Document:

Exhibit 10.3

 

REVOLVING TERM LOAN SUPPLEMENT

 

THIS SUPPLEMENT to
the Master Loan Agreement dated June 17, 2004 (the “MLA”), is entered into as
of June 17, 2004 between CoBANK, ACB
(“CoBank”) and SOUTH DAKOTA SOYBEAN
PROCESSORS, LLC, VOLGA, SOUTH DAKOTA (the “Company”), and amends and
restates the Supplement dated February 26, 2002 and numbered BO5IT05D executed
by South Dakota Soybean Processors and assumed by the Company.

 

SECTION 1. 
The Revolving Term Loan Commitment.  On the terms and conditions set forth in the
MLA and this Supplement, CoBank agrees to make loans to the Company from the
date hereof, up to and including March 20, 2011, in an aggregate principal
amount not to exceed, at any one time outstanding, $18,400,000.00 less the
amounts scheduled to be repaid during the period set forth below in Section 5
(the “Commitment”).  Within the limits
of the Commitment, the Company may borrow, repay and reborrow.

 

The Company may, in its sole
discretion, elect to permanently reduce the amount of the Commitment by giving
CoBank ten days prior written notice. 
Said election shall be made only if the Company is not in default at the
time of the election and will remain in compliance with all financial covenants
after such reduction.  Any such
reduction shall be treated as an early, voluntary reduction of the Commitment
amount pursuant to the repayment schedule set out in Section 5.

 

SECTION 2. 
Purpose. 
The purpose of the Commitment is to provide working capital to the
Company and to finance the construction of a soybean refinery.

 

SECTION 3. 
Term. 
Intentionally Omitted.

 

SECTION 4. 
Interest. 
The Company agrees to pay interest on the unpaid balance of the loans in
accordance with one or more of the following interest rate options, as selected
by the Company:

 

(A)          Weekly
Quoted Variable Rate. 
At a rate per annum equal at all times to the rate of interest
established by CoBank on the first Business day of each week.  The rate established by CoBank shall be
effective until the first Business Day of the next week.  Each change in the rate shall be applicable
to all balances subject to this option and information about the then current
rate shall be made available upon telephonic request.

 

(B)          Quoted
Fixed Rate.  At
a fixed rate per annum to be quoted by CoBank in its sole discretion in each
instance.  Under this option, rates may
be fixed on such balances and for such periods, as may be agreeable to CoBank
in its sole discretion in each instance.

 

The Company shall select the
applicable rate option at the time it requests a loan hereunder and may,
subject to the limitations set forth above, elect to convert balances bearing
interest at the variable rate option to one of the fixed rate options.  Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate option unless
the amount fixed is repaid or fixed for an additional period in accordance with
the terms hereof.  Notwithstanding the

 

 

foregoing, unless CoBank
otherwise consents in its sole discretion in each instance, rates may not be
fixed for periods expiring after the maturity date of the loans.  In the event CoBank consents to one or more
balances being fixed for a period or periods extending beyond the maturity date
of the loans and the Commitment is not renewed, then each such balance shall be
due and payable on the last day of its fixed rate period and the promissory
note set forth below shall be deemed amended accordingly.  All elections provided for herein shall be
made telephonically or it writing and must be received by 12:00 Noon Company’s
local time.  Interest shall be
calculated on the actual number of days each loan is outstanding on the basis
of a year consisting of 360 days and shall be payable monthly in arrears by the
20th day of the following mouth.

 

SECTION 5. 
Promissory Note.  The Company promises to repay on the dates set forth below, the
outstanding principal, if any, that is in excess of the available Commitment,
which shall be reduced in scheduled periodic increments of $1,300,000.00 as
follows:

	
  Payment
  Date

  	
   

  	
  Reducing
  Commitment Amount*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 20, 2004

  	
   

  	
  $

  	
  17,100,000.00

  	
   

  
	
  March 20, 2005

  	
   

  	
  $

  	
  15,800,000.00

  	
   

  
	
  September 20, 2005

  	
   

  	
  $

  	
  14,500,000.00

  	
   

  
	
  March 20, 2006

  	
   

  	
  $

  	
  13,200,000.00

  	
   

  
	
  September 20, 2006

  	
   

  	
  $

  	
  11,900,000.00

  	
   

  
	
  March 20, 2007

  	
   

  	
  $

  	
  10,600,000.00

  	
   

  
	
  September 20, 2007

  	
   

  	
  $

  	
  9,300,000.00

  	
   

  
	
  March 20, 2008

  	
   

  	
  $

  	
  8,000,000.00

  	
   

  
	
  September 20, 2008

  	
   

  	
  $

  	
  6,700,000.00

  	
   

  
	
  March 20, 2009

  	
   

  	
  $

  	
  5,400,000.00

  	
   

  
	
  September 20, 2009

  	
   

  	
  $

  	
  4,100,000.00

  	
   

  
	
  March 20, 2010

  	
   

  	
  $

  	
  2,800,000.00

  	
   

  
	
  September 20, 2010

  	
   

  	
  $

  	
  1,500,000.00

  	
   

  
	
  March 20, 2011

  	
   

  	
  0.00

  	
   

  

 

If any installment due date is
not a day on which CoBank is open for business, then such payment shall be made
on the next day on which CoBank is open for business.  In addition to the above, the Company promises to pay interest on
the unpaid principal balance hereof at the times and in accordance with the
provisions set forth in Section 4 hereof. 
This note replaces and supersedes, but does not constitute payment of
the indebtedness evidenced by, the promissory note set forth in the Supplement
being amended and restated hereby.

 

SECTION 6. 
Prepayment. 
Subject to the broken funding surcharge provision of the MLA, the
Company may on one Business Day’s prior written notice prepay all or any
portion of the loan(s).  During the term
of the Commitment, prepayments shall be applied to such balances, fixed or
variable, as the Company shall specify. 
After the expiration of the term of the Commitment, prepayments shall,
unless CoBank otherwise agrees, be applied to principal

 

2

 

installments in the inverse
order of their maturity and to such balances, fixed or variable, as CoBank
shall specify.

 

SECTION
7.  Commitment Fee.  In consideration of the Commitment, the
Company agrees to pay to CoBank a commitment fee on the average daily unused
portion of the Commitment at the rate of 1/2 of 1% per annum (calculated on a
360 day basis), payable monthly in arrears by the 20th day following each
month.  Such fee shall be payable for each
month (or portion thereof) occurring during the original or any extended term
of the Commitment.

 

IN WITNESS WHEREOF,
the parties have caused this Supplement to be executed by their duly authorized
officers as of the date shown above.

 

 

	
  CoBANK, ACB

  	
  SOUTH DAKOTA SOYBEAN PROCESSORS,

  LLC

  
	
   

  	
   

  
	
  By:

  	
  /s/ Teresa L.

  	
   

  	
  By:

  	
  /s/ Rodney Christianson

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   
  Assistant Corporate Secretary

  	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
							

 

3Exhibit 10.4

 

STATUSED REVOLVING CREDIT SUPPLEMENT

 

THIS SUPPLEMENT to
the Master Loan Agreement dated June 17, 2004 (the “MLA”), is entered into
as of June 17, 2004 between CoBANK, ACB
(“CoBank”) and SOUTH DAKOTA SOYBEAN
PROCESSORS, LLC, VOLGA, SOUTH DAKOTA (the “Company”), and amends and
restates the Supplement dated February 26, 2002 and numbered BO51S01F
executed by South Dakota Soybean Processors and assumed by the Company.

 

SECTION 1.                            The
Revolving Credit Facility.  On the
terms and conditions set forth in the MLA and this Supplement, CoBank agrees to
make loans to the Company during the period set forth below in an aggregate
principal amount not to exceed, at any one time outstanding, the lesser of
$16,000,000.00 (the “Commitment”), or the “Borrowing Base” (as calculated
pursuant to the Borrowing Base Report attached hereto as Exhibit A).  Within the limits of the Commitment, the
Company may borrow, repay and reborrow.

 

SECTION 2.                            Purpose.  The purpose of the Commitment is to finance
the inventory and receivables referred to in the Borrowing Base Report.

 

SECTION 3.                            Term.  The term of the Commitment shall be from the
date hereof, up to and including March 3l, 2005, or such late date as
CoBank may, in its sole discretion, authorize in writing.

 

SECTION 4.                            Interest.  The Company agrees to pay interest on the
unpaid balance of the loans in accordance with one or more of the following
interest rate options, as selected by the Company:

 

(A)                               Weekly
Quoted Variable Rate.  At a rate per
annum equal at all times to the rate of interest established by CoBank on the
first Business Day of each week.  The
rate established by CoBank shall be effective until the first Business Day of
the next week.  Each change in the rate
shall be applicable to all balances subject to this option and information
about the then current rate shall be made available upon telephonic request.

 

(B)                               Quoted
Fixed Rate.  At a fixed rate per
annum to be quoted by CoBank in its sole discretion in each instance.  Under this option, rates may be fixed on
such balances and for such periods, as may be agreeable to CoBank in its sole
discretion in each instance.

 

The Company shall select the applicable rate option at the time it
requests a loan hereunder and may, subject to the limitations set forth above,
elect to convert balances bearing interest at the variable rate option to one
of the fixed rate options.  Upon the
expiration of any fixed rate period, interest shall automatically accrue at the
variable rate option unless the amount fixed is repaid or fixed for an
additional period in accordance with the terms hereof. Notwithstanding the
foregoing, unless CoBank otherwise consents in its sole discretion in each
instance, rates may not be fixed for periods expiring after the maturity date
of the loans.  In the event CoBank

 

 

consents to one or more balances being fixed for a period or periods
extending beyond the maturity date of the loans and the Commitment is not
renewed, then each such balance shall be due and payable on the last day of its
fixed rate period and the promissory note set forth below shall be deemed
amended accordingly.  All elections
provided for herein shall be made telephonically or in writing and must be
received by 12:00 Noon Company’s local time. 
Interest shall be calculated on the actual number of days each loan is
outstanding on the basis of a year consisting of 360 days and shall be payable
monthly in arrears by the 20th day of the following month.

 

SECTION 5.                            Promissory
Note.  The Company promises to repay
the unpaid principal balance of the loans on the last day of the term of the
Commitment.  In addition to the above,
the Company promises to pay interest on the unpaid principal balance of the
loans at the times and in accordance with the provisions set forth in
Section 4 hereof.  This note
replaces and supersedes, but does not constitute payment of the indebtedness
evidenced by, the promissory note set forth in the Supplement being amended and
restated hereby.

 

SECTION 6.                            Borrowing
Base Reports, Etc.  The Company
agrees to furnish a Borrowing Base Report to CoBank at such times or intervals
as CoBank may from time to time request. 
Until receipt of such a request, the Company agrees to furnish a
Borrowing Base Report to CoBank within 45 days after each month end calculating
the Borrowing Base as of the last day of the month for which the Report is
being furnished.  However, if no balance
is outstanding hereunder on the last day of such month, then no Report need be
furnished.  Regardless of the frequency
of the reporting, if at any time the amount outstanding under the Commitment
exceeds the Borrowing Base, the Company shall immediately notify CoBank and
repay so much of the loans as is necessary to reduce the amount outstanding
under the Commitment to the limits of the Borrowing Base.

 

SECTION 7.                            Letters
of Credit.  In addition to loans and
if agreeable to CoBank in its sole discretion in each instance, the Company may
utilize the Commitment to open irrevocable letters of credit for its account.  Each letter of credit shall reduce the
amount available under the Commitment by the maximum amount capable of being
drawn thereunder.  The rights and
obligations of the parties with respect to each letter of credit will be
governed by the Reimbursement Agreement attached hereto as Exhibit B (which
rights and obligations shall be in addition to the rights and obligations of
the parties hereunder and under the MLA). 
Notwithstanding the foregoing or any other provision hereof, the maximum
amount capable of being drawn under each letter of credit must be statused
against the Borrowing Base in the same manner as if it were a loan, and in the
event that (after repaying all loans) the maximum amount capable of being drawn
under the letters of credit exceeds the Borrowing Base, then the Company shall
immediately notify CoBank and pay to CoBank (to be held as cash collateral) an
amount equal to such excess.

 

SECTION 8.                            Commitment
Fee.  In consideration of the
Commitment, the Company agrees to pay to CoBank a commitment fee on the average
daily unused portion of the Commitment at the rate of 1/4 of 1% per annum
(calculated on a 360 day basis), payable monthly in arrears by the 20th day
following each month.  Such fee shall be
payable for each month (or portion thereof) occurring during the original or
any extended term of the

 

2

 

Commitment.  For purposes of
calculating the commitment fee only, the “Commitment” shall mean the dollar
amount specified in Section 1 hereof, irrespective of the Borrowing Base.

 

SECTION 9.                            Amendment
Fee.  In consideration of the
amendment, the Company agrees to pay to CoBank on the execution hereof a fee in
the amount of $2,500.00.

 

IN WITNESS WHEREOF,
the parties have caused this Supplement to be executed by their duly authorized
officers as of the date shown above.

 

 

	
  CoBANK, ACB

  	
   

  	
  SOUTH DAKOTA SOYBEAN PROCESSORS,

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Teresa L.

  	
   

  	
  By:

  	
  /s/
  Rodney Christianson

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
    Assistant
  Corporate Secretary

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
							

 

3

 

South Dakota Soybean Processors, LLC

BORROWING BASE REPORT

CoBank ACB

mm/dd/yy

 

 

	
  Eligible Inventory

  	
   

  	
  Quantity

  	
   

  	
  Unit

  	
   

  	
  Unit

  Value

  	
   

  	
  Market

  Value

  	
   

  	
  Advance

  Rate

  	
   

  	
  Maximum

  Advance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soybeans *

  	
   

  	
   

  	
   

  	
  Bushels

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soybean Meal **

  	
   

  	
   

  	
   

  	
  Tons

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soybean Oil

  	
   

  	
   

  	
   

  	
  Pounds

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SoyOyl **

  	
   

  	
   

  	
   

  	
  Pounds

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Refined Oil **

  	
   

  	
   

  	
   

  	
  Pounds

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soybean Hulls **

  	
   

  	
   

  	
   

  	
  Tons

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  0

  	
   

  

 

* Valued at Bid Price FOB Volga, SD

** Valued at Market FOB Volga, SD

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trade Receivables

  	
   

  	
   

  	
   

  	
  0-10 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  90

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  10-30 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Over 30 days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
  A. Maximum Advance Values of Inventory & Receivables

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. Less: Any Amount owed for the purchase of Soybeans

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100

  	
  %

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Borrowing Base

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D. Outstanding Balance of Loan at mm/dd/yy

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E. Excess / (Deficit)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  

 

Note: If a deficit exists,
please remit amount to CoBank unless remitted since period ending date

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Authorized Signature

  	
   

  	
  Title

  	
   

  	
  Date

  

 

 

Exhibit B

 

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

 

In consideration of CoBank issuing one or more letters of credit (each
a “Credit”) for the Company’s account under the Supplement to which this
agreement is attached (the “Supplement”), the Company agrees as follows:

 

1.                                       The
Company will pay to CoBank in United States currency and in immediately
available funds the amount of each draft drawn or instrument paid under a
Credit.  In addition, the Company agrees
to pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, as
well as all customary charges associated with the issuance of a Credit.  If a Credit is payable in a foreign
currency, the Company will pay to CoBank an amount in United States currency equivalent
to CoBank’s selling rate of exchange for that currency.  In addition to the amounts set forth above,
the Company shall pay to CoBank such amounts as CoBank shall determine arc
necessary to compensate CoBank for any cost attributable to CoBank issuing or
having outstanding any Credit resulting from the application of any taw or
regulation concerning any reserve, assessment, capital adequacy or similar
requirement relating to letters of credit, reimbursement agreements with
respect thereto, or to similar liabilities or assets of banks, whether existing
at the time of the issuance of a Credit or adopted thereafter.  Each payment hereunder shall be payable on
demand at the place and manner set forth in the Master Loan Agreement between
the parties (the “MLA’) and with interest from the date of demand to the date
paid at CoBank’s National Variable Rate. 
The Company hereby authorizes CoBank to create a loan under the
Supplement bearing interest at the variable rate set forth therein for any sums
owing hereunder.

 

2.                                       Neither
CoBank nor any of its correspondents shall in any way be responsible for the
performance by any beneficiary of its obligations to the Company nor for the
form, sufficiency, correctness, genuineness, authority of the person signing,
falsification or legal effect of any documents called for under a Credit if
such documents on their face appear to be in order.  In addition, CoBank and its correspondents may receive and accept
or pay as complying with the terms of a Credit any drafts, documents, or
certificates, otherwise in order, signed by any person purporting to be an
administrator, executor, trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, or other legal
representative of the party authorized under a Credit to draw or issue such
instruments or other documents.

 

3.                                       In
the event the Credit is a commercial Credit, then, is addition to the other
provisions hereof, the Company: (i) agrees to obtain or cause to be in
existence insurance on any merchandise described in the Credit against fire and
other usual risks and against any additional risks which CoBank may request,
and (ii) authorizes and empowers CoBank to collect the amount due under any
such insurance and apply the same against any of the Company’s obligations to
CoBank arising under the Credit or otherwise. 
In addition, whether the Credit is a commercial or a standby Credit, the
Company represents and warrants that any required import, export or foreign
exchange licenses or other governmental approvals relevant to the Credit and
the merchandise described therein have been obtained and that the transactions
contemplated thereby are not prohibited under any law, rule, regulation, order
or the like, including the Foreign Assets Control Regulations of the U.S.
Department of Treasury.

 

4.                                       All
directors and correspondence relating to a Credit are to be sent at the
Company’s risk and CoBank does not assume any responsibility for any
inaccuracy, interruption, error, or delay in transmission or delivery by post,
telegraph, cable or other electronic means, or for any inaccuracy of
translation.

 

5.                                       CoBank
shall not be responsible for my act, error, neglect, default, omission,
insolvency or failure in business of any of its correspondents, and any action
taken or omitted by CoBank or its correspondents under or in connection with a
Credit shall, if taken or omitted with honesty in fact, be binding on the
Company and shall not put CoBank or its correspondents under any resulting
liability to the Company.  In no event
shall CoBank be liable for special, consequential or punitive damages.

 

6.                                       The
Company will indemnify CoBank against and hold it harmless from all loss,
damage, cost, and expense (including attorneys’ fees and expenses) arising out
of (i) its issuance of or any other action taken by CoBank in connection with a
Credit, other than loss or damage resulting from its gross negligence or
willful misconduct, and (ii) claims or legal proceedings incident to the
collection of amounts owed by the Company hereunder, or the enforcement of
CoBank’s rights or the rights of others under a Credit, including, without
limitation, legal

 

5

 

proceedings relating to any court order, injunction or other process or
decree restraining or seeking to restrain CoBank from paying any amount under a
Credit.

 

7.                                       In
the event (i) the Company fails to make any payment owing hereunder when the
same shall become due and payable; (ii) any covenant or representation or warranty
set forth herein is breached; (iii) the “Commitment” (as defined in the
Supplement) expires prior to the expiration date of any Credit; or (iv) an
“Event of Default” (as defined in the MLA) occurs under the MLA, then, in any
such event, the amount of each Credit, together with any amounts payable by the
Company in connection therewith, shall, at CoBank’s option, become immediately
due and payable.  To the extent that any
amount paid by the Company pursuant to this Section 7 shall not then be
due under the terms of a Credit, such payment shall serve as security for the
Company’s obligation to indemnify CoBank for any amounts subsequently disbursed
by CoBank pursuant to a Credit. 
Furthermore, upon the institution of any legal proceeding described is Section 6(ii)
hereof, the Company will, on demand, assign and deliver to CoBank, as security
for the Company’s obligation to indemnify CoBank, cash collateral in an amount
satisfactory to CoBank.

 

8.                                       CoBank
shall be fully protected in, and shall incur no liability to the Company for
acting upon, any oral, telephonic, facsimile, cable or other electronic
instructions which CoBank in good faith believes to have been given by any
authorized person.  CoBank may, at its
option, use any means of verifying any instructions received by it and may
also, at its option, refuse to act on any oral, telephonic, facsimile, cable or
other electronic instructions or any part thereof, without incurring any
responsibility for any loss, liability or expenses arising out of such refusal.

 

9.                                       The
Uniform Customs and Practice as most recently published by the International
Chamber of Commerce (hereafter called the “UCP”) shall in all respects be
deemed a part hereof as fully as if incorporated herein, and shall apply to the
Credits.  To the extent the UCP is
inconsistent with the governing law set forth in the MLA, the UCP shall
control.

 

6

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