LOAN AGREEMENT

Exhibit 10.46

 

 

LOAN AGREEMENT

 

between

 

CITY OF BLUFFTON, INDIANA

 

and

 

INDIANA BIO-ENERGY, LLC

 

 

 

$22,000,000

CITY OF BLUFFTON, INDIANA

SUBORDINATE SOLID WASTE DISPOSAL FACILITY REVENUE BONDS,

SERIES 2007 A

(INDIANA BIO-ENERGY, LLC ETHANOL PLANT PROJECT)

 

 

Dated as of March 1, 2007

 

 

The amounts payable to the Issuer and certain other rights of the Issuer under this Loan Agreement (except for Unassigned Rights) have been pledged and assigned to U.S. Bank National Association, as Trustee under the Indenture of Trust, dated as of March 1, 2007, between the Issuer and the Trustee. For the purpose of perfecting the security interest of the Trustee in such amounts payable and such rights assigned to the Trustee under the Indiana Uniform Commercial Code - Secured Transactions, the counterpart of this Loan Agreement actually delivered to the Trustee shall be deemed the original thereof.

 

 

 

 

TABLE OF CONTENTS

 

 

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ii

 

 

LOAN AGREEMENT

 

This LOAN AGREEMENT, dated as of March 1, 2007, is between CITY OF BLUFFTON, INDIANA, a municipal corporation of the State of Indiana (the “Issuer”), and INDIANA BIO­-ENERGY, LLC, a limited liability company organized and existing under and by virtue of the laws of the State of Indiana (the “Company”).

 

RECITALS:

 

A. The Issuer is authorized by the provisions of Indiana Code Sections 36-7-11.9-1 et seq., as supplemented and amended, and Indiana Code Sections 36-7-12-1 et seq., as supplemented and amended (collectively, the “Act”) to issue its revenue bonds for the purpose of financing “pollution control facilities” (within the meaning of the Act) within the territorial jurisdiction of the Issuer.

 

B. The governing body of the Issuer has, by ordinance adopted pursuant to and in accordance with the provisions of the Act, authorized the financing of a portion of the cost of acquiring, constructing and equipping certain solid waste disposal facilities which constitute “pollution control facilities” (within the meaning of the Act) and which are more particularly described in Exhibit A hereto (the “Project”).

 

C. The Issuer proposes to issue its Subordinate Solid Waste Disposal Facility Revenue Bonds, Series 2007A (Indiana Bio-Energy, LLC Ethanol Plant Project) (the “Bonds”) in order to provide funds to loan to the Company for the purpose of financing a portion of the costs of the Project, paying a portion of the interest on the Bonds, funding a debt service reserve fund and paying certain costs relating to the issuance of the Bonds.

 

D. The Bonds shall be issued under and pursuant to the Indenture of Trust, dated as of March 1, 2007 (the “Indenture”), between the Issuer and U.S. Bank National Association, as Trustee, pursuant to which the Issuer shall pledge and assign to the Trustee certain rights of the Issuer hereunder.

 

E. Pursuant to this Agreement, the Issuer will loan the proceeds of the Bonds to the Company to finance the foregoing costs, secured by (1) the Subordinate Construction/Permanent Mortgage, Subordinate Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing dated as of March 1, 2007 from the Company to the Trustee (the “Subordinate Mortgage”) and (2) the Subordinate Security Agreement dated as of March 1, 2007, from the Company to the Trustee, as amended and supplemented from time to time (the “Subordinate Security Agreement”), and the Company agrees to make, or cause to be made, payments sufficient to pay when due (whether at stated maturity, by acceleration or otherwise) the principal of and premium, if any, and interest on the Bonds.

 

F. The issuance, sale and delivery of the Bonds and the execution and delivery of this Agreement and the Indenture have been in all respects duly and validly authorized in accordance with the Act and the Bond Ordinance (as defined in the Indenture).

 

In consideration of the respective representations and agreements contained in this Agreement, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

All words and terms used but not otherwise defined in this Agreement, shall for all purposes of this Agreement have the meanings specified in Article I of the Indenture, unless the context clearly requires otherwise. In addition, the following terms shall have the following meanings when used in this Agreement:

 

“Indenture” means the Indenture of Trust, dated as of March 1, 2007, between the Issuer and the Trustee, relating to the issuance of the Bonds, as such Indenture may be supplemented and amended from time to time as therein permitted.

 

The words “hereto,” “hereunder” and other words of similar import refer to this Agreement as a whole.

 

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ARTICLE II

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

 

Section 2.01. Representations, Warranties and Agreements of Issuer. The Issuer represents, warrants and agrees that:

 

(a)

The Issuer (1) is a municipal corporation of the State, (2) has full power and authority to enter into the transactions contemplated by this Agreement, the Tax Agreement and the Indenture and to carry out its obligations under this Agreement, the Tax Agreement and the Indenture, including the issuance of the Bonds and (3) by proper corporate action has duly authorized the execution and delivery of this Agreement, the Bonds, the Tax Agreement and the Indenture.

 

(b)

Under existing statutes and decisions, no taxes on income or profits are imposed on the Issuer. The Issuer will not knowingly take or omit to take any action reasonably within its control which action or omission would impair the exclusion of interest paid on the Bonds from the federal gross income of the owners of the Bonds. The Issuer will file or cause to be filed with the United States Department of Treasury the information required by Section 149(e) of the Code.

 

(c)

To the actual knowledge of the Issuer, neither the execution and delivery by the Issuer of this Agreement, the Tax Agreement, the Bonds or the Indenture, nor the consummation by the Issuer of the transactions contemplated by this Agreement, the Tax Agreement, the Bonds or the Indenture, conflicts with, will result in a breach of or default under or will (except with respect to the lien of the Indenture) result in the imposition of any lien on any property of the Issuer pursuant to the terms, conditions or provisions of any statute, ordinance, resolution, order, rule, regulation, agreement or instrument to which the Issuer is a party or by which it is bound.

 

(d)

Each of this Agreement, the Tax Agreement and the Indenture has been duly authorized, executed and delivered by the Issuer and each constitutes the legal, valid and binding special, limited obligation of the Issuer enforceable against the Issuer in accordance with its terms.

 

(e)

To the actual knowledge of the Issuer, there is no litigation or proceeding pending or threatened against the Issuer, or affecting it, which would adversely affect the validity of this Agreement, the Tax Agreement, the Indenture or the Bonds or the ability of the Issuer to comply with its obligations under this Agreement, the Indenture, the Tax Agreement or the Bonds.

 

(f)

The Issuer hereby finds and determines that all requirements of the Act have been complied with and that the financing of the Project through the issuance of the Bonds will further the public purposes of the Act.

 

(g)

Pursuant to Indiana Code Section 36-7-12-16, no member of the City of Bluffton, Indiana Economic Development Commission or the Common Council of the Issuer has any pecuniary interest in any aspect of the proposed financing or in the Company.

 

(h)

The Issuer will apply the proceeds from the sale of the Bonds as specified in the Indenture, the Tax Agreement and this Agreement. So long as any of the Bonds remain outstanding and except as may be authorized by the Indenture, the Issuer will not issue or sell any bonds or obligations, other than the Bonds, the principal of or premium, if any, or interest on which will be payable from the Trust Estate.

 

(i)

To the actual knowledge of the Issuer, no approval, authorization or consent of any governmental or public agency or authority or officer (other than those which have been obtained) is required in connection with the execution and delivery by the Issuer of this Agreement, the Indenture, the Tax Agreement or the Bonds and other than those required under the securities laws of the United States or any state or the Code, as to all of which no representation is made by the Issuer.

 

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(j)

The Issuer has taken proper action to submit an Application for Volume Cap to the Indiana Finance Authority and has received verification that the volume cap was awarded in the amount of $22,000,000.

 

(k)

The Bonds are to be issued under and secured by the Indenture, pursuant to which certain of the Issuer’s interests in this Agreement, and the revenues and income to be derived by the Issuer pursuant to this Agreement, will be pledged and assigned to the Trustee as security for payment of the principal, or premium, if any, and interest on the Bonds. The Issuer covenants that it has not and will not pledge or assign its interest in this Agreement, or the revenues and income derived pursuant to this Agreement, excepting Unassigned Rights, other than to the Trustee under the Indenture to secure the Bonds.

 

Concurrently with the Closing Date, the Issuer shall execute and deliver a certificate reaffirming the foregoing representations, warranties and agreements as of the date thereof.

 

Section 2.02. Representations, Warranties and Agreements of Company. The Company represents, warrants and agrees that:

 

(a)

It is a corporation duly organized, validly existing and in good standing under the laws of the State, is not in violation of any provision of its Articles of Organization or Fifth Amended and Restated Operating Agreement, in each case as the same have been amended, has full corporate power to own its properties and conduct its business, and has the corporate power to enter into, and by proper corporate action has duly authorized the execution and delivery of, this Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement and the Tax Agreement.

 

(b)

Neither the execution and delivery of this Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement or the Tax Agreement, the consummation of the transactions contemplated by each such instrument, nor the fulfillment of or compliance with the terms and conditions of this Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement or the Tax Agreement conflicts with or will result in a breach of any of the terms, conditions or provisions of any law or judgment to which the Company or its property or assets are subject or of any corporate restriction contained in its Articles of Organization or Fifth Amended and Restated Operating Agreement, in each case as the same have been amended, or any agreement or instrument to which the Company is now a party or by which it is bound, or constitutes, with or without the giving of notice or lapse of time or both, a default under any of the foregoing, or, except as set forth in the Subordinate Mortgage and the Subordinate Security Agreement, results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Company under the terms of any instrument or agreement.

 

(c)

This Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement and the Tax Agreement have been duly and validly authorized, executed and delivered by the Company and are legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, usury or other similar laws affecting the rights of creditors generally, equitable principles relating to the availability of remedies and principles of public or governmental policy limiting the enforceability of the indemnification and contribution provisions.

 

(d)

All orders and approvals have been received and will be in effect prior to the Closing Date, and, no further consent, approval, authorization or order of, or registration with, any court or governmental or regulatory agency or body is required with respect to the Company for the execution, delivery and performance by the Company of this Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement and the Tax Agreement.

 

(e)

The Company has received an executed counterpart of the Indenture and hereby consents to and approves of the provisions thereof.

 

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(f)

The information relating to the Project and use of the proceeds of the Bonds furnished by the Company in writing to Chapman and Cutler LLP, as Bond Counsel, in connection with the issuance of the Bonds, is, to the best of the Company’s knowledge, true and correct in all material respects.

 

(g)

The Company does not, as of the date of issuance of the Bonds, reasonably expect any use of moneys derived from the proceeds of the Bonds or any investment or reinvestment thereof or from the sale of the Project which would cause the Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Code.

 

(h)

The Project constitutes and will constitute Exempt Facilities and consist of those facilities described in Exhibit A hereto (as such Exhibit A is from time to time amended or supplemented in accordance with Section 3.02), and the Company shall not consent to any changes in the Project which would adversely affect the qualification of the Project as “pollution control facilities” under the Act or adversely affect the Tax-Exempt status of the Bonds. The Company covenants that at all times when any Bonds are outstanding, the Project will be geographically located in the corporate limits of the Issuer.

 

(i)

The Company will cooperate with the Issuer in filing or causing to be filed with the United States Department of Treasury the information required by Section 149(e) of the Code.

 

(j)

There is no litigation or proceeding pending, or to the knowledge of the Company threatened, against the Company which could adversely affect the validity of this Agreement or the ability of the Company to comply with its obligations under this Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordination Agreement or the Tax Agreement.

 

Concurrently with the Closing Date, the Company shall execute and deliver a certificate reaffirming the foregoing representations, warranties and agreements as of the Closing Date.

 

ARTICLE III

ACQUISITION, CONSTRUCTION, EQUIPPING,

COMPLETION AND OPERATION OF PROJECT

 

Section 3.01. Agreement to Acquire, Construct, Equip and Complete Project. The Company will complete the acquisition, construction and equipping of the Project as soon as practicable in accordance with the plans and specifications kept, and as they may be revised, under Section 3.02. The Company will use the proceeds of the Bonds, including investment income thereon, solely in accordance with the provisions of the Indenture, this Agreement, the Tax Agreement and the Project Certificate. The Issuer does not represent that the proceeds of the Bonds will be sufficient to pay the costs of completing the Project. If the proceeds from the Bonds are not sufficient for completion of the Project, the Company will complete the Project with its own funds (or will borrow funds necessary for such completion) and will not thereby be entitled to reimbursement of any amount from the Issuer, the Trustee or any Bondholder or to any reduction in any amounts payable by the Company hereunder.

 

Subject to the Subordinate Mortgage and the Subordinate Security Agreement, the Company may at its own expense cause a portion of the Project to be remodeled or cause such substitutions, modifications and improvements to be made to a portion of the Project from time to time as the Company, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications and improvements shall be included under the terms of this Agreement as part of the Project and subject to the lien and security interest of the Subordinate Mortgage and the Subordinate Security Agreement.

 

Within seven Business Days after the Completion Date, the Company shall provide the Notice of Completion to the Trustee and the Issuer, which shall be substantially in the form as attached hereto as Exhibit B.

 

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Section 3.02. Plans and Specifications. Subject to the provisions of the next paragraph, the Company may make, authorize or permit changes or amendments in the components of the Project or may determine not to complete any portion of the Project for which Bond proceeds (and investment income thereon) are available, or may finance such portion of the Project from any other source; provided, however, that Bond proceeds (and investment income thereon) otherwise allocable to such portion of the Project must be used either (i) to pay costs of the remaining parts of the Project, (ii) to pay the cost of other solid waste disposal facilities qualifying under the Act and the Code, subject to the provisions of this Section and with the approval of the Issuer, or (iii) to pay or redeem principal on the Bonds in accordance with the provisions of this Agreement and the Indenture, provided that in the case of (ii) or (iii), the Company shall have received a Favorable Opinion of Bond Counsel with respect to such application. If the Company determines not to complete any portion of the Project or to fund such portion of the Project from any other source, such portion of the Project shall no longer be deemed to be within the meaning of the term “Project” for any purpose of this Agreement or the Indenture.

 

If the Company and the Issuer consider it necessary or desirable to supplement or amend Exhibit A to this Agreement to reflect changes in the description of the Project, such supplement or amendment will not be considered as an amendment to this Agreement requiring the consent of any Owner or the Trustee for the purposes of Article XI of the Indenture.

 

No change or amendment in the components of the Project pursuant to the terms of this Section shall be made if such change or amendment causes the weighted average economic life of the Project to be reduced unless the Company shall have delivered to the Trustee a Favorable Opinion of Bond Counsel with respect to such change or amendment. A copy of each such change in or amendment to Exhibit A hereof shall be filed promptly with the Issuer and the Trustee. In addition, the Company shall deliver to the Issuer a certificate of an Authorized Company Representative detailing the proposed changes.

 

Section 3.03. Records. The Company will maintain such records in connection with the acquisition, construction and equipping of the Project as are required to permit ready identification of the Project and the items of Project Costs.

 

Section 3.04. Operation of Project. So long as the Company owns the Project and the Bonds are outstanding, the Project will be operated as “pollution control facilities” as contemplated by the Act and as solid waste disposal facilities as contemplated by Section 142(a)(6) of the Code. To the extent that such definitions are amended after the date of this Agreement, the Company will use its reasonable best efforts to operate the Project in accordance with such amendments or changes; provided, however, that the Company’s failure to operate the Project in such manner will not, in and of itself, constitute a default under this Agreement and further provided, that in the event of a conflict between the provisions of this Section and the provisions of Section 6.05, Section 6.05 shall control.

 

Section 3.05. Right of Access to the Plant and Inspection of Records . The Company agrees that during the term of this Agreement the Issuer, the Trustee and the duly authorized agents of either of them shall have the right (but not any duty or obligation) at all reasonable times during normal business hours to inspect the records maintained by the Company pursuant to Section 3.03 and to enter upon the site of the Plant to examine and inspect the Plant; provided, however, that this right is subject to federal and State laws and regulations applicable to the site of the Plant. The rights of inspection and access hereby reserved to the Issuer and the Trustee may be exercised only after the Issuer, the Trustee or such agent shall have executed a secrecy agreement if requested by the Company in the form then currently used by Company, and nothing contained in this Section or in any other provision of this Agreement shall be construed to entitle the Issuer or the Trustee to any information or inspection involving the confidential know-how of the Company.

 

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Section 3.06. Authorized Company Representative . The Company shall appoint an Authorized Company Representative (who, until another person or officer is designated, shall be the Treasurer of the Company) for the purpose of acting on behalf of the Company and taking all actions and making all certifications required to be taken and made by an Authorized Company Representative under the provisions of this Agreement and the Indenture, and shall appoint alternate Authorized Company Representatives to take any such action or make any such certification if the same is not taken or made by the Authorized Company Representative. In the event any of said persons, or any successor appointed pursuant to the provisions of this Section, should resign or become unavailable or unable to take any action or make any certificate provided for in this Agreement or the Indenture, another Authorized Company Representative or alternate Authorized Company Representative shall thereupon be appointed by the Company. If the Company fails to make such designation within 10 days following the date when the then incumbent resigns or becomes unavailable or unable to take any of the said actions, the Treasurer of the Company shall serve as the Authorized Company Representative.

 

Whenever under the provisions of this Agreement or the Indenture the approval of the Company is required or the Issuer is required to take some action at the request of the Company, such approval or such request shall be made by the Authorized Company Representative or alternate Authorized Company Representative unless otherwise specified in this Agreement or the Indenture, and the Issuer or the Trustee shall be authorized to act on any such approval or request.

 

Section 3.07. Company to Repair, Replace, Rebuild or Restore. To the extent not inconsistent with any agreement between the Company and the Senior Lender, if there are any Outstanding Bonds when all or any part of the Plant is taken by eminent domain or threat thereof, or destroyed or damaged, the Company shall comply with the provisions of the Subordinate Mortgage, and the following subsections shall also apply:

 

(a)

Immediately after all or any part of the Plant is taken by eminent domain or threat thereof, or destroyed or damaged, the Company shall notify the Independent Engineer, the Trustee and the Issuer in writing of such event.

 

(b)

If the condemnation award or insurance claim is less than $100,000, the Trustee shall pay the Net Proceeds, subject to the provisions of the Senior Mortgage, to the Company. The Company shall proceed promptly to replace, repair, rebuild and restore the Plant to substantially the same condition as existed before the taking or event causing the damage or destruction, with such changes, alterations and modifications (including substitution or addition of other property) as may be desired by the Company and will be suitable for continued operation of the Plant for the business purposes of the Company, and the Company will pay all costs thereof. If the Net Proceeds are not sufficient to pay such costs in full, the Company shall pay that portion of the cost in excess of the amount of the Net Proceeds and shall complete such repair, replacement, rebuilding or restoration as provided in Section 5.02(d) of the Indenture.

 

(c)

If the condemnation award or insurance claim is $100,000 or more, all Net Proceeds of the condemnation award or insurance claim, subject to the provisions of the Senior Mortgage, shall be retained by the Trustee, deposited in the Condemnation and Awards Fund and disbursed therefrom in accordance with the Subordinate Mortgage and Section 5.02(d) of the Indenture, subject to all of the following conditions precedent:

 

(i)

there shall be no Event of Default in existence at the time of any disbursement of the insurance or condemnation proceeds, unless such Event of Default would be cured upon the application of such Net Proceeds; provided, however, this condition precedent shall be waived if the Trustee is otherwise directed by the Owners of a majority in aggregate principal amount of the Bonds Outstanding;

 

(ii)

the Company shall have determined, based upon a certificate of an Independent Engineer, that the cost of restoration, repair and rebuilding is and will be equal to or less than the amount of insurance or condemnation proceeds and other funds deposited by the Company with the Trustee; and

 

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(iii)

the Company shall have determined, based upon a certificate of an Independent Engineer, that the restoration, repair and rebuilding can be completed in accordance with plans and specifications approved by Independent Engineer (such approval not to be unreasonably withheld), in accordance with codes and ordinances.

 

The Company hereby agrees that the Trustee shall apply amounts in the Condemnation and Awards Fund in accordance with the Subordinate Mortgage and Section 5.02(d) of the Indenture.

 

(d)

The Company shall not, by reason of the payment of any costs of repair, rebuilding, replacement or restoration, be entitled to any reimbursement from the Issuer or any abatement or diminution of the amounts payable hereunder.

 

(e)

All buildings, improvements and equipment acquired in the repair, rebuilding, replacement or restoration of the Plant, together with any interests in land acquired by the Company necessary for such restoration, shall be deemed a part of the Plant and available for use and occupancy by the Company without the payment of any additional amounts other than those provided herein except as otherwise allowed herein, provided that no land, interest in land, buildings or improvements shall be acquired subject to any lien or encumbrance except as otherwise allowed herein.

 

ARTICLE IV

ISSUANCE OF BONDS; LOAN TO COMPANY; OTHER OBLIGATIONS

 

Section 4.01. Issuance of Bonds; Loan to Company . In order to finance a portion of the costs of the Project, the Issuer will issue, sell and deliver the Bonds to the initial purchasers thereof and deposit the proceeds of the Bonds with the Trustee as provided in Article V of the Indenture. Such deposit shall constitute a loan by the Issuer to the Company under this Agreement. The obligations of the Company under this Agreement, including specifically the obligation to make Loan Payments as provided in Section 5.01(a) hereof are absolute and unconditional and shall be secured by the Subordinate Mortgage and the Subordinate Security Agreement. The Issuer authorizes the Trustee to disburse the proceeds of the Bonds in accordance with Section 5.02 of the Indenture. The Company hereby approves the Indenture and the issuance by the Issuer of the Bonds and all of the terms and conditions thereof.

 

Section 4.02. Issuance of Other Obligations. While any of the Bonds are outstanding, the Company agrees not to incur any indebtedness except for the Senior Loan, this Agreement and any debt as described in the immediately succeeding sentence. T