Exhibit 10.1
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Amount:
$740,000.00
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Date: 7/13/2006 |
RURAL
DEVELOPMENT LOAN AGREEMENT
THIS AGREEMENT dated as of the date
first written above between Western Iowa Energy, LLC., a limited
liability company organized and existing under the laws of the
State of Iowa (the “Borrower”) and Glidden Rural
Electric Cooperative of Glidden, Iowa, a cooperative corporation
organized and existing under the laws of the State of Iowa,
(“Glidden”) sets forth the terms and understandings
between the Borrower and Glidden regarding a loan (the
“Loan”) Glidden is making to the Borrower pursuant to
Section 313 of the Rural Electrification Act of 1936, as
amended (the “Act”) and 7 C.F.R. Part 1703,
Subpart B — Rural Economic Development Loan and Grant Program
(the “Regulations”).
Glidden has filed an application and
supporting material (collectively, the “Application
Materials”) with the United States of America (the
“Government”) pursuant to 7 C.F.R. Section 1703.34
requesting the Loan for promoting rural economic development.
The Government wishes to make the
Loan to Glidden from the Rural Economic Development Subaccount
within the Rural Electrification and Telephone Revolving Fund
pursuant to Section 313 of the Act to finance the Rural
development project (the “Project”) more particularly
described in the Letter of Agreement (the “Letter of
Agreement”) between the Government and Glidden dated February
27, 2006.
Glidden wishes to make a loan to
Borrower for the purposes described in the Application
Materials.
NOW, THEREFORE, IN CONSIDERATION OF
THE MUTUAL AGREEMENTS HEREIN CONTAINED, GLIDDEN AND BORROWER AGREE
AS FOLLOWS:
| A. |
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Glidden shall lend Seven Hundred Forty Thousand Dollars
($740,000.00) to the Borrower, and the proceeds of the Loan shall
be used solely: (a) to finance the construction of a
bio-diesel manufacturing facility in Wall Lake, Iowa (the Approved
Purpose) as set forth in the Application Materials, or (b) to
reimburse short-term financing and expenditures for the Approved
Purpose. The proceeds of the Loan shall not be used to finance any
costs or retire any indebtedness for the Approved Purpose incurred
prior to the Government’s receipt on June 15, 2005, of the
Application Materials. |
| B. |
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Glidden shall advance the proceeds of the Loan to the Borrower
in one disbursement at the time of closing. |
| C. |
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The Borrower shall repay the Loan in accordance with the note
to be executed by the Borrower and made payable to Glidden. The
Borrower shall begin to repay the Loan on the date set forth in the
note and shall continue paying without interruption until all
indebtedness associated with the Loan has been repaid in full on or
before the tenth anniversary of the date of the note. |
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| D. |
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The Loan will not bear interest although indebtedness not paid
when due will be subjected to late charges and other charges
provided in the note described below. |
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| E. |
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If the Borrower fails to satisfy all conditions, requirements
and terms prerequisite to the advance of the proceeds of the Loan
from Glidden to the Borrower as set forth in this Agreement before
the first anniversary of the date of this Agreement, or such later
date as Glidden at its discretion may approve in writing in
furtherance of the purposes of the Act, the Loan Commitment shall
be considered rescinded. |
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| F. |
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In order to secure performance of its obligations hereunder and
under the Note, the Borrower shall provide Glidden with an
Irrevocable Letter of Credit in a form acceptable to Glidden and in
an amount equal to the Principal amount of the Note, with Glidden
designated as the beneficiary of said Irrevocable Letter of
Credit. |
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| 2. |
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Affirmative Covenants . |
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| A. |
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The Borrower shall execute and deliver its promissory note (the
“Note”) to Glidden in the form attached hereto in order
to evidence its obligation to repay the Loan by the terms of this
Agreement, the Letter of Agreement and the Note. The Borrower shall
pay all indebtedness evidenced by the Note in the manner and at the
times described therein. |
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| B. |
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The Borrower shall promptly use the proceeds of the Loan only
in the manner and exclusively for the purposes set forth in the
Application Materials as previously approved by The Government and
in accordance with the Letter of Agreement between The Government
and Glidden, and this Agreement and the Regulations (as they may be
amended from time to time). No changes may be made in the foregoing
without the prior written approval of Glidden and the Government.
Until disbursed by the Borrower for authorized Loan purposes, the
Borrower shall deposit the Loan Proceeds in a separate bank account
which is fully insured by the Federal Deposit Insurance
Corporation. |
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| C. |
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The Borrower shall return to Glidden as a prepayment on the
Note all proceeds of the Loan, including any interest earned on the
proceeds of the Loan, which have not been expended by the Borrower
for authorized Loan purposes before the second anniversary of the
date of the advance of the proceeds of the Loan from Glidden to the
Borrower, or such later date as Glidden at its discretion may
approve in writing in furtherance of the purposes of the Act. |
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| D. |
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The Borrower shall make all payments on the Note by using a
reasonable method of |
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payment specified by Glidden. |
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| E. |
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The Borrower agrees to provide to Glidden (a) an itemized
list with attached invoices, receipts, bills of sale, and other
evidence that shows the expenditures made on the Project for the
Approved Purpose using the proceeds of the Loan and (b) a
signed certification from an authorized official of Borrower to the
effect “I certify that the proceeds of the Rural Economic
Development Loan from Glidden were expended on the approved
purposes shown on this list and the attached invoices, receipts,
bills of sale, and other evidence represent the items shown on this
list.” Such invoices, receipts, bills of sale, and other
evidence must at least total the amount of funds that have been
provided to Borrower using the proceeds of the Loan. The certified
list must be provided upon completion of the Project, or by the
first anniversary of the date of the advance of funds to Borrower,
whichever occurs first. If all funds have not been expended by the
first anniversary, Borrower must provide to Glidden a certified
list of current expenditures and a statement of its intended
expenditure schedule. Upon completion of the Project, Borrower must
provide to Glidden a final certified list of the expenditures,
including the attachments. A duplicate certified listing of
expenditures shall also be submitted to RBS for its files. |
| F. |
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The Borrower shall permit Glidden officials and officials of
The Government to inspect and copy its records about the Project
during regular business hours. Representatives of Glidden and The
Government may inspect the Project itself during regular business
hours. |
| G. |
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The Borrower shall comply with the Regulations, as they may be
amended from time to time, including, without limitation, any
federal regulations or federal statutes which the Regulations
identify as being applicable to activities contemplated by the
Application Materials or this Agreement. |
| H. |
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So long as the Borrower remains obligated to Glidden under the
terms of any financial assistance previously or subsequently
extended under the Act, the Borrower shall fully perform all
obligations to Glidden which the Borrower has undertaken concerning
such assistance. |
| I. |
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Upon completion of the Project, Borrower shall provide to
Glidden and the Government a Management Representation Letter, a
copy of which is attached hereto as Exhibit “A,” typed
on the Borrower’s letterhead and duly executed by an
authorized officer of the Borrower. |
| J. |
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The Borrower shall complete the certification form,
Certification Regarding Debarment, Suspension, Ineligibility and
Voluntary Exclusion-Lower Tier Covered Transactions, attached
hereto as Exhibit “B.” In addition, Borrower shall
ensure that the certification form is completed by all applicable
parties in conjunction with any lower-tier transactions involving
the Project. |
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The Borrower shall not enter into or
request Glidden to approve any agreements which would permit third
parties to fund, develop, manage, own, lease or operate the Project
in a manner that would violate the Regulations or this Agreement if
the Borrower were to undertake such activity in its own name.
| 4. |
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Representations and Warranties . |
The
Borrower represents and warrants that on and as of the date first
set forth above:
| A. |
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The Borrower has been duly organized and is validly- existing
as a as a corporation in good standing, with authority to do
business in the State of Iowa, and with the power and authority to
perform its obligations under this Agreement, the Note and the
Regulations. |
| B. |
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This Agreement and the Note have been duly authorized, executed
and delivered by the Borrower and such documents constitute the
legal and binding agreements of the Borrower, enforceable against
the Borrower in accordance with their respective terms, subject to
(i) applicable laws of general application relating to or
affecting creditors’ rights generally and (ii) the
application of general principles of equity regardless of whether
such enforceability is considered in a proceeding in equity or at
law. |
| C. |
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The execution or the delivery by the Borrower of this
Agreement, the Security Agreement and the Note; the consummation of
the transactions contemplated herein or therein; and the
fulfillment by the Borrower of the terms hereof or thereof, do not
conflict with or violate, result in a breach of or constitute a
default under any term or provision of the organizational documents
of the Borrower or any law or regulation or any order now
applicable to the Borrower of any court, regulatory body having
jurisdiction over the Borrower, or the terms of any indenture, deed
of trust, mortgage, note, note agreement or instrument to which the
Borrower or any of its properties is bound. The Borrower has not
received any notice from any other party to any of the foregoing
that a default has occurred or that any event or condition exist
that with the giving of notice or lapse of time or both would
constitute such a default. |
| D. |
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No approval, authorization, consent, order, registration,
filing, qualification, license or permit of or with any state or
federal court or governmental agency or body having jurisdiction
over the Borrower is required by the Borrower for the consummation
by the Borrower of the transactions contemplated by this Agreement,
the Letter of Agreement, the Security Agreement, and the Note
except such as have been obtained. |
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| E. |
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There is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator concerning the Borrower, this Agreement, the Letter of
Agreement or the Note which, if adversely determined, would have a
material adverse effect on the Borrowers ability to perform its
obligations under this Agreement, the Letter of Agreement or the
Note. |
| F. |
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All information, reports and other papers and data furnished to
Glidden by the Borrower concerning the preapplication and
application of the Borrower for the Loan were, at the time the same
were so furnished, complete and correct in all material respects to
the extent necessary to give Glidden a true and accurate knowledge
of the subject matter and no document furnished or other written
statement made to Glidden in con |
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