     Anydissolution or liquidation proceeding shall be instituted by or against anyBorrower, and, if instituted against any Borrower, shall be consented to oracquiesced in by such Borrower or shall remain for 45 days undismissed.

 

(j)                                     Ajudgment or judgments for the payment of money in excess of the sum of $250,000in the aggregate shall be rendered against any Borrower and either (i) thejudgment creditor executes on such judgment or (ii) such judgment remainsunpaid or undischarged for more than 60 days from the date of entry thereof orsuch longer period during which execution of such judgment shall be stayedduring an appeal from such judgment.

 

(k)                                  Thematurity of any material Indebtedness of any Borrower (other than Indebtednessunder this Agreement) shall be accelerated, or any Borrower shall fail to payany such material Indebtedness when due (after the lapse of any applicablegrace period) or, in the case of such Indebtedness payable on demand, whendemanded (after the lapse of any applicable grace period), or any event shalloccur or condition shall exist and shall continue for more than the period ofgrace, if any, applicable thereto and shall have the effect of causing, orpermitting the holder of any such Indebtedness or any trustee or other Personacting on behalf of such holder to cause, such material Indebtedness to becomedue prior to its stated maturity or to realize upon any collateral given assecurity therefor.  For purposes of thisSection, Indebtedness of any Borrower shall be deemed “material” if it exceeds$1,000,000 as to any item of Indebtedness or in the aggregate for all items ofIndebtedness with respect to which any of the events described in this Section7.1(k) has occurred.

 

(l)                                     Anyexecution or attachment shall be issued whereby any substantial part of theproperty of any Borrower shall be taken or attempted to be taken and the sameshall not have been vacated or stayed within 30 days after the issuancethereof.

 

(m)                               AnySecurity Document shall, at any time, cease to be in full force and effect orshall be judicially declared null and void, or the validity or enforceabilitythereof shall be contested by any Borrower, or the Administrative Agent or theLenders shall cease to have a valid and perfected security interest having thepriority contemplated thereunder in all of the collateral described therein,other than by action or inaction of the Administrative Agent or the Lenders if(i) the aggregate value of the collateral affected by any of the foregoingexceeds $150,000 and (ii) any of the foregoing shall remain unremedied for ten(10) days or more after receipt of notice thereof by the Borrowers’ Agent fromthe Administrative Agent.

 

(n)                                 AnyChange of Control shall occur.

 

Section 7.2                                      Remedies.  If (a) any Event of Default described in Sections7.1 (g), (h) or (i) shall occur, the Commitments shall automatically terminateand the Notes and all other Obligations shall automatically become immediatelydue and payable, and the Borrowers shall

 

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without demandcash collateralize an amount equal to the aggregate face amount of alloutstanding Letters of Credit; or (b) any other Event of Default shall occurand be continuing, then, upon receipt by the Administrative Agent of a requestin writing from the Required Lenders, the Administrative Agent shall take anyof the following actions so requested: (i) declare the Commitments terminated,whereupon the Commitments shall terminate, (ii) declare the outstanding unpaidprincipal balance of the Notes, the accrued and unpaid interest thereon and allother Obligations to be forthwith due and payable, whereupon the Notes, allaccrued and unpaid interest thereon and all such Obligations shall immediatelybecome due and payable, in each case without presentment, demand, protest orother notice of any kind, all of which are hereby expressly waived, anything inthis Agreement or in the Notes to the contrary notwithstanding, and (iii)demand that the Borrowers cash collateralize an amount equal to the aggregate faceamount of all outstanding Letters of Credit.  Upon the occurrence of any of the eventsdescribed in clause (a) of the preceding sentence, or upon the occurrence ofany of the events described in clause (b) of the preceding sentence when sorequested by the Required Lenders, the Administrative Agent may exercise allrights and remedies under any of the Loan Documents, and enforce all rights andremedies under any applicable law.

 

Section 7.3                                      Offset.  In addition to the remedies set forth inSection 7.2, upon the occurrence of any Event of Default and thereafter whilethe same be continuing, each Borrower hereby irrevocably authorizes each Lenderto set off any Obligations owed to such Lender against all deposits and creditsof such Borrower with, and any and all claims of such Borrower against, suchLender.  Such right shall exist whetheror not such Lender shall have made any demand hereunder or under any other LoanDocument, whether or not the Obligations, or any part thereof, or deposits andcredits held for the account of the Borrowers is or are matured or unmatured,and regardless of the existence or adequacy of any collateral, guaranty or anyother security, right or remedy available to such Lender or the Lenders.  Each Lender agrees that, as promptly as isreasonably possible after the exercise of any such setoff right, it shallnotify the Borrowers’ Agent of its exercise of such setoff right; provided,however, that the failure of any Lender to provide such notice shall notaffect the validity of the exercise of such setoff rights.  Nothing in this Agreement shall be deemed awaiver or prohibition of or restriction on any Lender to all rights of banker’sLien, setoff and counterclaim available pursuant to law.

 

**ARTICLEVIII**

**THE ADMINISTRATIVE AGENT**

 

The followingprovisions shall govern the relationship of the Administrative Agent with theLenders.

 

Section 8.1                                      Appointmentand Authorization.  EachLender appoints and authorizes the Administrative Agent to take such action asagent on its behalf and to exercise such respective powers under the LoanDocuments as are delegated to the Administrative Agent by the terms thereof,together with such powers as are reasonably incidental thereto.  Neither the Administrative Agent nor any ofits directors, officers or employees shall be liable for any action

 

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takenor omitted to be taken by it under or in connection with the Loan Documents,except for its own gross negligence or willful misconduct.  The Administrative Agent shall act as anindependent contractor in performing its obligations as Administrative Agenthereunder.  The duties of theAdministrative Agent shall be mechanical and administrative in nature, andnothing herein contained shall be deemed to create any fiduciary relationshipamong or between the Administrative Agent, any Borrower or the Lenders.

 

Section 8.2                                      NoteHolders.  The Administrative Agentmay treat the payee of any Note as the holder thereof until written notice oftransfer shall have been filed with it, signed by such payee and in formreasonably satisfactory to the Administrative Agent.

 

Section 8.3                                      ConsultationWith Counsel. The Administrative Agent may consult with legal counsel selected by itand shall not be liable for any action taken or suffered in good faith by it inaccordance with the advice of such counsel.

 

Section 8.4                                      LoanDocuments.  The Administrative Agentshall not be responsible to any Lender for any recitals, statements,representations or warranties in any Loan Document or be under a duty toexamine or pass upon the validity, effectiveness, genuineness or value of anyof the Loan Documents or any other instrument or document furnished pursuantthereto, and the Administrative Agent shall be entitled to assume that the sameare valid, effective and genuine and what they purport to be.

 

Section 8.5                                      CoBankand Affiliates.  With respectto its Commitments and the Loans made by it, CoBank shall have the same rightsand powers under the Loan Documents as any other Lender and may exercise thesame as though it were not the Administrative Agent consistent with the termsthereof, and CoBank and its Affiliates may accept deposits from, lend money toand generally engage in any kind of business with the Borrower as if it were notthe Administrative Agent.

 

Section 8.6                                      Actionby Administrative Agent.  Exceptas may otherwise be expressly stated in this Agreement, the AdministrativeAgent shall be entitled to use its discretion with respect to exercising orrefraining from exercising any rights which may be vested in it by, or withrespect to taking or refraining from taking any action or actions which it maybe able to take under or in respect of, the Loan Documents.  The Administrative Agent shall be required toact or to refrain from acting (and shall be fully protected in so acting orrefraining from acting) upon the instructions of the Required Lenders, and suchinstructions shall be binding upon all holders of Notes; provided, however,that the Administrative Agent shall not be required to take any action whichexposes the Administrative Agent to personal liability or which is contrary tothe Loan Documents or applicable law.  TheAdministrative Agent shall incur no liability under or in respect of any of theLoan Documents by acting upon any notice, consent, certificate, warranty orother paper or instrument believed by it to be genuine or authentic or to besigned by the proper party or parties and to be consistent with the terms ofthis Agreement.

 

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Section 8.7                                      CreditAnalysis.  Each Lender hasmade, and shall continue to make, its own independent investigation orevaluation of the operations, business, property and condition, financial andotherwise, of any Borrower in connection with entering into this Agreement andhas made its own appraisal of the creditworthiness of each Borrower.  Except as explicitly provided herein, theAdministrative Agent has no duty or responsibility, either initially or on acontinuing basis, to provide any Lender with any credit or other informationwith respect to such operations, business, property, condition orcreditworthiness, whether such information comes into its possession on orbefore the first Event of Default or at any time thereafter.

 

Section 8.8                                      Noticesof Event of Default, Etc.  In theevent that the Administrative Agent shall have acquired actual knowledge of anyEvent of Default or Default, the Administrative Agent shall promptly givenotice thereof to the Lenders.  TheAdministrative Agent shall not be deemed to have knowledge or notice of anyDefault or Event of Default, except with respect to actual defaults in thepayment of principal, interest and fees required to be paid to theAdministrative Agent for the account of the Lenders, unless the AdministrativeAgent shall have received written notice from a Lender or a Borrower referringto this Agreement, describing such Default or Event of Default and stating thatsuch notice is a “Notice of Default”.

 

Section 8.9                                      Indemnification.  Each Lender agrees to indemnify theAdministrative Agent, as Administrative Agent (to the extent not reimbursed bythe Borrower), ratably according to such Lender’s share of the aggregateRevolving and Term Loan Commitment Amounts from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements of any kind or nature whatsoever whichmay be imposed on or incurred by the Administrative Agent in any way relatingto or arising out of the Loan Documents or any action taken or omitted by theAdministrative Agent under the Loan Documents, provided that no Lender shall beliable for any portion of such liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursementsresulting from the Administrative Agent’s gross negligence or willfulmisconduct.  No payment by any Lenderunder this Section shall relieve the Borrower of any of its obligations underthis Agreement.

 

Section 8.10                                Paymentsand Collections.  All funds receivedby the Administrative Agent in respect of any payments made by any Borrower onthe Tranche A Term Notes shall be distributed forthwith by the AdministrativeAgent among the Tranche A Term Lenders, in like currency and funds as received,ratably according to each such Lender’s Term Loan Percentage.  All funds received by the AdministrativeAgent in respect of any payments made by any Borrower on the Tranche B TermNotes shall be distributed forthwith by the Administrative Agent among theTranche B Term Lenders, in like currency and funds as received, ratablyaccording to each such Lender’s Term Loan Percentage.  All funds received by the AdministrativeAgent in respect of any payments made by any Borrower on the Revolving Notes,Revolving Commitment Fees or Letter of Credit Fees shall be distributedforthwith by the Administrative Agent among the Revolving Lenders, in likecurrency and funds as received, ratably according to each such Lender’sRevolving Percentage.

 

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(a)                                  PersonalProperty.  After any Event of Defaulthas occurred, all funds received by the Administrative Agent as realization oncollateral that constitutes personal property (excluding any machinery andequipment that are fixtures to any real estate) shall (except as may otherwisebe required by law) be distributed by the Administrative Agent in the followingorder: (a) first, to the Administrative Agent in an amount equal to theamounts, if any, as are necessary to pay the costs and expenses (includingreasonable attorneys’ fees) incurred by the Administrative Agent in connectionwith any enforcement action or collection proceeding in relation to therelevant personal property collateral, (b) second, to the Lenders, ratablyin an amount equal to the amounts, if any, as are necessary to pay the costsand expenses (including reasonable attorneys’ fees) incurred by each Lender inconnection with any enforcement action or collection proceeding in relation tothe relevant personal property collateral, (c) third, to the RevolvingLenders in an amount up to but not exceeding the amount of principal thenoutstanding in respect of the Revolving Loans and any portion of theObligations relating thereto and any accrued and unpaid interest thereon(including any interest that, but for the provisions of the Bankruptcy Codewould have accrued on such amounts), (d) fourth, to the Term Lendersratably, in an amount up to but not exceeding the amount of the principal ofthe Obligations then outstanding and any accrued but unpaid interest thereon(including any interest that, but for the provisions of the Bankruptcy Codewould have accrued on such amounts), (e) fifth, to the Lenders, ratably,in an amount up to but not exceeding the amount of any other Obligations thenoutstanding, and (f) sixth, the remainder, if any, to the Borrowers’Agent for the benefit of the Borrowers or as a court of competent jurisdictionmay otherwise direct.

 

(b)                                 RealProperty.  After any Event of Defaulthas occurred, all funds received by the Administrative Agent as realization oncollateral that constitutes real property (including any machinery andequipment that are fixtures to such real property) shall (except as mayotherwise be required by law) be distributed by the Administrative Agent in thefollowing order: (a) first, to the Administrative Agent in an amountequal to the amounts, if any, as are necessary to pay the costs and expenses(including reasonable attorneys’ fees) incurred by the Administrative Agent inconnection with any enforcement action or collection proceeding in relation tothe relevant real property collateral, (b) second, to the Lenders,ratably in an amount equal the amounts, if any, as are necessary to pay thecosts and expenses (including reasonable attorneys’ fees) incurred by eachLender in connection with any enforcement action or collection proceeding inrelation to the relevant real property collateral, (c) third, to theTerm Lenders ratably, in an amount up to but not exceeding the amount theamount of the principal of the Obligations then outstanding and any accrued butunpaid interest thereon (including any interest that, but for the provisions ofthe Bankruptcy Code would have accrued on such amounts), (d) fourth, tothe Revolving Lenders in an amount up to but not exceeding the amount ofprincipal then outstanding in respect of the Revolving Loans and any portion ofthe Obligations relating thereto and any accrued and unpaid interest thereon(including any interest that, but for the provisions of the Bankruptcy Codewould have accrued on such amounts), (e) fifth, to the Lenders, ratably,in an amount up to but

 

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notexceeding the amount of any other Obligations then outstanding, and (f) sixth,the remainder, if any, to the Borrowers’ Agent for the benefit of the Borrowersor as a court of competent jurisdiction may otherwise direct.

 

(c)                                  General.  After any Event of Default has occurred, allfunds received by the Administrative Agent, whether as payments by theBorrowers or as realization on collateral not constituting personal property orreal property (which shall be distributed in accordance with subsections (a)and (b) of this Section 8.10, as applicable) or on any guaranties, shall(except as may otherwise be required by law) be distributed by theAdministrative Agent in the following order: (a) first, to theAdministrative Agent in an amount equal to the amounts, if any, as arenecessary to pay the costs and expenses (including reasonable attorneys’ fees)incurred by the Administrative Agent in connection with any enforcement actionor collection proceeding hereunder, (b) second, to the Lenders, ratablyin an amount equal the amounts, if any, as are necessary to pay the costs andexpenses (including reasonable attorneys’ fees) incurred by each Lender inconnection with any enforcement action or collection proceeding, (c) third,to the Lenders in an amount up to but not exceeding the amount of principalthen outstanding on the Obligations and any accrued and unpaid interest thereon(including any interest that, but for the provisions of the Bankruptcy Codewould have accrued on such amounts), (d) fourth, to the Lenders,ratably, in an amount up to but not exceeding the amount of any otherObligations then outstanding, and (e) fifth, the remainder, if any, tothe Borrowers’ Agent for the benefit of the Borrowers or as a court ofcompetent jurisdiction may otherwise direct.

 

Section 8.11                                Sharingof Payments.  If any Lendershall receive and retain any payment, voluntary or involuntary, whether bysetoff, application of deposit balance or security, or otherwise, in respect ofIndebtedness under this Agreement or the Notes in excess of such Lender’s sharethereof as determined under this Agreement, then such Lender shall purchasefrom the other Lenders for cash and at face value and without recourse, suchparticipation in the Notes held by such other Lenders as shall be necessary tocause such excess payment to be shared ratably as aforesaid with such otherLenders; provided, that if such excess payment or part thereof isthereafter recovered from such purchasing Lender, the related purchases fromthe other Lenders shall be rescinded ratably and the purchase price restored asto the portion of such excess payment so recovered, but without interest.  Subject to the participation purchaseobligation above, each Lender agrees to exercise any and all rights of setoff,counterclaim or banker’s lien first fully against any Notes and participationstherein held by such Lender, next to any other Indebtedness of the Borrowers tosuch Lender arising under or pursuant to this Agreement and to anyparticipations held by such Lender in Indebtedness of the Borrowers arisingunder or pursuant to this Agreement, and only then to any other Indebtedness ofany Borrower to such Lender.

 

Section 8.12                                Adviceto Lenders.  TheAdministrative Agent shall forward to the Lenders copies of all notices,financial reports and other material communications received hereunder from theBorrowers by it as Administrative Agent, excluding, however, notices,

 

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reportsand communications which by the terms hereof are to be furnished by theBorrowers directly to each Lender.

 

Section 8.13                                DefaultingLender.

 

(a)                                  RemediesAgainst a Defaulting Lender.  In addition to the rights and remedies thatmay be available to the Administrative Agent or the Borrowers’ Agent under thisAgreement or applicable law, if at any time a Lender is a Defaulting Lendersuch Defaulting Lender’s right to participate in the administration of theLoans, this Agreement and the other Loan Documents, including withoutlimitation, any right to vote in respect of, to consent to or to direct anyaction or inaction of the Administrative Agent or to be taken into account inthe calculation of the Required Lenders, shall be suspended while such Lenderremains a Defaulting Lender.  If a Lenderis a Defaulting Lender because it has failed to make timely payment to the AdministrativeAgent of any amount required to be paid to the Administrative Agent hereunder(without giving effect to any notice or cure periods), in addition to otherrights and remedies which the Administrative Agent or the Borrower may haveunder the immediately preceding provisions or otherwise, the AdministrativeAgent shall be entitled (i) to collect interest from such Defaulting Lender onsuch delinquent payment for the period from the date on which the payment wasdue until the date on which the payment is made at the overnight Federal Fundsrate, (ii) to withhold or setoff and to apply in satisfaction of the defaultedpayment and any related interest, any amounts otherwise payable to suchDefaulting Lender under this Agreement or any other Loan Document until suchdefaulted payment and related interest has been paid in full and such defaultno longer exists and (iii) to bring an action or suit against such DefaultingLender in a court of competent jurisdiction to recover the defaulted amount andany related interest.  Any amountsreceived by the Administrative Agent in respect of a Defaulting Lender’s Loansshall not be paid to such Defaulting Lender and shall be held uninvested by theAdministrative Agent and either applied against the purchase price of suchLoans under the following subsection (b) or paid to such Defaulting Lender uponthe default of such Defaulting Lender being cured.

 

(b)                                 Purchasefrom Defaulting Lender.  Any Lenderthat is not a Defaulting Lender shall have the right, but not the obligation,in its sole discretion, to acquire all of a Defaulting Lender’s Commitments.  If more than one Lender exercises such right,each such Lender shall have the right to acquire such proportion of suchDefaulting Lender’s Commitments on a pro rata basis.  Upon any such purchase, the Defaulting Lender’sinterest in its Loans and its rights hereunder (but not its liability inrespect thereof or under the Loan Documents or this Agreement to the extent thesame relate to the period prior to the effective date of the purchase) shallterminate on the date of purchase, and the Defaulting Lender shall promptlyexecute all documents reasonably requested to surrender and transfer suchinterest to the purchaser thereof subject to and in accordance with the requirementsset forth in 9.6, including an Assignment in form reasonably acceptable to theAdministrative Agent.  The purchase pricefor the Commitments of a Defaulting Lender shall be equal to the amount of theprincipal balance of the Loans

 

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outstandingand owed by the Borrower to the Defaulting Lender.  The purchaser shall pay to the DefaultingLender in Immediately Available Funds on the date of such purchase theprincipal of and accrued and unpaid interest and fees on the Loans made by suchDefaulting Lender hereunder (it being understood that such accrued and unpaidinterest and fees may be paid pro rata to the purchasing Lender and theDefaulting Lender by the Administrative Agent at a subsequent date upon receiptof payment of such amounts from the Borrower). Prior to payment of such purchase price to a Defaulting Lender, theAdministrative Agent shall apply against such purchase price any amountsretained by the Administrative Agent pursuant to the last sentence of theimmediately preceding subsection (a).  TheDefaulting Lender shall be entitled to receive amounts owed to it by theBorrower under the Loan Documents which accrued prior to the date of thedefault by the Defaulting Lender, to the extent the same are received by theAdministrative Agent from or on behalf of the Borrower.  There shall be no recourse against any Lenderor the Administrative Agent for the payment of such sums except to the extentof the receipt of payments from any other party or in respect of the Loans.

 

Section 8.14                                Resignation.  If at any time CoBank shall deem itadvisable, in its sole discretion, it may submit to each of the Lenders and theBorrowers’ Agent a written notification of its resignation as AdministrativeAgent under this Agreement, such resignation to be effective upon theappointment of a successor Administrative Agent, but in no event later than 30days from the date of such notice.  Uponsubmission of such notice, the Required Lenders may appoint a successorAdministrative Agent.

 

**ARTICLEIXMISCELLANEOUS**

 

Section 9.1                                      Modifications.  Neither this Agreement, anyother Loan Document, nor any terms hereof or thereof may be amended,supplemented or modified except in accordance with the provisions of thisSection 9.1.  The Required Lenders andeach Borrower party to the relevant Loan Document may, or with the writtenconsent of the Required Lenders, the Administrative Agent and each suchBorrower may, from time to time, (i) enter into written amendments, supplementsor modifications hereto and to the other Loan Documents for the purpose ofadding any provisions to this Agreement or the other Loan Documents or changingin any manner the rights of the Lenders or of the Borrowers hereunder orthereunder or (ii) waive, on such terms and conditions as the Required Lendersor the Administrative Agent, as the case may be, may specify in suchinstrument, any of the requirements of this Agreement or the other LoanDocuments or any Default or Event of Default and its consequences; provided,however, no such amendment, modification, waiver or consent shall:

 

(a)                                  Reducethe rate or extend the time of payment of interest thereon, or reduce theamount of the principal thereof, or modify any of the provisions of any Notewith respect to the payment or repayment thereof, without the consent of theholder of each Note so affected; or

 

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(b)                                 Increasethe amount or extend the time of any Commitment of any Lender, without theconsent of such Lender; or

 

(c)                                  Reducethe rate or extend the time of payment of any fee payable to a Lender, withoutthe consent of the Lender affected; or

 

(d)                                 Exceptas may otherwise be expressly provided in any of the other Loan Documents,release any material portion of collateral securing, or any guaranties for, allor any part of the Obligations without the consent of all the Lenders; or

 

(e)                                  Amendthe definition of Required Lenders or otherwise reduce the percentage of theLenders required to approve or effectuate any such amendment, modification,waiver, or consent, without the consent of all the Lenders; or

 

(f)                                    Requirethe consent of any Lender (i) other than the Revolving Lenders if suchamendment, waiver or consent relates solely to the Revolving Loans, (ii) otherthan the Tranche A Term Lenders if such amendment, waiver or consent relatessolely to the Tranche A Term Loans, or (iii) other the Tranche B Term Lendersif such amendment, waiver or consent relates solely to the Tranche B Term Loans

 

(g)                                 Amendany of the foregoing Subsections (a) through (f) of this Section or thisSubsection (g) without the consent of all the Lenders; or

 

(h)                                 Amendany provision of this Agreement relating to the Administrative Agent (in itscapacity as agent for the Lenders) without the consent of the AdministrativeAgent; or

 

(i)                                     Amendany provision of this Agreement relating to the issuance of Letters of Creditwithout the consent of the Administrative Agent.

 

Section 9.2                                      Expenses.  Whether or not the transactions contemplatedhereby are consummated, the Borrowers agree to reimburse the AdministrativeAgent upon demand for all reasonable out-of-pocket expenses paid or incurred bythe Administrative Agent (including the fees and expenses of Dorsey &Whitney LLP, counsel to the Administrative Agent, and any filing and recordingcosts) in connection with the negotiation, preparation, approval, review,execution, delivery, administration, amendment, modification and interpretationof this Agreement and the other Loan Documents and any commitment lettersrelating thereto.  The Borrowers shallalso reimburse the Administrative Agent and each Lender upon demand for allreasonable out-of-pocket expenses (including expenses of legal counsel) paid orincurred by the Administrative Agent or any Lender in connection with thecollection and enforcement of this Agreement and any other Loan Document.  The obligations of the Borrowers under thisSection shall survive any termination of this Agreement.

 

Section 9.3                                      Waivers,etc.  No failure on the part of theAdministrative Agent or the holder of a Note to exercise and no delay inexercising any power or right hereunder or under

 

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anyother Loan Document shall operate as a waiver thereof; nor shall any single orpartial exercise of any power or right preclude any other or further exercisethereof or the exercise of any other power or right.  The remedies herein and in the other LoanDocuments provided are cumulative and not exclusive of any remedies provided bylaw.

 

Section 9.4                                      Notices.  Except when telephonic notice is expresslyauthorized by this Agreement, any notice or other communication to any party inconnection with this Agreement shall be in writing and shall be sent by manualdelivery, facsimile transmission, overnight courier or United States mail(postage prepaid) addressed to such party at the address specified on thesignature page hereof, or at such other address as such party shall havespecified to the other party hereto in writing. All periods of notice shall be measured from the date of deliverythereof if manually delivered, from the date of sending thereof if sent byfacsimile transmission, from the first Business Day after the date of sendingif sent by overnight courier, or from four days after the date of mailing ifmailed; provided, however, that any notice to the AdministrativeAgent or any Lender under Article II hereof shall be deemed to have been givenonly when received by the Administrative Agent or such Lender.

 

Section 9.5                                      Taxes.  The Borrowers agrees to pay, and save theAdministrative Agent and the Lenders harmless from all liability for, any stampor other taxes which may be payable with respect to the execution or deliveryof this Agreement or the issuance of the Notes, which obligation of theBorrowers shall survive the termination of this Agreement.

 

Section 9.6                                      Successorsand Assigns; Participations; Purchasing Lenders.

 

(a)                                  ThisAgreement shall be binding upon and inure to the benefit of the Borrowers, theAdministrative Agent, the Lenders, all future holders of the Notes, and theirrespective successors and assigns, except that the Borrowers may not assign ortransfer any of their rights or obligations under this Agreement without theprior written consent of each Lender.

 

(b)                                 AnyLender may, in the ordinary course of its commercial banking business and inaccordance with applicable law, at any time sell to one or more banks or otherfinancial institutions (“Participants”) participating interests in a minimumamount of $250,000 in any Revolving Loan or any Term Loan or other Obligationowing to such Lender, any Revolving Note or any Term Note held by such Lender,and any Revolving Commitment or any Term Loan Commitment of such Lender, or anyother interest of such Lender hereunder. In the event of any such sale by any Lender of participating intereststo a Participant, (i) such Lender’s obligations under this Agreement to theother parties to this Agreement shall remain unchanged, (ii) such Lender shallremain solely responsible for the performance thereof, (iii) such Lender shallremain the holder of any such Revolving Note or any such Term Note for allpurposes under this Agreement, (iv) the Borrowers, the Borrowers’ Agent and theAdministrative Agent shall continue to deal solely and directly with suchLender in connection with such Lender’s rights and obligations under thisAgreement and (v) the agreement pursuant to which such

 

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Participantacquires its participating interest herein shall provide that such Lender shallretain the sole right and responsibility to enforce the Obligations, including,without limitation the right to consent or agree to any amendment,modification, consent or waiver with respect to this Agreement or any otherLoan Document, provided that such agreement may provide that such Lender willnot consent or agree to any such amendment, modification, consent or waiverwith respect to the matters set forth in Sections 9.1(a) through (e) without theprior consent of such Participant.  EachBorrower agrees that if amounts outstanding under this Agreement, the RevolvingNotes, the Term Notes and the Loan Documents are due and unpaid, or shall havebeen declared or shall have become due and payable upon the occurrence of anEvent of Default, each Participant shall be deemed to have, to the extentpermitted by applicable law, the right of setoff in respect of itsparticipating interest in amounts owing under this Agreement and any RevolvingNote, any Term Note or other Loan Document to the same extent as if the amountof its participating interest were owing directly to it as a Lender under thisAgreement or any Revolving Note, any Term Note or other Loan Document; provided,that such right of setoff shall be subject to the obligation of suchParticipant to share with the Lenders, and the Lenders agree to share with suchParticipant, as provided in Section 8.11. Each Borrower also agrees that each Participant shall be entitled to thebenefits of Sections 2.18, 2.19, 2.20, 2.21 and 9.2 with respect to itsparticipation in the Revolving Commitments, Term Loan Commitments, RevolvingLoans and Term Loans; provided, that no Participant shall be entitled toreceive any greater amount pursuant to such subsections than the transferorLender would have been entitled to receive in respect of the amount of theparticipation transferred by such transferor Lender to such Participant had nosuch transfer occurred.

 

(c)                                  EachLender may, from time to time, with the consent of the Administrative Agent andthe Borrowers’ Agent (neither of which consents shall be unreasonably withheldor delayed; and if an Event of Default shall have occurred and be continuing,then consent of the Borrowers’ Agent shall not be required), assign to otherlenders (“Assignees”) all or part of its rights or obligations hereunderor under any Loan Document in a minimum amount of $1,000,000 evidenced by anyRevolving Note then held by that Lender, together with equivalent proportionsof its Revolving Commitment, any Term Note then held by that Lender, its TermLoan Commitment pursuant to written agreements executed by such assigningLender, such Assignee(s), the Borrowers and the Administrative Agent insubstantially the form of Exhibit H, which agreements shall specify ineach instance the portion of the Obligations evidenced by the Revolving Notesand Term Notes which is to be assigned to each Assignee and the portion of theRevolving Commitment and Term Loan Commitment of such Lender to be assumed byeach Assignee (each, an “Assignment Agreement”); provided, however,that the assigning Lender must pay to the Administrative Agent a processing andrecordation fee of $3,500 per assignment. Upon the execution of each Assignment Agreement by the assigning Lender,the relevant Assignee, the Borrowers and the Administrative Agent, payment tothe assigning Lender by such Assignee of the purchase price for the portion ofthe Obligations being acquired by it and receipt by the Borrowers’ Agent of acopy of

 

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the relevantAssignment Agreement, (x) such Assignee lender shall thereupon become a “Lender”for all purposes of this Agreement with a pro rata share of the RevolvingCommitment and a Term Loan Commitment in the amount set forth in suchAssignment Agreement and with all the rights, powers and obligations afforded aLender under this Agreement, (y) such assigning Lender shall have no furtherliability for funding the portion of its Commitment assumed by such Assigneeand (z) the address for notices to such Assignee shall be as specified in theAssignment Agreement executed by it.  Concurrentlywith the execution and delivery of each Assignment Agreement, the assigningLender shall surrender to the Administrative Agent the Revolving Note and TermNote a portion of which is being assigned, and the Borrowers shall execute anddeliver a Revolving Note and Term Note to the Assignee in the amount of itsRevolving Commitment and its Term Loan Commitment, respectively, and a newRevolving Note and Term Note to the assigning Lender in the amount of itsRevolving Commitment and Term Loan Commitment, respectively, after givingeffect to the reduction occasioned by such assignment, all such Notes toconstitute “Revolving Notes” and “Term Notes” for all purposes of thisAgreement and of the other Loan Documents.

 

(d)                                 TheBorrowers shall not be liable for any costs incurred by the Lenders ineffecting any participation under subparagraph (b) of this subsection or by theLenders in effecting any assignment under subparagraph (c) of this subsectionexcept with respect to the Administrative Agent as provided in this Section9.6.

 

(e)                                  EachLender may disclose to any Assignee or Participant and to any prospectiveAssignee or Participant any and all financial information in such Lender’spossession concerning the Borrowers or any of their Subsidiaries (if any) whichhas been delivered to such Lender by or on behalf of the Borrowers or any oftheir Subsidiaries pursuant to this Agreement or which has been delivered tosuch Lender by or on behalf of the Borrowers or any of their Subsidiaries inconnection with such Lender’s credit evaluation of such Borrower or any of itsSubsidiaries prior to entering into this Agreement, provided that priorto disclosing such information, such Lender shall first obtain the agreement ofsuch prospective Assignee or Participant to comply with the provisions ofSection 9.7.

 

(f)                                    Notwithstandingany other provision in this Agreement, any Lender may at any time create asecurity interest in, or pledge, all or any portion of its rights under andinterest in this Agreement and any note held by it in favor of any federalreserve bank in accordance with Regulation A of the Board or U.  S.  TreasuryRegulation 31 CFR § 203.14, and such Federal Reserve Bank may enforce suchpledge or security interest in any manner permitted under applicable law.

 

(g)                                 Notwithstandingany other provision in this Agreement, (i) all Revolving Loan, Term Loan orother Obligations owing to CoBank hereunder that are retained by CoBank for itsown account and are not part of a sale of a participation interest or theassignment of any rights or obligations under the Loan Documents, shall beentitled to

 

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patronagedistributions in accordance with the bylaws of CoBank and its practices andprocedures related to patronage distributions and (ii) any Revolving Loan, TermLoan or other Obligations owing to CoBank hereunder that are not retained byCoBank for its own account and are part of a sale of a participation interestor the assignment of any rights or obligations under the Loan Documents, shallnot be entitled to any such patronage distributions.

 

Section 9.7                                      Confidentialityof Information.  TheAdministrative Agent and each Lender shall use reasonable efforts to assurethat information about the Borrower and its operations, affairs and financialcondition, not generally disclosed to the public or to trade and othercreditors, which is furnished to the Administrative Agent or such Lenderpursuant to the provisions hereof is used only for the purposes of thisAgreement and any other relationship between such Lender and the Borrower andshall not be divulged to any Person other than the Lender, their Affiliates andtheir respective officers, directors, employees and agents, except: (a) totheir attorneys and accountants, (b) in connection with the enforcement of therights of the Administrative Agent and the Lenders hereunder and under the LoanDocuments or otherwise in connection with applicable litigation, (c) inconnection with assignments and participations and the solicitation ofprospective assignees and participants referred to in the immediately precedingSection, (d) if such information is generally available to the public otherthan as a result of disclosure by the Administrative Agent or any Lender, (e)to any direct or indirect contractual counterparty in any hedging arrangementor such contractual counterparty’s professional advisor, (f) to any nationallyrecognized rating agency that requires information about any Lender’sinvestment portfolio in connection with ratings issued with respect to such Lender,and (g) as may otherwise be required or requested by any regulatory authority havingjurisdiction over the Administrative Agent or any Lender or by any applicablelaw, rule, regulation or judicial process, the opinion of any Lender’s counselconcerning the making of such disclosure to be binding on the parties hereto.  No Lender shall incur any liability to theBorrower by reason of any disclosure permitted by this Section.

 

Section 9.8                                      GoverningLaw and Construction.  THE VALIDITY,CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BEGOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECTTO CONFLICT OF LAWS PRINCIPLES THEREOF.  Wheneverpossible, each provision of this Agreement and the other Loan Documents and anyother statement, instrument or transaction contemplated hereby or thereby or relatinghereto or thereto shall be interpreted in such manner as to be effective andvalid under such applicable law, but, if any provision of this Agreement, theother Loan Documents or any other statement, instrument or transactioncontemplated hereby or thereby or relating hereto or thereto shall be held tobe prohibited or invalid under such applicable law, such provision shall beineffective only to the extent of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions ofthis Agreement, the other Loan Documents or any other statement, instrument ortransaction contemplated hereby or thereby or relating hereto or thereto.

 

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Section 9.9                                      Consentto Jurisdiction.  AT THEOPTION OF THE ADMINISTRATIVE AGENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTSMAY BE ENFORCED IN ANY FEDERAL COURT OR COLORADO STATE COURT SITTING IN CITY ORCOUNTY OF DENVER; AND EACH BORROWER CONSENTS TO THEJURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE INSUCH FORUMS IS NOT CONVENIENT.  IN THEEVENT ANY BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDERANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THERELATIONSHIP CREATED BY THIS AGREEMENT, THE ADMINISTRATIVE AGENT AT ITS OPTIONSHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS ANDVENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDERAPPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

 

Section 9.10                                Waiverof Jury Trial.  EACH BORROWER,THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHTTO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ORTHEREBY.

 

Section 9.11                                Survivalof Agreement.  Allrepresentations, warranties, covenants and agreement made by each Borrowerherein or in the other Loan Documents and in the certificates or other instrumentsprepared or delivered in connection with or pursuant to this Agreement or anyother Loan Document shall be deemed to have been relied upon by the Lenders andshall survive the making of the Loans by the Lenders and the execution anddelivery to the Lenders by the Borrowers of the Notes, regardless of anyinvestigation made by or on behalf of the Lenders, and shall continue in fullforce and effect as long as any Obligation is outstanding and unpaid and solong as the Commitments have not been terminated; provided, however, that theobligations of the under 9.2, 9.5 and 9.12 shall survive payment in full of theObligations and the termination of the Commitments.

 

Section 9.12                                Indemnification.  The Borrowers hereby agree to defend,protect, indemnify and hold harmless the Administrative Agent and the Lendersand their respective Affiliates and the directors, officers, employees,attorneys and agents of the Administrative Agent and the Lenders and theirrespective Affiliates (each of the foregoing being an “Indemnitee” andall of the foregoing being collectively the “Indemnitees”) from andagainst any and all claims, actions, damages, liabilities, judgments, costs andexpenses (including all reasonable fees and disbursements of counsel which maybe incurred in the investigation or defense of any matter) imposed upon,incurred by or asserted against any Indemnitee, whether direct, indirect orconsequential and whether based on any federal, state, local or foreign laws orregulations (including securities laws, environmental laws, commercial laws andregulations), under common law or on equitable cause, or on contract orotherwise:

 

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(a)                                  byreason of, relating to or in connection with the execution, delivery, performanceor enforcement of any Loan Document, any commitments relating thereto, or anytransaction contemplated by any Loan Document; or

 

(b)                                 byreason of, relating to or in connection with any credit extended or used underthe Loan Documents or any act done or omitted by any Person, or the exercise ofany rights or remedies thereunder, including the acquisition of any collateralby the Lenders by way of foreclosure of the Lien thereon, deed or bill of salein lieu of such foreclosure or otherwise;

 

provided,however, that the Borrowers shall not be liable to any Indemnitee for anyportion of such claims, damages, liabilities and expenses resulting from suchIndemnitee’s gross negligence or willful misconduct.  In the event this indemnity is unenforceableas a matter of law as to a particular matter or consequence referred to herein,it shall be enforceable to the full extent permitted by law.

 

Thisindemnification applies, without limitation, to any act, omission, event orcircumstance existing or occurring on or prior to the later of the TerminationDate or the date of payment in full of the Obligations, including specificallyObligations arising under clause (b) of this Section.  The indemnification provisions set forthabove shall be in addition to any liability the Borrowers may otherwise have.  Without prejudice to the survival of anyother obligation of the Borrowers hereunder the indemnities and obligations ofthe Borrowers contained in this Section shall survive the payment in full ofthe other Obligations.

 

Section 9.13                                Captions.  The captions or headings herein and any tableof contents hereto are for convenience only and in no way define, limit ordescribe the scope or intent of any provision of this Agreement.

 

Section 9.14                                EntireAgreement.  This Agreement andthe other Loan Documents embody the entire agreement and understanding betweenthe Borrowers, the Administrative Agent and the Lenders with respect to thesubject matter hereof and thereof.  ThisAgreement supersedes all prior agreements and understandings relating to thesubject matter hereof.  Nothing containedin this Agreement or in any other Loan Document, expressed or implied, isintended to confer upon any Persons other than the parties hereto any rights,remedies, obligations or liabilities hereunder or thereunder.

 

Section 9.15                                Counterparts.  This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one and the sameinstrument, and any of the parties hereto may execute this Agreement by signingany such counterpart.

 

Section 9.16                                BorrowerAcknowledgements.  Each Borrowerhereby acknowledges that (a) it has been advised by counsel in the negotiation,execution and delivery of this Agreement and the other Loan Documents, (b)neither the Administrative Agent nor any Lender has any fiduciary relationshipto such Borrower, the relationship being solely that of debtor and creditor,

 

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(c) no jointventure exists between such Borrower and the Administrative Agent or anyLender, and (d) neither the Administrative Agent nor any Lender undertakes anyresponsibility to such Borrower to review or inform such Borrower of any matterin connection with any phase of the business or operations of such Borrower andsuch Borrower shall rely entirely upon its own judgment with respect to itsbusiness, and any review, inspection or supervision of, or information suppliedto, the Borrowers by the Administrative Agent or any Lender is for theprotection of the Lenders and neither such Borrower nor any third party isentitled to rely thereon.

 

Section 9.17                                Appointmentof and Acceptance by Borrowers’ Agent.  Midwest Investors of Iowa, Cooperative herebyappoints and authorizes the Borrowers’ Agent to take such action as its agenton its behalf and to exercise such powers under the Loan Documents as aredelegated to the Borrowers’ Agent by the terms thereof, together with suchpower that are reasonably incidental thereto, and Golden Oval Eggs, LLC herebyaccepts such appointment.

 

Section 9.18                                RelationshipAmong Borrowers.

 

(a)                                  JOINTAND SEVERAL LIABILITY.  EACH BORROWER AGREES THAT IT IS LIABLE,JOINTLY AND SEVERALLY WITH EACH OTHER BORROWER, FOR THE PAYMENT OF ALLOBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT THE LENDERS AND THEADMINISTRATIVE AGENT CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL BORROWERS,IN THE LENDERS’ OR THE ADMINISTRATIVE AGENT’S SOLE AND UNLIMITED DISCRETION.

 

(b)                                 Waiversof Defenses.  The obligations of theBorrowers hereunder shall not be released, in whole or in part, by any actionor thing which might, but for this provision of this Agreement, be deemed alegal or equitable discharge of a surety or guarantor, other than irrevocablepayment and performance in full of the Obligations (except for contingentindemnity and other contingent Obligations not yet due and payable) at a timeafter any obligation of the Lenders hereunder to make the Term Loans andRevolving Loans and of the Letter of Credit Bank to issue Letters of Credit shallhave expired or been terminated and all outstanding Letters of Credit shallhave expired or the liability of the Letter of Credit Bank thereon shall haveotherwise been discharged.  The purposeand intent of this Agreement is that the Obligations constitute the direct andprimary obligations of each Borrower and that the covenants, agreements and allobligations of each Borrower hereunder be absolute, unconditional andirrevocable.  Each Borrower shall be andremain liable for any deficiency remaining after foreclosure of any mortgage,deed of trust or security agreement securing all or any part of theObligations, whether or not the liability of any other Person for suchdeficiency is discharged pursuant to statute, judicial decision or otherwise.

 

(c)                                  OtherTransactions.  The Lenders and theAdministrative Agent are expressly authorized to exchange, surrender or releasewith or without consideration any

 

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orall collateral and security which may at any time be placed with it by theBorrowers or by any other Person on behalf of the Borrowers, or to forward ordeliver any or all such collateral and security directly to the Borrowers forcollection and remittance or for credit. No invalidity, irregularity or unenforceability of any security for theObligations or other recourse with respect thereto shall affect, impair or be adefense to the Borrowers’ obligations under this Agreement.  The liabilities of each Borrower hereundershall not be affected or impaired by any failure, delay, neglect or omission onthe part of any Lender or the Administrative Agent to realize upon any of theObligations of any other Borrower to the Lenders or the Administrative Agent,or upon any collateral or security for any or all of the Obligations, nor bythe taking by any Lender or the Administrative Agent of (or the failure totake) any guaranty or guaranties to secure the Obligations, nor by the takingby any Lender or the Administrative Agent of (or the failure to take or thefailure to perfect its security interest in or other lien on) collateral orsecurity of any kind.  No act or omissionof any Lender or the Administrative Agent, whether or not such action orfailure to act varies or increases the risk of, or affects the rights orremedies of a Borrower, shall affect or impair the obligations of the Borrowershereunder.

 

(d)                                 ActionsNot Required.  Each Borrower, to theextent permitted by applicable law, hereby waives any and all right to cause amarshaling of the assets of any other Borrower or any other action by any courtor other governmental body with respect thereto or to cause any Lender or theAdministrative Agent to proceed against any security for the Obligations or anyother recourse which any Lender or the Administrative Agent may have withrespect thereto and further waives any and all requirements that any Lender orthe Administrative Agent institute any action or proceeding at law or inequity, or obtain any judgment, against any other Borrower or any other Person,or with respect to any collateral security for the Obligations, as a conditionprecedent to making demand on or bringing an action or obtaining and/orenforcing a judgment against, such Borrower under this Agreement.

 

(e)                                  NoSubrogation.  Notwithstanding anypayment or payments made by any Borrower hereunder or any setoff or applicationof funds of any Borrower by any Lender or the Administrative Agent, suchBorrower shall not be entitled to be subrogated to any of the rights of anyLender or the Administrative Agent against any other Borrower or any otherguarantor or any collateral security or guaranty or right of offset held by anyLender or the Administrative Agent for the payment of the Obligations, norshall such Borrower seek or be entitled to seek any contribution orreimbursement from any other Borrower or any other guarantor in respect ofpayments made by such Borrower hereunder, until all amounts owing to theLenders and the Administrative Agent by the Borrowers on account of theObligations are irrevocably paid in full. If any amount shall be paid to a Borrower on account of such subrogationrights at any time when all of the Obligations shall not have been irrevocablypaid in full, such amount shall be held by that Borrower in trust for theLenders and the Administrative Agent, segregated from other funds of thatBorrower, and shall, forthwith upon receipt by the Borrower, be turned over

 

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tothe Administrative Agent in the exact form received by the Borrower (dulyindorsed by the Borrower to the Administrative Agent, if required), to beapplied against the Obligations, whether matured or unmatured, in such order asthe Administrative Agent may determine.

 

(f)                                    Applicationof Payments.  Any and all paymentsupon the Obligations made by the Borrowers or by any other Person, and/or theproceeds of any or all collateral or security for any of the Obligations,may be applied by the Lenders on such items of the Obligations as the Lendersmay elect.

 

(g)                                 Recoveryof Payment.  If any payment receivedby the Lenders or the Administrative Agent and applied to the Obligations issubsequently set aside, recovered, rescinded or required to be returned for anyreason (including, without limitation, the bankruptcy, insolvency orreorganization of a Borrower or any other obligor), the Obligations to whichsuch payment was applied shall, to the extent permitted by applicable law, bedeemed to have continued in existence, notwithstanding such application, and eachBorrower shall be jointly and severally liable for such Obligations as fully asif such application had never been made. References in this Agreement to amounts “irrevocably paid” or to “irrevocablepayment” refer to payments that cannot be set aside, recovered, rescinded orrequired to be returned for any reason.

 

(h)                                 Borrowers’Financial Condition.  Each Borroweris familiar with the financial condition of the other Borrowers, and eachBorrower has executed and delivered this Agreement based on that Borrower’s ownjudgment and not in reliance upon any statement or representation of theLenders or the Administrative Agent.  TheLenders and the Administrative Agent shall have no obligation to provide anyBorrower with any advice whatsoever or to inform any Borrower at any time ofany Lender’s actions, evaluations or conclusions on the financial condition orany other matter concerning the Borrowers.

 

(i)                                     Bankruptcyof the Borrowers.  Each Borrowerexpressly agrees that, to the extent permitted by applicable law, theliabilities and obligations of that Borrower under this Agreement shall not inany way be impaired or otherwise affected by the institution by or against anyother Borrower or any other Person of any bankruptcy, reorganization,arrangement, insolvency or liquidation proceedings, or any other similarproceedings for relief under any bankruptcy law or similar law for the reliefof debtors and that any discharge of any of the Obligations pursuant to anysuch bankruptcy or similar law or other law shall not diminish, discharge orotherwise affect in any way the obligations of that Borrower under thisAgreement, and that upon the institution of any of the above actions, suchobligations shall be enforceable against that Borrower.

 

(j)                                     Limitation;Insolvency Laws.  As used in thisSection 9.18(j): (a) the term “Applicable Insolvency Laws” means thelaws of the United States of America or of any State, province, nation or othergovernmental unit relating to bankruptcy, reorganization,

 

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arrangement,adjustment of debts, relief of debtors, dissolution, insolvency, fraudulenttransfers or conveyances or other similar laws (including, without limitation,11 U. S. C. §547, §548, §550 and other “avoidance” provisions of Title 11 ofthe United Stated Code) as applicable in any proceeding in which the validityand/or enforceability of this Agreement against any Borrower, or any SpecifiedLien is in issue; and (b) “Specified Lien” means any security interest, mortgage,lien or encumbrance granted by any Borrower securing the Obligations, in wholeor in part.  Notwithstanding any otherprovision of this Agreement, if, in any proceeding, a court of competentjurisdiction determines that with respect to any Borrower, this Agreement orany Specified Lien would, but for the operation of this Section, be subject toavoidance and/or recovery or be unenforceable by reason of ApplicableInsolvency Laws, this Agreement and each such Specified Lien shall be valid andenforceable against such Borrower, only to the maximum extent that would notcause this Agreement or such Specified Lien to be subject to avoidance,recovery or unenforceability.  To theextent that any payment to, or realization by, the Lenders or the AdministrativeAgent on the Obligations exceeds the limitations of this Section and isotherwise subject to avoidance and recovery in any such proceeding, the amountsubject to avoidance shall in all events be limited to the amount by which suchactual payment or realization exceeds such limitation, and this Agreement aslimited shall in all events remain in full force and effect and be fullyenforceable against such Borrower.  ThisSection is intended solely to reserve the rights of the Lenders and theAdministrative Agent hereunder against each Borrower, in such proceeding to themaximum extent permitted by Applicable Insolvency Laws and neither theBorrowers, any guarantor of the Obligations nor any other Person shall have anyright, claim or defense under this Section that would not otherwise beavailable under Applicable Insolvency Laws in such proceeding.

 

Section 9.19                                InterestRate Limitation.  Notwithstandinganything herein to the contrary, if at any time the interest rate applicable toany Loan, together with all fees, charges and other amounts that are treated asinterest on such Loan under applicable law (collectively, the “Charges”),shall exceed the maximum lawful rate (the “Maximum Rate”) that may becontracted for, charged, taken, received or reserved by the Lender holding suchLoan in accordance with applicable law, the rate of interest payable in respectof such Loan hereunder, together with all Charges payable in respect thereof,shall be limited to the Maximum Rate and, to the extent lawful, the interestand Charges that would have been payable in respect of such Loan but were notpayable as a result of the operation of this Section shall be cumulated and theinterest and Charges payable to such Lender in respect of other Loans orperiods shall be increased (but not above the Maximum Rate therefor) until suchcumulated amount, together with interest thereon at the Federal Funds EffectiveRate to the date of repayment, shall have been received by such Lender.

 

[The next page is the signature page.]

 

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**IN WITNESS WHEREOF**, the parties hereto havecaused this Agreement to be executed as of the date first above written.

 
|                             | GOLDEN OVAL EGGS, LLC,                      |
|----------------------------------|---------------------------------------------|
|                             | as a Borrower and the Borrowers’ Agent |
|                             |                                        |
|                             |                                        |
|                             | By:                                         |   | /s/ Doug Leifermann |   |
|                             | Name:                                       |   Doug Leifermann |   |
|                             | Title:                                      |   | Vice President & Chief Financial Officer |   |
|                             |                                        |
|                             |                                        |
|                             | MIDWEST INVESTORS OF IOWA,                  |
|                             | COOPERATIVE,                                |
|                             | as a Borrower                               |
|                             |                                        |
|                             |                                        |
|                             | By:                                         |   | /s/ Doug Leifermann |   |
|                             | Name:                                       |   Doug Leifermann |   |
|                             | Title:                                      |   | Chief Financial Officer |   |
|                             |                                        |
|                             |                                        |
| Address for the Borrowers        |                                        |
| For Purposes of Notice:          |                                        |
|                             |                                        |
| 340 Dupont Avenue N.E.           |                                        |
| P.O. Box 615                     |                                        |
| Renville, MN 56284               |                                        |
| Fax: (320) 329-3276              |                                        |
| Attention: Doug Leifermann, Vice |                                        |
| President – Finance         |                                        |

 

S-1

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Commitment Amounts
| Revolving:       | $10,000,000                    | COBANK, ACB,                          |
|------------------|--------------------------------|---------------------------------------|
| Tranche A1 Term: | N/A                            | as a Lender and as the Administrative |
| Tranche A2 Term: | N/A                            | Agent                                 |
| Tranche B1 Term: | $7,300,000                     |                                  |
| Tranche B2 Term: | $7,700,000                     | By:                                   |   |   /s/ Gary Sloan |   |
|             | Name:                          |   Gary Sloan                |   |
|             | Title:                         |                                  |   Senior Loan Officer |   |
|             |                           |
|             | Address for funding notices:   |
|             | 5500 South Quebec Street       |
|             | Greenwood Village, CO 80111    |
|             | P.O. Box 5110                  |
|             | Denver, CO 80217               |
|             | Attention:                     |
|             | Fax: (303) 740-4002            |
|             |                           |
|             | Address for all other notices: |
|             | 1600 Colonnade                 |
|             | 5500 Wayzata Boulevard         |
|             | Minneapolis, MN 55416-1252     |
|             | Fax: (763) 765-2720            |
|             | Attention: Gary J. Sloan       |
|             |                           |
|             |                           |
| Revolving:       | N/A                            | METROPOLITAN LIFE INSURANCE           |
| Tranche A1 Term: | $14,700,000                    | COMPANY, as a Bank                    |
| Tranche A2 Term: | $15,300,000                    |                                  |
| Tranche B1 Term: | N/A                            | By:                                   |   |   /s/ Daniel A. O’Neill |   |
| Tranche B2 Term: | N/A                            | Name:                                 |   Daniel A. O’Neill |   |
|             | Title:                         |                                  |   Assistant Vice President |   |
|             |                           |
|             | Address for funding notices:   |
|             |                           |
|             |                           |
|             | Address for all other notices: |
|             | 4401 Westown Parkway           |
|             | Suite 220                      |
|             | West Des Moines, IA 50266      |
|             | Fax: (515) 223-0757            |
|             | Attention: Tony Jennings       |
|                  |                                |                                       |  |  |  |  |  |  |

 

S-2

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ANNEX I

 

PRICING GRID

** **

**Revolving Loans**

** **
| **Leverage Ratio**                                                | ** ** | **LIBOR  Applicable Margin** | ** ** | **Base Rate  Applicable Margin** | ** ** | **Applicable Commitment  Fee Percentage** | ** ** |
|-------------------------------------------------------------------|------------|------------------------------|------------|----------------------------------|------------|-------------------------------------------|------------|
| Less than 1.25 to 1.00                                            |       | 1.00                         | %          | (1.50                            | )%         | 0.200                                     | %          |
| Greater than or equal to 1.25 to 1.00 but  less than 2.25 to 1.00 |       | 1.25                         | %          | (1.25                            | )%         | 0.250                                     | %          |
| Greater than or equal to 2.25 to 1.00 but  less than 3.00 to 1.00 |       | 1.75                         | %          | (0.75                            | )%         | 0.375                                     | %          |
| Greater than or equal to 3.00 to 1.00 but  less than 3.75 to 1.00 |       | 2.25                         | %          | (0.25                            | )%         | 0.375                                     | %          |
| Greater than or equal to 3.75 to 1.00                             |       | 2.75                         | %          | 0.25                             | %          | 0.375                                     | %          |

** **

**Term BLoans**

 
| **Leverage  Ratio**                                               | ** ** | **LIBOR  Applicable Margin** | ** ** | **Base  Rate  Applicable Margin** | **  ** |
|-------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------------|------------------|
| Less than 1.25 to 1.00                                            |       | 1.25                         | %          | (1.35                             | )%               |
| Greater than or equal to 1.25 to 1.00 but  less than 2.25 to 1.00 |       | 1.50                         | %          | (1.10                             | )%               |
| Greater than or equal to 2.25 to 1.00 but  less than 3.00 to 1.00 |       | 2.00                         | %          | (0.60                             | )%               |
| Greater than or equal to 3.00 to 1.00 but  less than 3.75 to 1.00 |       | 2.50                         | %          | (0.10                             | )%               |
| Greater than or equal to 3.75 to 1.00                             |       | 3.00                         | %          | 0.40                              | %                |

 

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ANNEX II

 

RISK MANAGEMENT GRID

 
| **Current Ratio**                                                 | ** ** | **Minimum Percentage of Eggs Contracted** | ** ** |
|-------------------------------------------------------------------|------------|-------------------------------------------|------------|
| Greater than  or equal to 1.25 to 1.00 but less than 1.50 to 1.00 | ** ** | > 50                                   | %          |
| Greater than  or equal to 1.50 to 1.00 but less than 2.00 to 1.00 | ** ** | > 40                                   | %          |
| Greater than  or equal to 2.00 to 1.00                            | ** ** | > 30                                   | %          |

 

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