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EXHIBIT 10.1
LOAN AGREEMENT
by and among
BADGER STATE ETHANOL, LLC
and
AGSTAR FINANCIAL SERVICES, PCA
dated as of June 22, 2005
TABLE OF CONTENTS
i
LIST OF SCHEDULES AND EXHIBITS
ii
LOAN AGREEMENT
THIS Loan Agreement between BADGER STATE ETHANOL, LLC, a Wisconsin limited liability company (the “Borrower”), and AGSTAR FINANCIAL SERVICES, PCA, an United States corporation (the “Lender”) is made and executed as of this 22 nd day of June, 2005.
RECITALS
A. The Borrower has requested the Lender extend to the Borrower a term loan in the amount of $15,491,086.94, for the purpose of refinancing the existing senior debt owed to the First National Bank of Omaha.
B. The Borrower has also requested the Lender extend to the Borrower a Convertible Loan in the amount of $20,000,000.00, for the purposes of adding corn processing equipment and fixtures to the Borrower’s existing facility located near Monroe, Green County, Wisconsin (the “Project”).
C. The Borrower has also requested the Lender extend to the Borrower a revolving loan in the amount of $9,000,000.00 for operating capital and cash management purposes.
D. The Borrower has also requested additional financing facilities be available to it in the form of Letters of Credit.
D. The Lender is willing to extend such financing to the Borrower upon the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
IN CONSIDERATION of the foregoing premises and the mutual covenants contained in this Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Borrower, the parties agree as follows:
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01. Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings. Terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code, as amended from time to time. All references to dollar amounts shall mean amounts in lawful money of the United States of America.
“ Advances ” means the Loans or Letters of Credit provided the Borrower pursuant to Sections 2.01, 2.02, 2.06 and 2.08.
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“ Affiliate ” means, as to any Person, any other Person: (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such Person; (b) that directly or indirectly beneficially owns or holds five percent (5%) or more of any class of voting stock of such Person; or (c) five percent (5%) or more of the voting stock of which is directly or indirectly beneficially owned or held by the Person in question. The term “control” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however , in no event shall the Lender or any Bank be deemed an Affiliate of the Borrower or any of their subsidiaries.
“ Agreement ” means this Loan Agreement, as this Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Loan Agreement from time to time.
“ Borrower ” means Badger State Ethanol, LLC, a Wisconsin limited liability company.
“ Business Day ” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Lender’s Office is located and, if such day relates to any LIBOR Rate, means any such day on which dealings in dollar deposits are conducted by and between banks in the applicable offshore dollar interbank market.
“ Capital Expenditures ” means, for any period, the sum of all amounts that would, in accordance with generally accepted accounting principles consistently applied, be included as additions to property, plant and equipment on a statement of cash flows for the Borrower during such period, with respect to: (a) the acquisition, construction, improvement, replacement or betterment of land, buildings, machinery, equipment or of any other fixed assets or leaseholds; or (b) other capital expenditures and other uses recorded as capital expenditures having substantially the same effect.
“ Closing Date ” means June 22, 2005.
“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
“ Collateral ” means and includes, without limitation, all property and assets granted as collateral security for the Loans or Indebtedness, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, assignment of rents, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract or otherwise.
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“ Commitment ” means the respective amounts committed to by Lender under the Notes.
“ Completion Date ” means the earlier of April 30, 2006, or the date a Completion Certificate is issued for the Project executed by the Borrower and General Contractor, whichever shall first occur.
“ Completion Certificate ” means a certificate executed by the Borrower and General Contractor stating that the Project is completed and that the corn processing equipment and fixtures are completely operational.
“ Compliance Certificate ” means a certificate of the Treasurer, or any other officer acceptable to the Lender, of the Borrower, in the form attached hereto as Exhibit A, setting forth the calculations of current financial covenants and stating: (a) the Financial Statements are true and correct and have been prepared in accordance with generally accepted accounting principles consistently applied; (b) whether they have knowledge of the occurrence of any Event of Default under this Agreement, and if so, stating in reasonable detail the facts with respect thereto; and (c) reaffirm and ratify the representations and warranties, as of the date of the certificate, contained in this Agreement.
“ Construction Contracts ” means any and all contracts, written or oral, between the Borrower and any Contractor and any subcontractor and between any of the foregoing and any other person or entity relating in any way to the construction of the Project, including the performing of labor or the furnishing of standard or specially fabricated materials in connection therewith.
“ Convertible Loan ” means the loan from the Lender to the Borrower in the amount of $20,000,000.00 and pursuant to the terms and conditions provided for in Section 2.02, below.
“ Convertible Note ” means that certain promissory note of even date herewith executed and delivered to the Lender by the Borrower in the amount of $20,000,000.00.
“ Convertible Loan Maturity Date ” means five years from the Conversion Date.
“ Contractor ” means and includes any person or entity, including the General Contractor, engaged to work on or to furnish materials or supplies for the Project.
“ Conversion Date ” means 60 days after the Completion Date.
“ Current Portion of Long Term Debt ” means that portion of Funded Debt payable within one year from the date of such determination, determined in accordance with generally accepted accounting principles, consistently applied.
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“ Debt ” means: (A) indebtedness for borrowed money or for the deferred purchase price of property or services; (B) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (C) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (A) or (B) above or (E) through (G) below; (D) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (E) indebtedness in respect of mandatory redemption or mandatory dividend rights on equity interests but excluding dividends payable solely in additional equity interests; and (F) all obligations of a Person, contingent or otherwise, for the payment of money under any noncompete, consulting or similar agreement entered into with the seller of a company or its assets or any other similar arrangements providing for the deferred payment of the purchase price for an acquisition permitted hereby or an acquisition consummated prior to the date hereof.
“ Default Rate ” has the meaning specified in Section 2.11.
“ Disbursing Agent ” means Lender, its successors and assigns.
“ Disbursing Agreement ” means the Disbursing Agreement, of even date herewith, executed by the Title Company, the Borrower, and the Lender, as the same may be from time to time amended, modified, or supplemented.
“ Disbursement Expiration Date ” means the date thirty (30) days subsequent to the Completion Date, unless extended in writing by the Lender and the Borrower for an additional, quantified term.
“ Distribution ” means any dividend, distribution, payment, or transfer of property to any member of the Borrower.
“ Draw Request ” means a request for an advance against the Revolving Note, or the Convertible Note prior to the Conversion Date, submitted by the Borrower to the Lender and the Disbursing Agent, in accordance with the terms and conditions of the Disbursing Agreement.
“ Environmental Laws ” means all laws and regulations relating to environmental, health, safety and land use matters applicable to any property.
“ EBITDA ” means for any period, the total of the following each calculated without duplication for the Borrower for such period: (i) net income from operations; plus (ii) any provision for (or less any benefit from) income taxes included in determining such net income; plus (iii) Interest Expense deducted in determining such net income; plus (iv) amortization and depreciation expense deducted in determining such net income.
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“ ERISA ” means the Employee Retirement Income Security Act of 1974.
“ Events of Default ” has the meaning specified in Section 6.01.
“ Excess Cash Flow ” means EBITDA, less the sum of: (i) required payments in respect of Funded Debt; (ii) Maintenance Capital Expenditures and (iii) Tax Distributions.
“ Extraordinary Items ” means items which are material and significantly different from the Borrower’s typical business activities, determined in accordance with generally accepted accounting principles, consistently applied.
“ Fixed Charge Coverage Ratio ” means the ratio of (EBITDA +/- Extraordinary Items) divided by the sum of Current Portion of Long Term Debt + Interest Expense + Dividends + Distributions + Tax Distributions + Maintenance Capital Expenditures).
“ Food Security Act ” means the Food Security Act of 1985, 7 U.S.C. §1631, as amended, and the regulations promulgated thereunder.
“ Funded Debt ” means the principal amount of all Debt of the Borrower having a final maturity of more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin) excluding, however, the principal amount due under the Revolving Note or any other line of credit used by Borrower for working capital purposes, all determined in accordance with generally accepted accounting principles, consistently applied for the period in question.
“ General Contractor ” means AMG / GCI, LLC, an Iowa limited liability company, and its successors and assigns.
“ Governmental Authority ” means and includes any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or hereafter in existence.
“ Grantor ” means and includes each and all of the persons or entities granting a Security Interest in any Collateral for the Indebtedness, including without limitation the Borrower.
“ Income Taxes ” means the applicable state, local or federal tax on the net income of the Borrower.
“ Intellectual Property ” has the meaning specified in Section 4.01(n).
“ Interest Expense ” means for any period, the total interest expense of the Borrower calculated on a consolidated basis.
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“ Interest Period ” means the period commencing on the date of an Advance and ending on the numerically corresponding day in the first calendar month thereafter, except that each such Interest Period which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day or if such succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day; (b) any Interest Period which would otherwise extend beyond the Maturity Date shall end on the Maturity Date; and (c) no Interest Period shall have a duration of less than one (1) month.
“ Inventory ” means all of the Borrower’s inventory, as such term is defined in the UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts or components, supplies or materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located.
“ Lender ” means AgStar Financial Services, PCA, and its successors and assigns.
“ Letter of Credit ” has the meaning specified in Section 2.08(a).
“ Letter of Credit Liabilities ” means, at any time, the aggregate maximum amount available to be drawn under all outstanding Letters of Credit (in each case, determined without regard to whether any conditions to drawing could then be met) and all unreimbursed drawings under Letters of Credit.
“ LIBOR Rate ” (London Interbank Offered Rate) shall mean the London Interbank offered rate per annum for one-month deposits in United States dollars, as determined by the British Banker’s Association average of interbank offered rates for United States dollar deposits in the London market based on quotations at 16 major banks, as published in the “Money Rates” Section of the Wall Street Journal as of the applicable determination date; provided , if Lender determines that the foregoing source is unavailable for the applicable Interest Period, Lender shall determine LIBOR based on a new index which is based on comparable information.
“ Loan and Carrying Charges ” means all commitment fees to the Lender, brokerage fees, standby fees, interest charges, service fees, attorneys’ fees, contractors’ fees, developers’ fees, funding fees, title insurance fees and charges, recording fees, registration taxes, real estate taxes, special assessments, insurance premiums, utility charges incurred by the Borrower in the construction of the Project and issuance of the Notes, all costs incurred in acquisition of the Real Property and any other costs incurred in the development of the Project.
“ Loan Documents ” means this Agreement, the Notes, Letters of Credit, the Security Agreement, the Mortgage and all other agreements, documents, instruments, and certificates
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of the Borrower delivered to, or in favor of, the Lender under this Agreement or in connection herewith or therewith, including, without limitation, all agreements, documents, instruments, certificates and delivered in connection with the extension of Advances by the Lender.
“ Loan Obligations ” means all obligations, indebtedness, and liabilities of the Borrower to the Lender arising pursuant to any of the Loan Documents, whether now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the obligation of the Borrower to repay the Advances, interest on the Advances, and all fees, costs, and expenses (including attorneys’ fees and expenses) provided for in the Loan Documents.
“ Loan/Loans ” means and includes the Term Loan, the Convertible Loan and the Revolving Loan.
“ Long Term Debt ” means indebtedness that matures more than one year after the date of determination thereof.
“ Long Term Marketing Agreement ” means any contract, agreement or understanding of the Borrower having a term of one year or more after the date of determination thereof relating to the sale of any raw materials, inventory, products or by-products of the Borrower.
“ Maintenance Capital Expenditures ” means all Capital Expenditures made in the ordinary course of business to maintain existing business operations of the Borrower in any fiscal year, determined in accordance with generally accepted accounting principles, consistently applied.
“ Make Whole Amount ” means any amounts in addition to outstanding principal and interest payable under the Notes or this Agreement in the event of a prepayment thereof.
“ Material Adverse Effect ” means any set of circumstances or events which: (i) has or could reasonably be expected to have any material adverse effect upon the validity or enforceability of any Loan Documents or any material term or condition contained therein; (ii) is or could reasonably be expected to be material and adverse to the condition (financial or otherwise), business assets, operations, or property of the Borrower; or (iii) materially impairs or could reasonably be expected to materially impair the ability of the Borrower to perform the obligations under the Loan Documents.
“ Maturity Date ” means July 1, 2010.
“ Maximum Rate ” means the rate set forth in Section 2.01(b).
“ Monthly Payment Date ” means the first day of each calendar month.
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“ Mortgage ” means that certain Mortgage of even date herewith, pursuant to which a mortgage interest shall be given by the Borrower to the Lender in the Real Property to secure payment to the Lender of the Loan Obligations.
“ Net Worth ” means the excess of total assets over total liabilities, total assets and total liabilities each to be determined in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) for the Borrower.
“ Net Income ” means income after all operating expenses including salaries and bonuses.
“ Note/Notes ” means and includes the Term Notes, Convertible Note and the Revolving Note evidencing the loans being made hereunder.
“ Ordinary Trade Payable Dispute ” means trade accounts payable, in an aggregate amount not in excess of $50,000.00 with respect to the Borrower, with respect to which: (a) there exists a bona fide dispute between Borrower and the vendor; (b) the Borrower is contesting the same in good faith by appropriate proceedings; and (c) the Borrower has established appropriate reserves on its financial statements.
“ Outstanding Credit ” means, at any time of determination, the aggregate amount of Advances then outstanding.
“ Outstanding Revolving Advances ” means the total Outstanding Credit under the Revolving Note.
“ Owner Equity Ratio ” means Tangible Net Worth divided by total assets, measured annually at the end of each fiscal year.
“ Participation Fee ” shall have the meaning specified in Section 2.10.
“ Person ” means any individual, corporation, business trust, association, company, partnership, joint venture, governmental authority, or other entity.
“ Personal Property ” means all buildings, structures, equipment, fixtures, improvements, building supplies and materials and personal property now or hereafter attached to, located in, placed in or necessary to the use of the improvements on the Real Property including, but without being limited to, all machinery, fixtures, equipment, furnishings, and appliances, as well as all renewals, replacements, additions, and substitutes thereof, and all products and proceeds thereof, and including without limitation all accounts, instruments, chattel paper, other rights to payment, money, deposit accounts, insurance proceeds and general intangibles of the Borrower, whether now owned or hereafter acquired.
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“ Plans and Specifications ” means the final plans and specifications for the construction of the Project, to be prepared by the General Contractor, and approved by the Lender, and all amendments and modifications thereof approved by Lender.
“ Project ” means any and all buildings, structures, fixtures, and other improvements made to the Real Property and other uses identified in the Project Sources and Uses Statement as part of the acquisition and construction of an ethanol production facility in Monroe, Wisconsin, for which the Loans to Borrower are being made hereunder.
“ Project Costs ” means the total of all costs of acquiring the Real Property and constructing the Project as identified in the Project Sources and Uses Statement, together with all Loan and Carrying Charges.
“ Project Sources and Uses Statement ” means the statement attached hereto as Exhibit B which identifies the sources and uses of monies in a total amount of $ related to the Project.
“ Real Property ” means that real property located in the County of Green, State of Wisconsin, owned by the Borrower, upon which the Project is to be constructed and which is described in Schedule 3.01(c).
“ Reimbursement Obligation ” means the obligation of the Borrowers to reimburse the Lender for any demand for payment or drawing under a Letter of Credit.
“ Related Documents ” means and includes without limitation all promissory notes, credit agreements, loan agreements, guaranties, security agreements, mortgages, deeds of trust, assignments and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
“ Request for Advance ” has the meaning specified in Section 2.07(a).
“ Revolving Advance ” means an advance under the Revolving Note.
“ Revolving Loan ” means the loan from the Lender to the Borrower in the amount of $9,000,000.00 and pursuant to the terms and conditions provided for in Sections 2.06 and 2.07, below.
“ Revolving Note ” means that certain promissory note to be executed and delivered to the Lender by the Borrower on the Closing Date in the amount of $9,000,000.00.
“ SARA ” means the Superfund Amendment and Reauthorizations Act of 1986, as amended.
“ Security Agreement ” means and includes, without limitation, any agreements, promises, covenants, arrangements, understandings, or other agreements, whether created by law,
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contract, or otherwise, which evidence, govern, represent, or create a Security Interest, as the same has been and may hereafter be amended or otherwise modified.
“ Security Interest ” means and includes without limitation any type of collateral security, whether in the form of a lien, charge, mortgage, assignment of rents, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.
“ Subordinated Debt ” means all Debt held by: (i) the City of Monroe, Wisconsin; and (ii) debt owed Wisconsin Power and Light Company or its agencies.
“ Sworn Construction Statement ” means a sworn construction statement, sworn to by the Borrower and the General Contractor, and of a form and substance acceptable to the Lender, a sample of which is attached hereto as Exhibit C.
“ Tangible Net Worth ” means the excess of total assets over total liabilities except Subordinated Debt, total assets and total liabilities each to be determined in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 5.01(c) for the Borrower, excluding, however, from the determination of total assets: (i) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, and other similar intangibles; (ii) treasury stock; (iii) securities which are not readily marketable; (iv) cash held in a sinking or other analogous fund established for the purpose of redemption, retirement or prepayment of capital stock or Debt; (v) any write-up in the book value of any asset resulting from a revaluation thereof subsequent to the Closing Date; (vi) amortized start-up costs; and (vii) any items not included in clauses (i) through (vi) above which are treated as intangibles in conformity with generally accepted accounting principles.
“ Tax Distributions ” has the meaning specified in Section 5.02(b).
“ Term Loans ” means the loans from the Lender to the Borrower in the amount of $15,491,086.94 and pursuant to the terms and conditions provided for in Section 2.01, below.
“ Term Notes ” means those certain promissory notes of even date herewith executed and delivered to the Lender by the Borrower in the following amounts: (i) $5,891,086.94 and (ii) $9,600,000.00
“ Title Company ” means Old Republic National Title Insurance Company, a Minnesota corporation, and its successors and assigns.
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“ Title Insurance ” means a lender’s title insurance policy, in form and substance satisfactory to the Lender and containing no exceptions (printed or otherwise) which are unacceptable to Lender, issued by a title insurer acceptable to the Lender, in the face amount of the Note, insuring that Lender has a first and prior lien on the Real Property and containing such endorsements as Lender may require.
“ Unused Commitment Fee ” shall have the meaning specified in Section 2.06(c).
“ Working Capital ” means current assets of the Borrower less current liabilities of the Borrower.
Section 1.02. Accounting Matters . All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistently applied, except as otherwise stated herein. To enable the ready and consistent determination of compliance by the Borrower with its obligations under this Agreement, the Borrower will not change the manner in which either the last day of its fiscal year or the last days of the first three fiscal quarters of its fiscal years is calculated.
Section 1.03. Construction . Wherever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate. The headings, captions or arrangements used in any of the Loan Documents are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of the Loan Documents, nor affect the meaning thereof.
AMOUNTS AND TERMS OF THE TERM LOANS
Section 2.01. Term Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Agreement, the Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender $15,491,086.94 to refinance existing obligations owed to 1 st National Bank of Omaha, a national banking association established in Omaha, Nebraska. Said amount shall be loaned pursuant to the terms and conditions set forth in this Agreement.
(a) Term Notes . The Term Loan shall be evidence by two promissory notes in the following amounts: (i) $5,891,086.94; and (ii) $9,600,000.00.
(b) Interest Rate . Subject to the provisions of Section 2.09 and 2.11, the Term Loan shall bear interest at rates as stated in the promissory notes. The computation of interest, amortization, maturity and other terms and conditions of the Term Loan shall be as provided in the promissory notes, provided, however, in no event shall the applicable rate exceed the maximum nonusurious interest rate, if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or received under applicable state or federal laws (the “Maximum Rate”).
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(c) Term Loan Term . The Term Loan term shall run for a period beginning on the date of this Agreement and ending on the Maturity Date.
Section 2.02. Convertible Loan .
(a) Convertible Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Agreement, the Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender $20,000,000.00. Said amount shall be loaned pursuant to the terms and conditions set forth in this Agreement.
(b) Advances . The Convertible Loan shall be funded by Advances on the Convertible Note to be used for the payment of Project Costs.
(c) Interest Rate . Subject to the provisions of Section 2.09 and 2.11, the Convertible Loan shall bear interest at a rate equal to the LIBOR Rate plus 325 basis points. The computation of interest, amortization, maturity and other terms and conditions of the Convertible Loan shall be as provided in the Convertible Note, provided, however, in no event shall the applicable rate exceed the Maximum Rate.
(d) Convertible Loan Term . The Convertible Loan term shall run for a period beginning on the date of this Agreement and ending on the Conversion Date. On the Conversion Date, the Convertible Loan shall become fully due and payable, except for that part, if any, of the Convertible Loan which is converted into a Term Loan pursuant to the terms of this Agreement.
(e) Conversion to Term Loan . The Lender agrees to convert the Convertible Loan into a Term Loan, provided all of the terms, conditions, warranties, representations, and covenants of the Borrower set forth in this Agreement are satisfied. The computation of interest, amortization, maturity and other terms and conditions of the Term Loan, upon conversion, shall be as provided in the Convertible Note.
Section 2.03. Disbursement of Convertible Loan .
(a) Deposit Account . Disbursements of the Convertible Loan will be made by the Lender in the manner provided in the Disbursing Agreement. Subject to Section 2.02(b) below, all disbursements will be made by wire transferring such funds to the deposit account of the Disbursing Agent in the amount of each Draw Request which is approved pursuant to the Disbursing Agreement. All Convertible Loan funds will be considered to have been advanced to and received by the Borrower upon, and interest on such funds will be payable by the Borrower from and after, their deposit in such deposit account.
(b) Lender’s Application of Loan Proceeds . Notwithstanding the provisions of Section 2.02(a), above, the Lender may elect, upon ten (10) days’ notice to the Borrower, to use the Convertible Loan funds to pay, as and when due, any Convertible Loan fees owing to Lender, interest on the Construction Loan, release charges under prior mortgages on the Property, and legal
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fees and disbursements of the Lender’s attorneys which are payable by the Borrower, unless Borrower causes such amount(s) to be paid within said ten (10) days. Such payments may be made, at the option of the Lender, by debiting or charging the Convertible Loan funds in the amount of such payments.
(c) Cost Information . All disbursements will be based upon a detailed breakdown of the Project Costs. The Sworn Construction Statement, as approved by the Lender, is attached as Exhibit C to this Agreement. In the event that the Borrower becomes aware of any change in the approved Project Costs, which would increase the total cost in excess of $25,000.00 above the amount shown on the attached Sworn Construction Statement, the Borrower shall immediately notify the Lender in writing and promptly submit to the Lender for its approval a revised Sworn Construction Statement. No further disbursements need be made by the Disbursing Agent unless and until the revised Sworn Construction Statement is approved. The Lender reserves the right to approve or disapprove any revised Sworn Construction Statement in its reasonable discretion.
(d) Loan in Balance, Deposit of Funds by Borrower . The Borrower shall keep the Loan in balance as provided in this Section. If the Lender at any time reasonably determines that the amount of the undisbursed Loan proceeds will not be sufficient fully to pay for all costs required to complete the construction of the Project in accordance with the approved Plans and Specifications and for all Project Costs to be incurred by the Borrower, whether such deficiency is attributable to changes in the work of construction or in the Plans and Specifications or to any other cause, the Lender may make written demand on the Borrower to deposit in an escrow fund to be established with the Lender an amount equal to the amount of the shortage reasonably determined by the Lender. The Borrower shall then deposit the required funds with the Lender within ten (10) days after the date of the Lender’s written demand. No further disbursements shall be made by the Disbursing Agent until those funds are deposited by the Borrower in the escrow fund. Whenever the Lender has any such funds on deposit in such escrow fund, it shall make all future advances for Project Costs from the escrow fund before making any further advances under the Loan.
(e) Additional Security . The Borrower irrevocably assigns to the Lender and grants to the Lender a security interest in, as additional security for the performance of the Borrower’s obligations under this Agreement and the Related Documents, its interest in all funds held by the Disbursing Agent, whether or not disbursed, all funds deposited by the Borrower with the Lender under this Agreement, all governmental permits obtained for the lawful construction of the Project, and all reserves, deferred payments, deposits, refunds, cost savings, and payments of any kind relating to the construction of the Project. Upon any default of the Borrower, the Lender may use any of the foregoing for any purpose for which the Borrower could have used them under this Agreement or with respect to the construction or financing of the Project. The Lender will also have all other rights and remedies as to any of the foregoing which are provided under applicable law or in equity.
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(f) Conditions Precedent to All Advances . The Lender’s obligation to make each Advance under the Convertible Note shall be subject to the terms, conditions and covenants set forth in this Agreement, including, without limitation, the following further conditions precedent:
(i) Loan in Balance . The Loan is in balance, as required by the provisions of Section 2.03(d), above;
(ii) Draw Request . The Borrower has submitted to the Lender and the Disbursing Agent a Draw Request for each such Advance, which such Draw Request shall comply with the requirements contained in this Agreement and the Disbursing Agreement;
(iii) Compliance With Disbursing Agreement . All of the terms and conditions of the Disbursing Agreement have been satisfied with respect to each such Advance;
(iv) Government Action . No license, permit, permission or authority necessary for the construction of the Project has been revoked or challenged by or before any Governmental Authority;
(v) Sworn Construction Statement . If required by the Lender, the Borrower shall furnish to the Lender an updated Sworn Construction Statement setting forth the Contractor(s) providing services or materials with respect to specific portions of the construction of the Project and setting forth the amounts actually incurred and paid, or to be incurred, in completing construction of the Project. Such updated Sworn Construction Statement shall be sworn to by the Borrower and the General Contractor to be a true, complete and accurate account of all costs actually incurred and an accurate estimate of all costs to be incurred in the future;
(vi) No Defaults . The Borrower is not in default under the terms of this Agreement, the Related Documents or any other agreement to which the Borrower is a party and which relates to the construction or operation of the Project;
(viii) Marketing Agreements . The Borrower has executed marketing agreements for all ethanol and DDGS to be produced at the Project and provided Lender with collateral assignments of all such agreements in form and content which is satisfactory to Lender and its counsel and acknowledged by the non-Borrower party to all such agreements;
(g) Suspension of Construction . If the Lender in reasonably good faith determines that any work or materials do not materially conform to the approved Plans and Specifications or sound building practice, or otherwise materially departs from any of the requirements of this Agreement, the Lender may require the work to be stopped and withhold disbursements until the matter is corrected. In such event, the Borrower will promptly correct the work to the Lender’s reasonable satisfaction. Provided Lender’s actions were reasonable, in good faith, and the work or materials did not conform to the approved Plans and Specifications or sound building practice, no such action by the Lender will affect the Borrower’s obligation to complete the Project on or before the Completion Date.
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(h) Inspections . The Borrower shall be responsible for making inspections of the Project during the course of construction and shall determine to their own satisfaction that the work done or materials supplied by the Contractors to whom payment is to be made out of each Advance has been properly done or supplied in accordance with the applicable contracts with such Contractors. If any work done or materials in excess of $25,000.00 supplied by a Contractor are not satisfactory to the Borrower, the Borrower will immediately notify the Lender in writing of such fact. It is expressly understood and agreed that the Lender or its authorized representative may conduct such inspections of the Project as it may deem necessary for the protection of the Lender’s interest, and, specifically, an architectural or engineering firm acceptable to the Lender may, at the option of the Lender and at the expense of the Borrower, conduct such periodic inspections of the Project, prepare such written progress reports during the period of construction, prepare such written reports upon completion of the Project and sign such Draw Requests, as the Lender may request, provided that no inspection shall unreasonably delay progress on the Project. Any inspections which may be made of the Project by the Lender or its representative will be made, and all certificates issued by the Lender’s representative will be issued, solely for the benefit and protection of the Lender, and that Borrower will not rely thereon. The Lender is under no duty to supervise or inspect construction or examine any books and records. Any inspection or examination by the Lender is for the sole purpose of protecting the Lender’s security and preserving the Lender’s rights under this Agreement. No default of the Borrower will be waived by any inspection by the Lender. In no event will any inspection by the Lender be a representation that there has been or will be compliance with the Plans or Specifications or that the construction is free from defective materials or workmanship.
(i) No Waiver . Any waiver by the Lender of any condition of disbursement must be expressly made in writing. The making of a disbursement prior to fulfillment of one or more conditions thereof shall not be construed as a waiver of such conditions, and the Lender reserves the right to require their fulfillment prior to making any subsequent disbursements.
Section 2.04. Conversion of Convertible Loan Into Term Loan . Pursuant to the terms and conditions contained in this Agreement, the Convertible Loan may be converted into a Term Loan.
(a) Conditions Precedent . In addition to the terms and conditions of disbursement set forth in this Agreement and as incorporated from the Disbursing Agreement, the Lender shall not be obligated to convert any part of the Convertible Loan into a Term Loan unless and until:
(i) Amount of Term Loan . The maximum amount of the Convertible Loan which is converted to a Term Loan shall be $20,000,000.00;
(ii) Convertible Loan Exceeds Term Loan . In the event that the amount of the Convertible Loan advanced by Lender exceeds the amount of the Term Loan to be made by the Lender, the Borrower shall immediately repay the amount of the Convertible Loan which is not being converted into a Term Loan; and
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(b) Conversion to Fixed Rate Loan . On the Conversion Date, the Borrower shall have the right to convert all or any part of the Convertible Loan into a fixed rate loan, with the consent of the Lender, which shall bear interest at a rate equal to the most recent ten-year fixed rate bonds sold by the Federal Farm Credit Banks Funding Corporation prior to the Conversion Date, plus 225 basis points.
Section 2.05. Excess Cash Flow . In addition to all other payments of principal and interest required under this Agreement or the Notes, the Borrower shall annually remit to Lender an amount equal to 25% of the Borrower’s Excess Cash Flow on or before April 30th of the succeeding fiscal year (the “Excess Cash Flow Payment”). Such payment shall be applied to the Term Loans or the Convertible Loan at the Lender’s discretion. Notwithstanding the foregoing, the Excess Cash Flow Payment is not required when the Borrower’s Owner Equity at each fiscal year end is greater than or equal to 50%.
Section 2.06. Revolving Loan .
(a) Revolving Loan . The Lender agrees, on the terms and conditions set forth in this Agreement, to extend credit to the Borrower from time to time during the period from the Closing Date through and including the Maturity Date by making loans to the Borrower on a revolving basis from time to time provided, however, that at no time shall the sum of the Outstanding Revolving Advances plus the outstanding Letters of Credit exceed $9,000,000.00.
(b) Interest Rate . Subject to the provisions of Section 2.09 and 2.11, the Revolving Loan shall bear interest at a rate equal to the LIBOR Rate plus 300 basis points. The computation of interest, amortization, maturity and other terms and conditions of the Revolving Loan shall be as provided in the Revolving Note, provided, however, in no event shall the applicable rate exceed the Maximum Rate.
(c) Unused Commitment Fee . In addition to the commitment fee payable on the Closing Date, Borrower agrees to pay to the Lender an Unused Commitment Fee on the average daily unused portion of such Lender’s Commitment under the Revolving Loan from the Closing Date until the Maturity Date at the rate of 0.25% per annum, payable in arrears in quarterly installments payable on the first day of each third month after the Conversion Date.
Section 2.07. Making the Revolving Advances.
(a) Revolving Advances . Each Revolving Advance shall be made, on notice from the Borrower (a “ Request for Advance ”) to the Lender delivered before 12:00 Noon (Minneapolis, Minnesota time) on a Business Day which is at least three (3) Business Days prior to the date of such Revolving Advance specifying the amount of such Revolving Advance, provided that, Lender will not be obligated to make Revolving Advance while an Event of Default exists or if the interest rate for such LIBOR Rate Accounts would exceed the Maximum Rate. Any Request for Advance applicable to a Revolving Advance received after 12:00 Noon (Minneapolis, Minnesota time) shall be deemed to have been received and be effective on the next Business Day. The amount
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so requested from the Lender shall, subject to the terms and conditions of this Agreement, be made available to the Borrower by: (i) depositing the same, in same day funds, in an account of the Borrower; or (ii) wire transferring such funds to a Person or Persons designated by the Borrower in writing. To the extent that a Revolving Advance is used for payment of Project Costs, the disbursement of the advance will be subject to the same conditions as an advance under the Convertible Loan as provided in Section 2.03 of this Loan Agreement.
(b) Requests for Advances Irrevocable . Each Request for Advance shall be irrevocable and binding on the Borrower and the Borrower shall indemnify the Lender against any loss or expense it may incur as a result of any failure to borrow any Advance after a Request for Advance (including any failure resulting from the failure to fulfill on or before the date specified for such Advance the applicable conditions set forth in Article III of this Agreement), including, without limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund such Advance when such Advance, as a result of such failure, is not made on such date.
(c) Minimum Amounts . Each Revolving Advance shall be in a minimum amount equal to $10,000.00.
(d) Use of Proceeds . The proceeds of the Revolving Advances shall be used by the Borrower to finance its working capital requirements in the ordinary course of business and to fund Project Costs.
Section 2.08. Letters of Credit .
(a) Commitment to Issue . The Borrower may request Revolving Advances by the Lender, and the Lender, subject to the terms and conditions of this Agreement, may, in its sole discretion, issue letters of credit for any Borrower’s account (such letters of credit, being hereinafter referred to collectively as the “ Letters of Credit ”); provided, however , that:
(i) the aggregate amount of outstanding Letter of Credit Liabilities shall not at any time exceed the amount of $1,000,000.00;
(ii) the sum of the outstanding Letters of Credit plus the Outstanding Revolving Advances shall not at any time exceed the Revolving Loan amount.
(b) Letter of Credit Request Procedure . The Borrower shall give the Lender irrevocable prior notice (effective upon receipt) on or before 3:00 P.M. (Minneapolis, Minnesota time) on the Business Day three Business Days prior to the date of the requested issuance of a Letter of Credit specifying the requested amount, expiry date and issuance date of each Letter of Credit to be issued and the nature of the transactions to be supported thereby. Any such notice received after 3:00 P.M. (Minneapolis, Minnesota time) on a Business Day shall be deemed to have been received and be effective on the next Business Day. Each Letter of Credit shall be in the form of Exhibit E, have an expiration date that occurs on or before the Maturity Date, shall be payable in U.S. dollars,
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must be satisfactory in form and substance to the Lender, and shall be issued pursuant to such documentation as the Lender may require, including, without limitation, the Lender’s standard form letter of credit request and reimbursement agreement; provided that, in the event of any conflict between the terms of such agreement and the other Loan Documents, the terms of the other Loan Documents shall control.
(c) Letter of Credit Fees . The Borrower shall pay to the Lender for (i) all fees, costs, and expenses of the Lender arising in connection with any Letter of Credit, including the Lender’s customary fees for amendments, transfers, and drawings on Letters of Credit and (ii) on the date of the issuance of the Letter of Credit, and at the anniversary date of issuance of such Letter of Credit, an issuance fee equal to one and one-half (1.5%) percent, on an annualized basis, of the maximum amount available to be drawn under the Letter of Credit.
(d) Funding of Drawings . Upon receipt from the beneficiary of any Letter of Credit of any demand for payment or other drawing under such Letter of Credit, the Issuer shall promptly notify the Borrower as to the amount to be paid as a result of such demand or drawing and the respective payment date. Any notice pursuant to the forgoing sentence shall specify the amount to be paid as a result of such demand or drawing and the respective payment date.
(e) Reimbursements . After receipt of the notice delivered pursuant to clause (d) of this Section 2.08 with respect to a Letter of Credit, the Borrower shall be irrevocably and unconditionally obligated to reimburse the Lender for any amounts paid by the Lender upon any demand for payment or drawing under the applicable Letter of Credit, without presentment, demand, protest, or other formalities of any kind other than the notice required by clause (d) of this Section 2.08. Such reimbursement shall occur no later than 3:00 P.M. (Minneapolis, Minnesota time) on the date of payment under the applicable Letter of Credit if the notice under clause (d) of this Section 2.08 is received by 2:00 P.M. (Minneapolis, Minnesota time) on such date or by 11:00 A.M. (Minneapolis, Minnesota time) on the next Business Day, if such notice is received after 2:00 P.M. (Minneapolis, Minnesota time). All payments on the Reimbursement Obligations (including any interest earned thereon) shall be made to the Lender for the account of the Lender in U.S. dollars and in immediately available funds, without set-off, deduction, or counterclaim.
(f) Reimbursement Obligations Absolute . The Reimbursement Obligations of the Borrower under this Agreement shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of the Loan Documents under all circumstances whatsoever and the Borrower hereby waives any defense to the payment of the Reimbursement Obligations based on any circumstance whatsoever, including, without limitation, in any case, the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit or any other Loan Document; (ii) any amendment or waiver of or any consent to departure from any Loan Document; (iii) the existence of any claim, set-off, counterclaim, defense, or other rights which any Borrower or any other Person may have at any time against any beneficiary of any Letter of Credit, the Lender or any other Person, whether in connection with any Loan Document or any unrelated transaction; (iv) any statement, draft, or other documentation presented under any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being
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untrue or inaccurate in any respect whatsoever; (v) payment by the Lender under any Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; or (vi) any other circumstance whatsoever, whether or not similar to any of the foregoing; provided that Reimbursement Obligations with respect to a Letter of Credit may be subject to avoidance by a Borrower if the Borrower proves in a final non-appealable judgment that it was damaged and that such damage arose directly from the Lender’s willful misconduct or gross negligence in determining whether the documentation presented under the Letter of Credit in question complied with the terms thereof.
(g) Issuer Responsibility . Borrower assumes all risks of the acts or omissions of any beneficiary of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Lender, nor any of its respective officers or directors shall have any responsibility or liability to the Borrower or any other Person for: (a) the failure of any draft to bear adequate reference to any Letter of Credit, or the failure of any Person to surrender or to take up any Letter of Credit or to send documents (other than the Letter of Credit) apart from drafts as required by the terms of any Letter of Credit, or the failure of any Person to note the amount of any instrument on any Letter of Credit, each of which requirements, if contained in any Letter of Credit itself, it is agreed may be waived by the Lender; (b) errors, omissions, interruptions, or delays in transmission or delivery of any messages; (c) the validity, sufficiency, or genuineness of any draft or other document, or any endorsement(s) thereon, even if any such draft, document or endorsement should in fact prove to be in any and all respects invalid, insufficient, fraudulent, or forged or any statement therein is untrue or inaccurate in any respect; (d) the payment by the Lender to the beneficiary of any Letter of Credit against presentation of any draft or other document that does not comply with the terms of the Letter of Credit; or (e) any other circumstance whatsoever in making or failing to make any payment under a Letter of Credit; provided that Borrower will not be liable pursuant to this section 2.08(g) for the willful misconduct of the Lender. The Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.
Section 2.09. Adjustments to Interest Rate . Notwithstanding any other provision of this Agreement or the Related Documents, the rate of interest under the Term Loan, the Construction Loan or the Revolving Loan shall vary according to the following schedule should the Owner’s Equity in the Borrower achieve the levels set forth below:
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Upon delivery of the monthly financial statements and the Compliance Certificate pursuant to Section 5.01(c)(iii) for each month that corresponds with each month end, the rate of interest for any month shall automatically be adjusted in accordance with the Owner’s Equity set forth therein and the rates set forth above. Such automatic adjustment to the rate of interest shall take effect as of the first Business Day of the month in which the Lender received the related Compliance Certificate. The term “ Adjustment Date ” shall mean each such Business Day when such rates, margins or fees change pursuant to the immediately prior sentence or the next following sentence. If the Borrower fails to deliver such Compliance Certificate which so sets forth the Owner’s Equity within the period of time required by Section 5.01(c)(iii) hereof or if any Event of Default occurs and is continuing, the rate of interest shall automatically be adjusted to a rate equal to the applicable LIBOR Rate plus 325 basis points, plus the default rate adjustment provide in Section 2.11, such automatic adjustments: (a) to take effect as of the first Business Day after the last day on which the Borrower were required to deliver the applicable Compliance Certificate in accordance with Section 5.01(c)(ii) hereof or in the case of an Event of Default, on the date the written notice is given to the Borrower; and (b) to remain in effect until subsequently adjusted in accordance herewith upon the delivery of such Compliance Certificate or, in the case of an Event of Default, when such Event of Default has been cured to the satisfaction of the Lender.
Section 2.10. Participation Fees . The Borrower agrees to pay to the Lender on the Closing Date a Participation Fee of $150,000.00.
Section 2.11. Default Interest . Upon the occurrence of an Event of Default, all past due principal and, to the extent permitted by applicable law, interest, fees, and other amounts owing hereunder, shall bear interest, from the date of such Event of Default until the date the Lender, in writing, acknowledge that such Event of Default is waived or cured or all Loan Obligations are paid in full, at the Default Rate. The term “ Default Rate ”, as used herein, means the lesser of: (a) the Maximum Rate (which shall mean the maximum nonusurious interest rate, if any, at any time, or from time to time, that may be contracted for, taken, reserved, charged or received under applicable state or federal laws); or (b) the rate per annum which shall from day-to-day be equal to two percent (2%) in excess of the then applicable rate of interest. Interest payable at the Default Rate shall be payable from time to time on demand or, if not sooner demanded, on the last day of each calendar month.
Section 2.12. Prepayment of Term Loan . The Borrower may, by notice to the Lender, prepay the outstanding amount of the Term Loan in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, without penalty or premium, except as provided in this Section 2.12. In the event any one or all of the Loans are converted to a fixed rate loan, the Borrower shall pay the prepayment penalty applicable to that fixed interest rate, if any.
Notwithstanding the foregoing, no prepayment fee shall be required if such prepayment is made pursuant to Section 2.05 of this Agreement.
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Section 2.13. Changes in Law Rendering Certain LIBOR Rate Loans Unlawful . In the event that any change in any applicable law (including the adoption of any new applicable law) or any change in the interpretation of any applicable law by any judicial, governmental or other regulatory body charged with the interpretation, implementation or administration thereof, should make it (or in the good-faith judgment of the Lender should raise a substantial question as to whether it is) unlawful for the Lender to make, maintain or fund LIBOR Rate Loans, then: (a) the Lender shall promptly notify each of the other parties hereto; and (b) the obligation of the Lender to make LIBOR rate loans of such type shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness. During the period of any suspension, Lender shall make loans to Borrower that are deemed lawful and that as closely as possible reflect the terms of this Agreement.
Section 2.14. Payments and Computations .
(a) Method of Payment . Except as otherwise expressly provided herein, all payments of principal, interest, and other amounts to be made by the Borrower under the Loan Documents shall be made to the Lender in U.S. dollars and in immediately available funds, without set-off, deduction, or counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Borrower shall, at the time of making each such payment, specify to the Lender the sums payable under the Loan Documents to which such payment is to be applied and in the event that the Borrower fail to so specify or if an Event of Default exists, the Lender may apply such payment and any proceeds of any Collateral to the Loan Obligations in such order and manner as it may elect in its sole discretion, subject to Section 2.14(c).
(b) Payments on a Non-Business Day . Whenever any payment under any Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest and fees, as the case may be.
(c) Proceeds of Collateral . All proceeds received by the Lender from the sale or other liquidation of the Collateral when an Event of Default exists shall first be applied as payment of the accrued and unpaid fees and expenses of the Lender hereunder, including, without limitation, under Section 7.04 and then to all other unpaid or unreimbursed Loan Obligations (including reasonable attorneys’ fees and expenses) owing to the Lender and then any remaining amount of such proceeds shall be applied to the unpaid amounts of Loan Obligations, until all the Loan Obligations have been paid and satisfied in full or cash collateralized. After all the Loan Obligations (including without limitation, all contingent Loan Obligations) have been paid and satisfied in full, all Commitments terminated and all other obligations of the Lender to the Borrower otherwise satisfied, any proceeds of Collateral shall be delivered to the Person entitled thereto as directed by the Borrower or as otherwise determined by applicable law or applicable court order.
(d) Computations . Except as expressly provided otherwise herein, all computations of interest and fees shall be made on the basis of actual number of days lapsed over a
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year of 365 or 366 days, as appropriate. Interest shall accrue from and include the date of borrowing, but exclude the date of payment.
Section 2.15. Maximum Amount Limitation . Anything in this Agreement or the other Loan Documents to the contrary notwithstanding, Borrower shall not be required to pay unearned interest on any Note or any of the Loan Obligations, or ever be required to pay interest on any Note or any of the Loan Obligations at a rate in excess of the Maximum Rate, if any. If the effective rate of interest which would otherwise be payable under this Agreement, any Note or any of the other Loan Documents would exceed the Maximum Rate, if any, then the rate of interest which would otherwise be contracted for, charged, or received under this Agreement, any Note or any of the other Loan Documents shall be reduced to the Maximum Rate, if any. If any unearned interest or discount or property that is deemed to constitute interest (including, without limitation, to the extent that any of the fees payable by Borrower for the Loan Obligations to the Lender under this Agreement, any Note, or any of the other Loan Documents are deemed to constitute interest) is contracted for, charged, or received in excess of the Maximum Rate, if any, then such interest in excess of the Maximum Rate shall be deemed a mistake and canceled, shall not be collected or collectible, and if paid nonetheless, shall, at the option of the holder of such Note, be either refunded to the Borrower, or credited on the principal of such Note. It is further agreed that, without limitation of the foregoing and to the extent permitted by applicable law, all calculations of the rate of interest or discount contracted for, charged or received by the Lender under its Note, or under any of the Loan Documents, that are made for the purpose of determining whether such rate exceeds the Maximum Rate applicable to the Lender, if any, shall be made, to the extent permitted by applicable laws (now or hereafter enacted), by amortizing, prorating and spreading during the period of the full terms of the Advances evidenced by the Notes, and any renewals thereof all interest at any time contracted for, charged or received by Lender in connection therewith. This Section 2.15 shall control every other provision of all agreements among the parties to this Agreement pertaining to the transactions contemplated by or contained in the Loan Documents, and the terms of this Section 2.15 shall be deemed to be incorporated in every Loan Document and communication related thereto.
Section 2.16. Lender Records . All advances and all payments or prepayments made thereunder on account of principal or interest may be evidenced by the Lender in accordance with its usual practice in an account or accounts evidencing such advances and all payments or prepayments thereunder from time to time and the amounts of principal and interest payable and paid from time to time thereunder; in any legal action or proceeding in respect of the Notes, the entries made in such account or accounts shall be prima facie evidence of the existence and amounts of all advances and all payments or prepayments made thereunder on account of principal or interest. Lender shall provide monthly statements of such entries to Borrower for the purpose of confirming the accuracy of such entries.
Section 2.17. Loan Payments . During the continuance of an Event of Default, the Lender may deduct any obligations due or any other amounts due and payable by the Borrower under the Loan Documents from any accounts maintained with the Lender.
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Section 2.18. Purchase of Equity Interests in AgStar Financial Services, PCA . Besides (and not in lieu of) the other amounts payable by Borrower under this Agreement, Borrower shall purchase $1,000.00 of equity interests in AgStar Financial Services, PCA. The purchase price for the equity interests shall be payable in full on or prior to the date hereof. Such purchases of equity interests shall comply with AgStar Financial Services, PCA’s respective by-laws and capital plans applicable to borrowers generally. Borrower hereby acknowledge receipt of the following information and materials pertaining to AgStar Financial Services, PCA prior to the execution of this Agreement: (i) copies of the by-laws of AgStar Financial Services, PCA; (ii) a written description of the terms and conditions under which the equity interests are issued; (iii) a copy of the most recent annual reports of AgStar Financial Services, PCA; and (iv) if more recent than the latest annual reports, the latest quarterly reports of AgStar Financial Services, PCA. AgStar Financial Services, PCA shall possess a statutory security interest in its equity interests. AgStar Financial Services, PCA reserves the right to sell participations on a non-patronage basis.
Borrower acknowledges and agrees that: (a) only the portions of the Loans provided to Borrower by AgStar Financial Services, PCA are entitled to patronage distributions in accordance with the bylaws of AgStar Financial Services, PCA and its practices and procedures; and (b) any patronage or similar payments to which Borrower is entitled as a result of its ownership of the equity interests in AgStar Financial Services, PCA will not be based on any of the Loans not belonging to AgStar Financial Services, PCA or in which AgStar Financial Services, PCA has granted a participation interest at any time.
Section 2.19. Compensation . Upon the request of the Lender, the Borrower shall pay to the Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to compensate it for any loss, cost, or expense (excluding loss of anticipated profits incurred by it) as a result of: (i) any payment, prepayment, or conversion of a LIBOR rate loan for any reason on a date other than the last day of the Interest Period for such Loan; or (ii) any failure by the Borrower for any reason (including, without limitation, the failure of any condition precedent specified in Section 3.01 to be satisfied) to borrow, extend, or prepay a LIBOR rate loan on the date for such borrowing, extension, or prepayment specified in the relevant notice of borrowing, extension or prepayment under this Agreement.
Such indemnification may include any amount equal to the excess, if any, of: (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrower, convert or extend to the last day of the applicable Interest Period (or in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such loan as provided for herein; over (b) the amount of interest (as reasonably determined by the Lender) which would have accrued to the Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank LIBOR market. The covenants of the Borrower set forth in this Section 2.19 shall survive the repayment of the Loans and other obligations under the Loan Documents hereunder.
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CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Funding . The effectiveness of this Agreement and obligations of the Lender to fund the Loans are subject to the condition precedent that the Lender shall have received the following, in form and substance satisfactory to the Lender:
(a) This Agreement, duly executed by the Borrower and the Lender;
(b) The Notes, duly executed by the Borrower;
(c) The Mortgage, fully executed and notarized, to secure the Loans encumbering on a first Lien basis the fee interest and/or leasehold interest of the Borrower in the Real Property and the fixtures thereon described in Schedule 3.01(c);
(d) A Security Agreement duly executed by the Borrower and in a form as provided by the Lender by which security agreement the Lender is granted a security interest by the Borrower in the Collateral;
(e) A copy of the Construction Contract(s) and a complete set of the Plans and Specifications, together with copies of all permits and government approvals relating to the construction and use of the Project;
(f) An assignment of contract for each of the Construction Contracts and the Plans and Specifications, duly executed by the Borrower and pursuant to which the Borrower shall have assigned to the Lender all of the Borrower’s right, title and interest in and to each such Construction Contract, and which assignment shall have been consented to and certified in writing by the other party(ies) to each such Construction Contract;
(g) A deposit account control agreement;
(h) Copies of all other agreements between Borrower and third parties used in the normal operations of Borrower, including but not limited to management agreements, marketing agreements, and corn delivery agreements;
(i) Assignments of the contracts between Borrower and third parties identified above, duly executed by the Borrower and pursuant to which the Borrower shall have assigned to the Lender all of the Borrower’s right, title and interest in and to each such contracts, and which assignment shall have been consented to and certified in writing by the other party(ies) to each such contract;
(j) Financing Statements in form and content satisfactory to the Lender and in proper form under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Lender, desirable to perfect the security interests created by the Security Agreement;
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(k) Copies of UCC, tax and judgment lien search reports listing all financing statements and other encumbrances which name the Borrower (under its present name and any previous name) and which are filed in the jurisdictions in which the Borrower is located, organized or maintains collateral, together with copies of such financing statements (none of which shall cover the collateral purported to be covered by the Security Agreement);
(l) Evidence that all other actions necessary or, in the opinion of the Lender, desirable to enable the Lender to perfect and protect the security interests created by the Security Agreement have been taken;
(m) An ALTA mortgagee title insurance policy issued by a title insurance company acceptable to Lender, with respect to the Real Property, assuring the Lender that the Mortgage creates a valid and enforceable encumbrance on the Real Property, free and clear of all defects and encumbrances except Permitted Liens and containing: (i) a comprehensive endorsement (ALTA form 9); (ii) a zoning endorsement (ALTA form 3.1) specifying an ethanol production facility as a permitted use for all of the parcels included in the Real Property; and (iii) such endorsements as the Lender shall reasonably require. All such title insurance policies shall be in form and substance reasonably satisfactory to the Lender and shall provide for affirmative insurance and such reinsurance as the Lender may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Lender;
(n) Maps or plats of the Real Property certified to the Lender and the title insurance company issuing the policy referred to in Subsection 3.01(n) (the “Title Insurance Company”) in a manner reasonably satisfactory to each of the Lender and the Title Insurance Company, dated a date reasonably satisfactory to each of the Lender and the Title Insurance Company by an independent professional licensed land surveyor, which maps or plats and the surveys on which they are based shall be sufficient to delete any standard printed survey exception contained in the applicable title policy and be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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