SPACE ABOVE THIS LINE IS FOR RECORDER'S USE ONLY THIS IS A CONSTRUCTION SECURITY AGREEMENT THAT SECURES AN OBLIGATION WHICH THE BORROWER INCURRED FOR THE PURPOSE OF MAKING IMPROVEMENTS ON THE REAL PROPERTY DESCRIBED HEREIN DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FINANCING STATEMENT

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FINANCING STATEMENT (the "Deed of Trust") is made and entered into as of February 14, 2007, by NEDAK ETHANOL, LLC, a Nebraska limited liability company (the "Borrower"), whose address for purposes of this Deed of Trust is 87590 Hillcrest Road, PO Box 391, Atkinson, Nebraska 68713; TO AND IN FAVOR OF LAWYERS TITLE INSURANCE CORPORATION, a Nebraska corporation (the "Trustee"), whose address for purposes of this Deed of Trust is 10 South LaSalle Street, Suite 2500, Chicago, IL 60603; FOR THE BENEFIT OF FARM CREDIT SERVICES OF GRAND FORKS, FLCA (the "Lender"), whose address for purposes of this Deed of Trust is 2424 32nd Avenue South, P.O. Box 13570, Grand Forks, North Dakota ###-###-####; pertaining to that certain Construction and Term Loan Note and that certain Revolving Credit Note, all as defined in the Credit Agreement (as defined below), of the Borrower dated as of the date of this Deed of Trust, payable to the order of Lender, in the aggregate original principal amount of FORTY-TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($42,500,000.00) (collectively, the "Notes");

 

 

 

 

 

1.   Grant.  For good and valuable consideration, and to secure the prompt payment, when due, of the Secured Obligations, as defined below, Borrower has irrevocably  granted, bargained, sold, conveyed, transferred, mortgaged, and assigned, and by these presents does hereby irrevocably grant, bargain, sell, convey, transfer, mortgage, and assign, to Trustee in trust, WITH POWER OF SALE, for the benefit and security of Lender, and hereby grants to Lender a security interest in, all of the real property described in Exhibit "A" attached hereto (the "Premises"); TOGETHER WITH (a) all buildings, structures, additions, and improvements now or hereafter located thereon or belonging thereto (collectively, the "Improvements"); (b) all goods which are or are to become fixtures attached to the Premises or Improvements (collectively, the "Fixtures"); (c) all easements, rights-of-way, strips and gores of land, alleys, sewer rights, and water rights relating thereto; (d) all leases, subleases, and other agreements affecting the use, enjoyment or occupancy of the Premises, now or hereafter entered into, together with any extensions thereof and guarantees relating thereto (collectively, the "Leases"), and all rents and other sums payable under the Leases, tenant security and other deposits, oil and gas or other mineral royalties, bonuses and rents, issues and profits relating to the Premises and Improvements (collectively, the "Rents"); (e) all right, title and interest, including reversions and remainders, if any, of Borrower, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street or highway adjoining the Premises; (f) all other estates, rights, titles, claims, interests, privileges, hereditaments and appurtenances of any nature whatsoever, in any way relat­ing to the Premises or Improvements; (g) all machinery, equipment, appliances and other articles of personal property of every kind whatsoever now owned or hereafter acquired by Borrower, now or hereafter located upon and used in connection with the Premises, together with all replacements thereof and substitutions therefor (collectively, the "Equipment"); (h) all awards or payments, including interest thereon, which may be made with respect to the Premises, Improvements, or Equipment, from the exercise of the right of eminent domain, or for any other injury thereto or decrease in the value thereof (collectively, the "Awards"); (i) all policies of insurance relating to the Premises, Improvements, or Equipment, all proceeds thereof, and any unearned premiums on any such insurance policies, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof; (j) all deposits made to procure or maintain utility services to the Premises or the Improvements and any money, cash, negotiable instru­ments, documents of title, securities, deposit accounts or other cash equivalents, including interest or income earned thereon held by Lender or Trustee under or in accordance with this Deed of Trust or any Related Document; (k) any amounts in any escrow fund for the purposes of payment of taxes, insurance premiums or other impositions in connection with the Premises, Improvements or Equipment; and (l) products and proceeds of the property described above.  The Premises, Improvements, Fixtures, Leases, Rents, Equipment, Awards, and all other real and personal property described in this paragraph are hereinafter collectively referred to as the "Property."

 

2.   Secured Obligations.  This Deed of Trust is given to secure the prompt payment when due of the following (the "Secured Obligations"):  (a) all Obligations of Borrower under that certain Master Credit Agreement by and between Borrower and Lender, dated as of the date of this Deed of Trust (together with the “Supplements” defined therein and as further amended and supplemented, the "Credit Agreement"), according to the terms thereof, including the Notes and any other note given in substitution therefor or in modification, renewal, or extension thereof, in whole or in part (such Notes and all other notes given in substitution therefor or in modification, renewal, or extension thereof, in whole or in part, are hereinafter collectively called the "Note"); (b) all indebtedness, liabilities, and obligations of Borrower now or hereafter incurred or arising pursuant to the provisions of this Deed of Trust or any other agreement or instrument now or hereafter evidencing, securing and/or guarantying the obligations of the Borrower under the Note or any part thereof (such other instruments and agreements are hereinafter collectively referred to as the "Related Documents"); and (c) any and all other indebtedness, obligations, and liabilities of Borrower to Lender of any nature whatsoever, whether arising out of contract, tort, or otherwise, including, without limitation, obligations arising under any and all present and future loans, advances, and/or other extensions of credit

3.   Warranty of Title.  Borrower warrants to Trustee and Lender that: (1) Borrower is lawfully seized and possessed of good, marketable, and indefeasible fee simple title to the Property, free and clear of all liens and encumbrances, other than those liens and/or encumbrances, if any, set forth on Exhibit "B" (the "Permitted Exceptions"), and (2) Borrower has the full right, power, and authority to execute and deliver this Deed of Trust to Trustee and Lender.  Subject only to the Permitted Exceptions, if any, Borrower warrants and will forever defend the title to the Property against the claims of all persons.

4.   Maintenance and Compliance with Laws.  Borrower shall keep the Property in good condition and repair, and shall promptly perform all repairs, replacements, and maintenance necessary to preserve its value.  Borrower shall promptly complete or restore promptly and in good and workmanlike manner any portion of the Property which may be damaged or destroyed, and shall pay, when due, all claims for labor performed and materials furnished on or to the Premises or Improvements, and any and all other claims which could result in a lien on the Property or any part thereof.  Borrower shall not commit waste or permit impairment or deterioration of the Property.  In addition to its obligation to comply with all "Applicable Environmental Laws" as provided below, Borrower shall comply with all other laws, ordinances, regulations, covenants, conditions, and restrictions affecting the Property or any part thereof (collectively, the "Applicable Laws"), including, without limitation, the Americans With Disabilities Act of 1990, and any and all amendments or supplements thereto, and shall not commit, suffer or permit any act to be done in or upon the Property in violation of any Applicable Laws.

       9.           Expenditures by Lender.  If Borrower fails to comply with any provision of this Deed of Trust, or pay any sum due hereunder, or if any action or proceeding is commenced that would materially affect Lender's interests in the Property, Lender may, but shall not be required to, take any action and expend all reasonable sums on Borrower's behalf that Lender deems appropriate.  Any amount that Lender expends in so doing will be payable on demand, will become part of the Secured Obligations secured hereby, and will bear interest at the Advance Rate from the date expended by Lender.  The rights provided for in this paragraph shall be in addition to any other rights or any remedies to which Lender may be entitled on account of the default.  Any election by Lender to take any action or make expenditures hereunder shall not prejudice Lender's right to declare a default and exercise remedies as provided herein.

       10.           Condemnation.  If all or any part of the Property is acquired by any governmental authority through eminent domain proceedings, Lender may at its election require that all or any portion of the net proceeds of the condemnation award be applied, at Lender's option, to the Secured Obligations or the repair or restoration of the Property.  For this purpose, Borrower shall assign, and hereby assigns, all proceeds of any such proceedings or purchase to Lender.  The net proceeds of the award shall mean the remainder of the award after payment of all reasonable costs, expenses, and attorneys' fees incurred by Trustee or Lender in connection with the condemnation.  If any eminent domain proceeding is filed or threatened, Borrower shall promptly notify Lender in writing, and Borrower shall promptly take such steps as may be necessary to defend the action and obtain and maximize the award.  Borrower may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Borrower will deliver or cause to be delivered to lender such instruments as may be requested by it from time to time to permit such participation.

 

11.           Documentary Stamps; Mortgage Taxes.  Borrower shall pay all costs incurred in recording, perfecting or continuing this Deed of Trust and the liens and interests created hereby, including without limitation, all taxes, fees, documentary stamps, and other charges for recording or registering this Deed of Trust, together with any other taxes or assessments which may now or hereafter be levied against the Trustee or Lender in connection with the Note, this Deed of Trust, the Credit Agreement and the Related Documents.

 

12.           Security Agreement; Financing Statements.

    14.   Authorized Entry.  Borrower authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Borrower's expense, as Lender may deem appropriate to determine compliance of the Property with the various provisions of the Deed of Trust.  Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of the Lender to Borrower or to any other person.

 

15.   Further Assurances; Attorney-In-Fact.  At any time, upon request of Lender, Borrower will make, execute and deliver to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security agreements, financing statements, continuation statements, instruments of further assurance, affidavits, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, preserve or enforce: (1) the obligations of Borrower under the Note, this Deed of Trust, the Credit Agreement and the Related Documents, and (2) the liens and security interests created by this Deed of Trust and the Related Documents as first and prior liens on the Property.  Borrower shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.  For purposes of taking such action or executing such documents, Borrower hereby irrevocably appoints Lender as Borrower's attorney-in-fact.

         b.   Other Defaults.  The failure of Borrower to comply with or perform its obligations under any term, obligation, covenant or condition contained in this Deed of Trust, the Note, the Credit Agreement or in any of the Related Documents, or in any other agreement between Borrower and Lender.

         c.   Transfer of Borrower's Interests.  The sale or transfer, without the Lender's prior written consent, of all or any part of the Property, or any interest in the Property ("sale or transfer" means, without limitation, the conveyance of Property or any right, title or interest therein, whether legal, beneficial or equitable, whether voluntary or involuntary whether by outright sale, deed, installment sale contract, land contract, assignment, lease with a term greater than three (3) years, lease-option contract, or by any other method of conveyance of any interest in the Property; and if Borrower is a corporation, partnership, limited liability company, or similar entity, "sale or transfer" also includes any change in ownership of more than ten percent (10%) of the voting stock, partnership interests, limited liability company interests, or similar interests as the case may be, of Borrower).

         d.   False Statements.  Should any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower under this Deed of Trust, the Note, the Credit Agreement or the Related Documents or otherwise in connection with the loan evidenced thereby, be or become false or misleading in any material respect.

 

         e.   Bankruptcy; Insolvency.  Should Borrower file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or insolvent, or file any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future bankruptcy, insolvency or other laws providing or relating to relief for debtors; or should Borrower seek or consent to or acquiesce in the appointment of any trustee, receiver or liquidator of Borrower or of all or any part of the Property, or of any or all of the Rents, or make any general assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due.

 

         f.   Entry of Order.  Should any court of competent jurisdiction enter an order, judgment or decree approving a petition filed against Borrower seeking any reorganization, dissolution or similar relief under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, which order, judgment or decree remains unvacated and unstayed for an aggregate of thirty (30) days (whether or not consecutive) from the first date of entry thereof; or should any trustee, receiver or liquidator of Borrower of all or any part

18.           Acceleration; Remedies; Power of Sale.  Upon the occurrence of an Event of Default under subparagraph 17(e) or 17(f) above, all Secured Obligations shall automatically become due and payable in their entirety without notice or demand, and, upon the occurrence of any other Event of Default and at any time thereafter, Trustee or Lender may declare all Secured Obligations to be immediately due and payable, and the same shall thereupon become due and payable without any presentment, demand protest or notice of any kind.

                   b.          Power of Sale.  Lender in its sole discretion may direct Trustee to exercise the Power of Sale herein contained.  Upon such event, Lender shall deposit with Trustee this Deed of Trust and the Note and such receipts and evidence of expenditures made and secured by this Deed of Trust as Trustee may require.

20.           INDEMNIFICATION.  BORROWER SHALL PROTECT AND SAVE HARMLESS, AND HEREBY INDEMNIFIES TRUSTEE AND LENDER, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AND AGENTS (EACH, AN "INDEMNIFIED PARTY"), FROM AND AGAINST ALL LOSS, LIABILITY, DAMAGE (WHETHER DIRECT OR CONSEQUENTIAL), OBLIGATIONS, CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING WITHOUT LIMITATION REASON­ABLE ATTORNEYS' FEES AND EXPENSES) IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST ANY INDEMNIFIED PARTY ARISING OUT OF OR RELATING TO: (A) ANY "EVENT OF DEFAULT" AS DEFINED HEREIN; (B) ANY BREACH OF THE "ENVIRONMENTAL PROVISIONS" SET FORTH ABOVE, THE APPLICATION OR EFFECT OF ANY "APPLICABLE ENVIRONMENTAL LAWS" (AS DEFINED ABOVE), OR THE PRESENCE, USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL, RELEASE OR THREATENED RELEASE OF "HAZARDOUS WASTE" OR "HAZARDOUS SUBSTANCES" ON OR ABOUT THE PROPERTY; (C) THE OWNER­SHIP OF THE PROPERTY OR ANY INTEREST THEREIN OR RECEIPT OF ANY RENTS; (D) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF OR DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE PROPERTY, OR ANY PART THEREOF, OR ON THE ADJOINING SIDE­WALKS, CURBS, ADJACENT PARKING AREAS, STREETS OR WAYS; (E) ANY USE, NONUSE OR CONDITION IN, ON OR ABOUT THE PROPERTY OR ANY PART THEREOF, OR ON THE ADJOINING SIDEWALKS, CURBS, ADJACENT PARKING AREAS, STREETS OR WAYS; OR (F) PERFORMANCE OF ANY LABOR OR SERVICES OR THE FURNISHING OF ANY MATERIALS OR OTHER PROPERTY IN RESPECT OF THE PROPERTY OR ANY PART THEREOF; WHETHER OR NOT ANY OF THE MATTERS SET FORTH ABOVE WERE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENT ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTY OR INDIVIDUALS OR ENTITIES ACTING AS THE AGENTS OR EMPLOYEES OF ANY INDEMNIFIED PARTY, AND WHETHER OR NOT THE SAME WERE KNOWN OR SHOULD HAVE BEEN KNOWN TO ANY INDEMNIFIED PARTY.  NOTWITHSTANDING ANY PROVISION TO THE CONTRARY SET FORTH IN THIS PARAGRAPH, SUCH INDEMNITY SHALL NOT APPLY WITH RESPECT TO MATTERS CAUSED BY OR ARISING SOLELY OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER, OR ANY OF ITS AGENTS, OR WITH RESPECT TO LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES BASED SOLELY ON FACTS OR CIRCUMSTANCES OCCURRING ONLY SUBSEQUENT TO SUCH TIME, IF ANY, AT WHICH LENDER BECOMES THE OWNER OF THE PROPERTY BY WAY OF FORECLOSURE OF THE LIEN OF THIS DEED OF TRUST, CONVEYANCE IN LIEU OF SUCH FORECLOSURE, OR OTHERWISE.  ANY AMOUNT PAYABLE TO ANY "INDEMNIFIED PARTY" BY REASON OF THE APPLICATION OF THIS PARAGRAPH SHALL BECOME IMMEDI­ATELY DUE AND PAYABLE UPON DEMAND BY LENDER, AND SHALL BEAR INTEREST AT THE "ADVANCE RATE" FROM THE DATE OF SUCH DEMAND.  THE OBLIGATIONS OF BORROWER UNDER THIS PARAGRAPH SHALL SURVIVE ANY TERMINATION OR SATIS­FACTION OF THIS DEED OF TRUST.

               b.   Duties and Secured Obligations of Trustee.  (1) The duties and obligations of Trustee shall be determined solely by the express provisions of this Deed of Trust and Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth herein, and no implied covenants or obligations shall be imposed upon Trustee; (2) No provision of this Deed of Trust shall require Trustee to expend or risk its own funds, or otherwise incur any financial obligation in the performance of any of its duties hereunder, or in the exercise of any of its right or powers, if it shall have grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it; (3) Trustee may consult with counsel of its own choosing and the advice of such counsel shall be full and complete authorization and protection in the respect of any action taken or suffered by it in good faith and reliance thereon; (4) Trustee shall not be liable for any action taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Deed of Trust; (5) Trustee shall not be responsible for the payment of any unpaid taxes on the Property due and owing at the time of the sale of all or any part of the Property pursuant to the procedures set forth herein.

               c.   Successor Trustee.  Lender may from time to time appoint a successor to any Trustee named herein pursuant to the applicable provisions of Nebraska law.  Upon such appointment, the successor shall be vested with all title, powers and duties conferred upon Trustee herein.

         a.   Notices.  Any notice under this Deed of Trust shall be in writing and shall be effective when actually delivered, or when deposited with a nationally recognized overnight courier, or, if mailed, shall be deemed effective when deposited in the United States mail first class, certified or registered mail, postage prepaid, directed to the party or parties at its or their respective addresses set forth above.  Any party may change its address for notices under this Deed of Trust by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address.  Borrower agrees to keep Lender and Trustee informed at all times of Borrower's current address.

    The foregoing instrument was acknowledged before me this __________ day of February, 2007, by Jerome Fagerland, as the President and General Manager of NEDAK ETHANOL, LLC, a Nebraska limited liability company, on behalf of the limited liability company.

 

    Witness my hand and official seal.

 

    Witness my hand and official seal.