MASTER LOAN AGREEMENT
Exhibit 6.2
MLA No. RI0291
THIS MASTER LOAN AGREEMENT is entered into as of June 6, 2005, between FARM CREDIT SERVICES
OF AMERICA, FLCA (“Farm Credit”) and WESTERN IOWA ENERGY, LLC, Wall Lake, Iowa (the “Company”).
BACKGROUND
From time to time Fart Credit may make loans to the Company. In order to reduce the amount of
paperwork associated therewith, Farm Credit and the Company would like to enter into a master loan
agreement. For that reason, and in consideration of Farm Credit making one or more loans to the
Company, Farm Credit and the Company agree as follows:
SECTION 1. Supplements. In the event the Company desires to borrow from Farm Credit and Farm
Credit is willing to lend to the Company, or in the event Farm Credit and the Company desire to
consolidate any existing loans hereunder, the parties will enter into a Supplement to this
agreement (a “Supplement”). Each Supplement will set forth the amount of the loan, the purpose of
the loan, the interest rate or rate options applicable to that loan, the repayment terms of the
loan, and any other terms and conditions applicable to that particular loan. Each loan will be
governed by the terms and conditions contained in this agreement and in the Supplement relating to
the loan.
SECTION 2. Sale of Participation Interests and Appointment of Administrative Agent. The
Company acknowledges that concurrent with the execution of this Master Loan Agreement and related
Supplements, Farm Credit is selling a participation interest in this Master Loan Agreement and
Supplements executed concurrently herewith to CoBank, ACB (“CoBank”) (up to and including 100%
interest). Pursuant to an Administrative Agency Agreement dated June 6, 2005, (“Agency Agreement”),
Farm Credit and CoBank appointed CoBank to act as. Administrative Agent (“Agent”) to act
in place of Farm Credit hereunder and under the Supplements and any security documents to be
executed thereunder. All funds to be advanced hereunder shall be made by Agent, all repayments by
the Company hereunder shall be made to Agent, and all notices to be made to Farm Credit hereunder
shall be made to Agent. Agent shall be solely responsible for the administration of this agreement,
the Supplements and the security documents to be executed by the Company thereunder and the
enforcement of all rights and remedies of Farm Credit hereunder and thereunder. Company
acknowledges the appointment of the Agent and consents to such appointment.
SECTION 3. Availability. Loans will be made available on any day on which Agent and the
Federal Reserve Banks are open for business upon the telephonic or written request of the Company.
Requests for loans must be received no later than 12:00 Noon Company’s local time on the date the
loan is desired. Loans will be made available by wire transfer of immediately available funds to
such account or accounts as may be authorized by the Company. The Company shall furnish to Agent a
duly completed and executed copy of a CoBank Delegation and Wire and Electronic Transfer
Authorization Form of the Agent, and Agent shall be entitled to rely on (and shall incur no
liability to the Company in acting on) any request or direction furnished in accordance with the
terms thereof.
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SECTION 4. Repayment. The Company’s obligation to repay each loan shall be evidenced by
the promissory note set forth in the Supplement relating to that loan or by such replacement note
as Agent shall require. Agent shall maintain a record of all loans, the interest accrued thereon,
and all payments made with respect thereto, and such record shall, absent proof of manifest error,
be conclusive evidence of the outstanding principal and interest on the loans. All payments shall
be made by wire transfer of immediately available funds, by check, or by automated clearing house
or other similar cash handling processes as specified by separate agreement between the Company and
Agent. Wire transfers shall be made to ABA No. 000000000 for advice to and credit of CoBank (or to
such other account as Agent may direct by notice). The Company shall give Agent telephonic notice
no later than 12:00 Noon Company’s local time of its intent to pay by wire and funds received after
3:00 p.m. Company’s local time shall be credited on the next business day. Checks shall be mailed
to XxXxxx, XXX, Xxxxxxxxxx 000, Xxxxxx, Xxxxxxxx 00000-0000 (or to such other place as Agent may
direct by notice). Credit for payment by check will not be given until the later of: (a) the day on
which Agent receives immediately available funds; or (b) the next business day after receipt of the
check.
SECTION 5. Capitalization. The Company agrees to purchase voting (Class D) or non-voting
(Class E) stock in Farm Credit Services of America, ACA ($1,000.00 worth of stock consisting of 200
shares of $5.00 par value stock) as required under the policy of Farm Credit at the time of
acquisition. Farm Credit policy may change from time to time. Farm Credit shall have a first lien
on the stock for payment of any liability of the Company to Farm Credit. Said stock shall be owned
as follows:
Owner Name: Western. Iowa Energy, LLC SSN/TIN: 41-2143913
The Company authorizes and appoints the following to act on behalf of the Company, to vote the
Class D stock, and to accept, receive and receipt for any dividends declared on the stock:
Xxxx Xxxxx, Voter
SECTION 6. Security. The Company’s obligations under this agreement, all Supplements (whenever
executed), and all instruments and documents contemplated hereby or thereby, shall be secured by a
statutory first lien on all equity which the Company may now own or hereafter acquire in Farm
Credit. In addition, the Company agrees to grant to Farm Credit, by means of such instruments and
documents as Agent shall reasonably require, a first lien (subject only to exceptions approved in
writing by Agent) on all personal property of the Company, and on all real property of the Company,
whether now existing or hereafter acquired. As additional security for those obligations: (i) the
Company agrees to grant to Farm Credit, by means of such instruments and documents as Agent shall
reasonably require, a first priority lien on such of its other assets, whether now existing or
hereafter acquired, as Agent may from time to time require; and (ii) the Company agrees to grant to
Farm Credit, by means of such instruments and documents as Agent shall require, a first priority
lien on all realty which the Company may from time to time acquire after the date hereof. Farm
Credit may at its discretion assign collateral to the Agent under the Agency Agreement.
SECTION 7. Conditions Precedent.
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(A) Conditions to Initial Supplement. Farm Credit’s obligation to extend credit under
the initial Supplement hereto is subject to the conditions precedent that Agent receive, in form
and content satisfactory to Agent, each of the following:
(i) This Agreement, Etc. A duly executed copy of this agreement and all instruments and
documents contemplated hereby.
(ii) Security Agreement. A security agreement granting to Farm Credit a first lien (subject
only to exceptions approved in writing by Agent) on all personal property of the Company, whether
now owned or hereafter acquired.
(iii) Mortgage/Deed of Trust. A mortgage or deed of trust granting to Farm Credit a first
lien (subject only to exceptions approved in writing by Agent) on the Company’s Property (as that
term is defined in the applicable Supplements) located near Wall Lake, Iowa.
(iv) Title Commitment/Policy. A commitment from a title insurance company acceptable to Agent
to issue an ALTA lender’s policy of title insurance in the face amount of $18,000,000.00 insuring
the Company’s Mortgage or Deed of Trust to Farm Credit as a first priority lien on the property
encumbered thereby, subject only to exceptions approved in writing by Agent. The Company agrees to
pay the cost of such commitment and the related policy, together with such endorsements as may be
reasonably requested by Agent, and also agrees that if, for any reason, a final title policy is
not issued by the date that is ninety (90) days after the date of this agreement or such later
date as may be agreeable to Agent, then an “Event of Default” shall be deemed to have occurred
under this agreement.
(v) Opinion of Counsel. An opinion of the Company’s counsel (in form and substance
acceptable to Agent) confirming due authorization and execution of the loan documents.
(vi) Environmental Audit. Such environmental audit or report as Agent may require.
(vii) Insurance. Certificates from the insurance carrier for the general contractor or
contractors (and if the Company is not adequately insured therein, from the Company’s insurance
carrier) evidencing workers’ compensation and liability insurance (including contractual
liability) carried during the course of construction, with liability limits for death of or injury
to persons and for damages to property in amounts acceptable to Agent or such other limits if any
are established under the construction contract(s). Without limiting the provision in Section 9(D)
herein or the foregoing, the Company agrees to obtain Builder’s Risk casualty insurance covering
fire and other casualty with extended coverage including vandalism and malicious mischief.
(viii) Evidence of Capital. Such evidence as Agent may require that the Company has obtained
equity capital and grants, or acceptable binding commitments thereof, in an amount no less than
$22,000,000.00 with terms and conditions acceptable to Agent.
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(ix) Appraisal. An appraisal of the Property by a licensed, independent appraiser
satisfactory to Agent, such appraisal to include a value for the proposed bio-diesel facility to
be located on the Company’s real property located near Wall Lake, Iowa.
(x) Survey. A plat survey of the property by a licensed surveyor satisfactory to Agent and
complying with the 1988 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, as
adopted by the American Land Title Association (“ALTA”) and the American Congress of Surveying &
Mapping (“ACSM”), including, without limitation, showing through the use of course bearings and
distances, the following: (i) all foundations of the improvements, including driveways and fences,
if any, in place and to be constructed; (ii) all easements and roads or rights of way and setback
lines, if any, affecting the improvements, and showing the same are unobstructed; (iii) the
dimensions, boundaries and square footage of the improvements; (iv) no encroachments by any
improvements on the property onto adjoining property; and (v) such other information as may be
required by Agent.
(xi) [Reserved]
(xii) Engineering and Construction Contracts. Copies of all engineering and construction
contracts with warranty provisions acceptable to Agent.
(xiii) Project Budget and Schedule, Contracts and Plans. The following: (i) a budget
setting forth the total estimated direct costs for construction (including real property
acquisition, site preparation and infrastructure, railroad siding, capitalized interest and
contingencies) not to exceed an aggregate total of $35,000,000.00 for the improvements, including
line item cost breakdowns for all direct costs by trade, job, and subcontractor, and a schedule of
all sources of funds to pay such costs (the “Project Budget”); (ii) a schedule setting forth, by
trade, job, and subcontractor, the estimated dates of commencement and completion of construction
of the improvements (the “Project Schedule”); (iii) a schedule of the amounts and times of
advances anticipated to be requisitioned by the Company from time to time during the term of
construction of the improvements (the “Disbursement Schedule”); (iv) a list of all subcontractors
and materialmen who have been, or, to the extent then determined by the Company, will be supplying
labor, materials or goods for the improvements; (v) two sets of the Plans with a certification
from the Company and from the Company’s architect or engineer, or with other evidence satisfactory
to Agent as to the following matters: (a) that the improvements can be completed by March 31,
2006, (the “Completion Date”); (b) that the Project Budget, Project Schedule, Disbursement
Schedule and the Plans satisfactorily provide for the construction of the improvements; and (c)
that the improvements upon completion will comply with all Laws (as defined in Section 9(B)
hereof), including, without limitation, all Laws relating to the environment, and all approvals,
consents, permits and licenses required under such Laws (the “Project Approvals”) which have been
obtained or are to be obtained by the Company relating in any way to the acquisition, construction
or the contemplated operation of the improvements (including, without limitation, those relating
to zoning, building, use and occupancy, fire prevention and health); and (vi) a list of the
Project Approvals indicating those Project Approvals obtained and to be obtained (and a schedule
for obtaining such Project Approvals).
(xiv) Process/Yield Guarantee. Acceptable Process/Yield Guarantee from the design
engineer and contractor, acceptable to Agent, as well as a minimum one-year warranty on
all work performed.
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(xv) Utilities; Access; Egress. A certificate from the Company’s engineer, or a report
from Agent’s inspecting engineer satisfactory to Agent, as to the methods of access to and egress
from the property and to the availability of water supply, electricity, natural gas, and other
utilities, and for the disposal of wastewater, all in locations and capacities sufficient to meet
the reasonable requirements of the Property and the improvements and otherwise satisfactory to
Agent.
(xvi) Escrow Agreement. An escrow agreement for distribution of loan funds acceptable to
Agent specifically providing for a Title/Abstract Company to distribute all funds. Costs of said
agreement are to be paid by the Company.
(xvii) Performance Bonds. Performance bonds, in form and content acceptable to Agent, for
construction and related contracts upon request by Agent.
(B) Conditions to Each Supplement. Farm Credit’s obligation to extend credit under each
Supplement, including the initial Supplement, is subject to the conditions precedent that Agent
receive, in form and content satisfactory to Agent, each of the following:
(i) Supplement. A duly executed copy of the Supplement and all instruments and documents
contemplated thereby.
(ii) Evidence of Authority. Such certified board resolutions, certificates of incumbency, and
other evidence that Agent may require that the Supplement, all instruments and documents executed
in connection therewith, and, in the case of initial Supplement hereto, this agreement and all
instruments and documents executed in connection herewith, have been duly authorized and executed.
(iii) Fees and Other Charges. All fees and other charges provided for herein or in the
Supplement.
(iv) Evidence of Perfection, Etc. Such evidence as Agent may require that Farm Credit has a
duly perfected first priority lien on all security for the Company’s obligations, and that the
Company is in compliance with Section 9(D) hereof.
(C) Conditions to Each Loan. Farm Credit’s obligation under each Supplement to make any
loan to the Company thereunder is subject to the condition that no “Event of Default” (as defined
in Section 12 hereof) or event which with the giving of notice and/or the passage of time would
become an Event of Default hereunder (a “Potential Default”), shall have occurred and be
continuing.
SECTION 8. Representations and Warranties.
(A) This Agreement. The Company represents and warrants to Farm Credit and Agent that
as of the date of this Agreement:
(i) Compliance. The Company and, to the extent contemplated hereunder, each “Subsidiary” (as
defined below), is in compliance with all of the terms of this agreement, and no Event of Default
or Potential Default exists hereunder.
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(ii) Subsidiaries. The Company has no “Subsidiary(ies)” (as defined below). For
purposes hereof, a “Subsidiary” shall mean a corporation of which shares of stock having ordinary
voting power to elect a majority of the board of directors or other managers of such corporation
are owned, directly or indirectly, by the Company.
(B) Each Supplement. The execution by the Company of each Supplement hereto shall
constitute a representation and warranty to Agent that:
(i) Applications. Each representation and warranty and all information set forth in any
application or other documents submitted in connection with, or to induce Farm Credit to enter
into, such Supplement, is correct in all material respects as of the date of the Supplement.
(ii) Conflicting Agreements, Etc. This agreement, the Supplements, and all security and other
instruments and documents relating hereto and thereto (collectively, at any time, the “Loan
Documents”), do not conflict with, or require the consent of any party to, any other agreement to
which the Company is a party or by which it or its property may be bound or affected, and do not
conflict with any provision of the Company’s operating agreement and articles of organization.
(iii) Compliance. The Company and, to the extent contemplated hereunder, each Subsidiary, is
in compliance with all of the terms of the Loan Documents (including, without limitation, Section
9(A) of this agreement on eligibility to borrow from Farm Credit).
(iv) Binding Agreement. The Loan Documents create legal, valid, and binding obligations of
the Company which are enforceable in accordance with their terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency, or similar laws affecting
creditors’ rights generally.
SECTION 9. Affirmative Covenants. Unless otherwise agreed to in writing by Agent while this
agreement is in effect, the Company agrees to, and with respect to Subsections 9(B) through 9(G)
hereof, agrees to cause each Subsidiary to:
(A) Eligibility. Maintain its status as an entity eligible to borrow from Farm Credit.
(B) Company Existence, Licenses, Etc. (i) Preserve and keep in full force and effect its
existence and good standing in the jurisdiction of its formation; (ii) qualify and remain
qualified to transact business in all jurisdictions where such qualification is required; and (iii)
obtain and maintain all licenses, certificates, permits, authorizations, approvals, and the like
which are material to the conduct of its business or required by law, rule, regulation, ordinance,
code, order, and the like (collectively, “Laws”).
(C) Compliance with Laws. Comply in all material respects with all applicable Laws, including,
without limitation, all Laws relating to environmental protection. In addition, the Company agrees
to cause all persons occupying or present on any of its properties, and to cause each
Subsidiary to cause all persons occupying or present on any of its properties, to comply in all
material respects with all environmental protection Laws.
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(D) Insurance. Maintain insurance with insurance companies or associations reasonably
acceptable to Agent in such amounts and covering such risks as are usually carried by companies
engaged in the same or similar business and similarly situated, and make such increases in the
type or amount of coverage as Agent may reasonably request. All such policies insuring any
collateral for the Company’s obligations to Farm Credit shall
have mortgagee or lender
loss payable clauses or endorsements in form and content acceptable to Agent. At Agent’s request,
all policies (or such other proof of compliance with this Subsection as may be satisfactory to
Agent) shall be delivered to Agent.
(E) Property Maintenance. Maintain all of its property that is necessary to or useful in
the proper conduct of its business in good working condition, ordinary wear and tear excepted.
(F) Books and Records. Keep adequate records and books of account in which complete entries
will be made in accordance with generally accepted accounting principles (“GAAP”) consistently
applied.
(G) Inspection. Permit Agent or its agents, upon reasonable notice and during normal business
hours or at such other times as the parties may agree, to examine its properties, books, and
records, and to discuss its affairs, finances, and accounts, with its respective officers,
directors, employees, and independent certified public accountants.
(H) Reports and Notices. Furnish to Agent:
(i) Annual Financial Statements. As soon as available, but in no event more than 90 days
after the end of each fiscal year of the Company occurring during the term hereof, annual
consolidated and consolidating financial statements of the Company and its consolidated
Subsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financial
statements shall: (a) be audited by independent certified public accountants selected by the
Company and acceptable to Agent; (b) be accompanied by a report of such accountants containing an opinion thereon acceptable to
Agent; (c) be prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a
statement of income, a statement of retained earnings, a statement of cash flows, and all notes
and schedules relating thereto.
(ii) Interim Financial Statements. Effective with the commencement of operations, as soon as
available, but in no event more than 30 days after the end of each month (other than the last
month in each fiscal year), a consolidated balance sheet of the Company and its consolidated
Subsidiaries, if any, as of the end of such month, a consolidated statement of income for the
Company and its consolidated Subsidiaries, if any for such period and for the period year to date,
and such other interim statements as Agent may reasonably request, all prepared in reasonable
detail and in comparative form in accordance with GAAP consistently applied and, if required by
written notice from Agent, certified by an authorized officer or employee of the Company
acceptable to Agent.
(iii) Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of
an Event of Default or a Potential Default.
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(iv) Notice of Non-Environmental Litigation. Promptly after the commencement thereof, notice
of the commencement of all actions, suits, or proceedings before any court, arbitrator, or
governmental department, commission, board, bureau, agency, or instrumentality affecting the
Company or any Subsidiary which, if determined adversely to the Company or any such Subsidiary,
could have a material adverse effect on the financial condition, properties, profits, or operations
of the Company or any such Subsidiary.
(v) Notice of Environmental Litigation, Etc. Promptly after receipt thereof, notice of the
receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a
condition that may require the Company or any Subsidiary to undertake or to contribute to a cleanup
or other response under environmental Laws, or which seek penalties, damages, injunctive relief, or
criminal sanctions related to alleged violations of such Laws, or which claim personal injury or
property damage to any person as a result of environmental factors or conditions.
(vi) Formation Documents. Promptly after any change in the Company’s operating agreement or
articles of organization (or like documents), copies of all such changes, certified by the
Company’s Secretary.
(vii) Budgets. As soon as available, but in no event more than 90 days after the end of any
fiscal year of the Company occurring during the term hereof, copies of the Company’s board-approved
annual budgets and forecasts of operations and capital expenditures.
(viii) Compliance Certificate. Together with each set of financial statements furnished to
Agent pursuant to Section 9(H) hereof for a period corresponding to a period for which one or more
of the financial covenants set forth in Section 11 hereof are required to be tested, a certificate
of an officer or employee of the Company acceptable to Agent setting forth calculations showing
compliance with each of the financial covenants that require compliance at the end of the period
for which the statements are being furnished.
(ix) Other Information. Such other information regarding the condition or operations,
financial or otherwise, of the Company or any Subsidiary as Agent may from time to time reasonably
request, including but not limited to copies of all pleadings, notices, and communications referred
to in Subsections 9(H)(iv) and (v) above.
(I) Management Contract. Provide a copy of the management contract with West Central
Cooperative no later than December 15, 2005, and obtain Agent’s written consent prior to making any
material changes therein.
(J) Risk Management Policies. Provide copies of risk management policies/contracts pertaining
to marketing of biodiesel and related by-products, and, procurement of soybean oil and related
input products no later than December 15, 2005. Furthermore, the Company agrees to obtain Agent’s
written consent prior to making any material changes therein.
SECTION 10. Negative Covenants. Unless otherwise agreed to in writing by Agent, while this
agreement is in effect the Company will not:
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(A) Borrowings. Create, incur, assume, or allow to exist, directly or
indirectly, any indebtedness or liability for borrowed money (including trade or bankers’
acceptances), letters of credit, or the deferred purchase price of property or services (including
capitalized leases), except for: (i) debt to Farm Credit; (ii) accounts payable to trade creditors
incurred in the ordinary course of business; (iii) current operating liabilities (other than for
borrowed money) incurred in the ordinary course of business; and (iv) debt of the Company to
miscellaneous creditors in an aggregate amount not to exceed $1,140,000.00, provided that such
debt is on terms and conditions, and with a lien priority acceptable to CoBank.
(B) Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge,
lien (including the lien of an attachment, judgment, or execution), security interest, or other
encumbrance of any kind upon any of its property, real or personal (collectively, “Liens”). The
foregoing restrictions shall not apply to: (i) Liens in favor of Farm Credit; (ii) Liens for
taxes, assessments, or governmental charges that are not past due; (iii) Liens and deposits under
workers’ compensation, unemployment insurance, and social security Laws; (iv) Liens and deposits
to secure the performance of bids, tenders, contracts (other than contracts for the payment of
money), and like obligations arising in the ordinary course of business, as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like
persons that secure obligations that are not past due; (vi) easements, rights-of-way,
restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere
with the occupation, use, and enjoyment of the property or assets encumbered thereby in the normal
course of its business or materially impair the value of the property subject thereto; and (vii)
Liens in favor of miscellaneous creditors to secure indebtedness permitted hereunder.
(C) Mergers, Acquisitions, Etc. Merge or consolidate with any other entity or acquire all or
a material part of the assets of any person or entity, or form or create any new Subsidiary or
affiliate, or commence operations under any other name, organization, or entity, including any
joint venture.
(D) Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any of its assets,
except in the ordinary course of business.
(E) Loans. Lend or advance money, credit, or property to any person or entity, except for
trade credit extended in the ordinary course of business.
(F) Contingent Liabilities. Assume, guarantee, become liable as a surety, endorse,
contingently agree to purchase, or otherwise be or become liable, directly or indirectly
(including, but not limited to, by means of a maintenance agreement, an asset or stock purchase
agreement, or any other agreement designed to ensure any creditor against loss), for or on account
of the obligation of any person or entity, except by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the Company’s business.
(G) Change in Business. Engage in any business activities or operations substantially
different from or unrelated to the Company’s present business activities or operations.
(H) Capital Expenditures. During any fiscal year of the Company commencing with the fiscal
year ending 2007, expend, in the aggregate, more than $500,000.00 for the acquisition of fixed or
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capital assets (including all obligations under any capitalized leases authorized under the
terms of this agreement, but excluding obligations under operating leases).
(I) Profit Distribution. Declare or pay any dividends, or make any distribution of assets to
the members/owners, or purchase, redeem, retire or otherwise acquire for value any of its
membership units, or allocate or otherwise set apart any sum for any of the foregoing, except that
in any fiscal year of the Company a distribution may be made to the Company’s members/owners of up
to 40% of the net profit (according to GAAP) for each fiscal year after receipt of the audited
financial statements for the pertinent fiscal year, provided that the Company is and will remain
in compliance with all loan covenants, terns and conditions. Furthermore, with respect to each
fiscal year of the Company, a distribution may be made to its members/owners in excess of 40% of
the net profits for such fiscal year if the Company has made the required “Free Cash Flow” payment
to Agent for such fiscal year as provided in the Construction and Term Loan Supplement dated June
6, 2005, and numbered R10291T01, and the Construction and Revolving Term Loan Supplement dated
June 6, 2005, and numbered RI0291T02, and any renewals, restatements and amendments thereof, and
provided that the Company will remain in compliance with all other loan covenants, terms and
conditions.
(J) Change to Operating Agreements, Etc. Amend or otherwise make any material changes to the
Company’s Articles of Organization, Operating Agreement, or other similar organizational
documents.
SECTION 11. Financial Covenants. Unless otherwise agreed to in writing, while this agreement
is in effect:
(A) Working Capital. The Company will have at the end of each period for which financial
statements are required to be furnished pursuant to Section 9(H) hereof an excess of current
assets over current liabilities (both as determined in accordance with GAAP consistently applied)
of not less than; (i) $3,200,000.00 beginning upon commencement of operations, certification of a
successful “performance test,” or March 31, 2006, whichever is earliest; and (ii) $4,500,000.00
beginning September 30, 2006, and continuing thereafter, except that in determining current
assets, any amount available under the Construction and Revolving Term Loan Supplement hereto
(less the amount that would be considered a current liability under GAAP if fully advanced) may be
included.
(B) Net Worth. The Company will have at the end of each period for which financial statements
are required to be furnished pursuant to Section 9(H) hereof an excess of total assets over total
liabilities (both as determined in accordance with GAAP consistently applied) of not less than:
(i) $21,000,000.00 beginning upon commencement of operations; and (ii) $23,000,000.00 beginning
September 30, 2006, and continuing thereafter.
(C) Debt Service Coverage Ratio. The Company will have at the end of each fiscal year of the
Company effective with fiscal year ending 2006, a “Debt Service Coverage Ratio” (as defined
below), for that year of not less than 1.50 to 1.00. For purposes hereof, the tern “Debt Service
Coverage Ratio” shall mean the following (all as calculated for the most current year-end in
accordance with GAAP consistently applied): (i) net income (after taxes), plus depreciation and
amortization; divided by (ii) all current portion of long term debt for the prior period (all
scheduled long term debt payments, but not to include any Free Cash Flow payments as defined in
Section 6 of the applicable Supplement).
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SECTION 12. Events of Default. Each of the following shall constitute an “Event of
Default” under this agreement:
(A) Payment Default. The Company should fail to make any payment to Agent, or purchase any
equity in Farm Credit when due.
(B) Representations and Warranties. Any representation or warranty made or deemed made by
the Company herein or in any Supplement, application, agreement, certificate, or other document
related to or furnished in connection with this agreement or any Supplement, shall prove to have
been false or misleading in any material respect on or as of the date made or deemed made.
(C) Certain Affirmative Covenants. The Company or, to the extent required hereunder, any
Subsidiary should materially fail to perform or comply with Sections 9(A) through 9(H)(ii),
9(H)(iv) through 9(H)(viii) or any reporting covenant set forth in any Supplement hereto, and such
failure continues for 15 days after written notice thereof shall have been delivered by Agent to
the Company.
(D) Other Covenants and Agreements. The Company or, to the extent required hereunder, any
Subsidiary should fail to perform or comply with any other covenant or agreement contained herein
or in any other Loan Document or shall use the proceeds of any loan for an unauthorized purpose.
(E) Cross-Default. The Company should, after any applicable grace period, breach or be in
default under the terms of any other agreement between the Company and Farm Credit.
(F) Other Indebtedness. The Company or any Subsidiary should fail to pay when due any
indebtedness to any other person or entity for borrowed money or any long-term obligation for the
deferred purchase price of property (including any capitalized lease), or any other event occurs
which, under any agreement or instrument relating to indebtedness or obligation, has the effect of
accelerating or permitting the acceleration of such indebtedness or obligation, whether or not
such indebtedness or obligation is actually accelerated or the right to accelerate is conditioned
on the giving of notice, the passage of time, or otherwise.
(G) Judgments. A judgment, decree, or order for the payment of money in excess of $50,000.00
shall be rendered against the Company or any Subsidiary and either: (i) enforcement proceedings
shall have been commenced, (ii) a Lien prohibited under Section 10(B) hereof shall have been
obtained, or (iii) such judgment, decree, order, or Lien shall continue unsatisfied and in effect
for a period of 20 consecutive days without being vacated, discharged, satisfied, or stayed pending
appeal.
(H) Insolvency, Etc. The Company or any Subsidiary shall: (i) become insolvent or shall
generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as
they come due; or (ii) suspend its business operations or a material part thereof or make an
assignment for the benefit of creditors; or (iii) apply for, consent to, or acquiesce in the
appointment of a trustee, receiver, or other custodian for it or any of its property or, in the
absence of such application, consent, or acquiescence, a trustee, receiver, or other custodian is
so appointed; or (iv) commence or have commenced against it any
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proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution, or liquidation Law of any jurisdiction.
(I) Material Adverse Change. Any material adverse change occurs, as reasonably determined by
Agent, in the Company’s financial condition, results of operation, or ability to perform its
obligations hereunder or under any instrument or document contemplated hereby.
SECTION 13. Remedies. Upon the occurrence and during the continuance of an Event of Default
or any Potential Default, Farm Credit shall have no obligation to continue to extend credit to the
Company and may discontinue doing so at any time without prior notice. For all purposes hereof,
the term “Potential Default” means the occurrence of any event which, with the passage of time or
the giving of notice or both would become an Event of Default. In addition, upon the occurrence
and during the continuance of any Event of Default, Farm Credit or Agent may, upon notice to the
Company, terminate any commitment and declare the entire unpaid principal balance of the loans,
all accrued interest thereon, and all other amounts payable under this agreement, all Supplements,
and the other Loan Documents to be immediately due and payable. Upon such a declaration, the
unpaid principal balance of the loans and all such other amounts shall become immediately due and
payable, without protest, presentment, demand, or further notice of any kind, all-of which are
hereby expressly waived by the Company. In addition, upon such an acceleration:
(A) Enforcement. Farm Credit or Agent may proceed to protect, exercise, and enforce such
rights and remedies as may be provided by this agreement, any other Loan Document or under Law.
Each and every one of such rights and remedies shall be cumulative and may be exercised from time
to time, and no failure on the part of Farm Credit or Agent to exercise, and no delay in
exercising, any right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude any other or future exercise thereof, or the
exercise of any other right. Without limiting the foregoing, Agent may hold and/or set off and
apply against the Company’s obligations to Farm Credit cash collateral held by Farm Credit or
Agent, or any balances held by Farm Credit or Agent for the Company’s account (whether or not such
balances are then due).
(B) Application of Funds. Agent may apply all payments received by it to the Company’s
obligations to Farm Credit in such order and manner as Agent may elect in its sole discretion.
In addition to the rights and remedies set forth above: (i) if the Company fails to purchase any
equity in Farm Credit when required or fails to make any payment to Agent when due, then at Agent’s
option in each instance, such payment shall bear interest from the date due to the date paid at 4%
per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan; and
(ii) after the maturity of any loan (whether as a result of acceleration or otherwise), the unpaid
principal balance of such loan (including without limitation, principal, interest, fees and
expenses) shall automatically bear interest at 4% per annum in excess of the rate(s) of interest
that would otherwise be in effect on that loan. All interest provided for herein shall be payable
on demand and shall be calculated on the basis of a year consisting of 360 days.
SECTION 14. Broken Funding Surcharge. Notwithstanding any provision contained in any
Supplement giving the Company the right to repay any loan prior to the date it would otherwise be
due and payable, the Company agrees that in the event it repays any fixed rate balance prior to its
scheduled
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due date or prior to the last day of the fixed rate period applicable thereto (whether such
payment is made voluntarily, as a result of an acceleration, or otherwise), the Company will pay
to Agent a surcharge in an amount equal to the greater of: (i) an amount that would result in Farm
Credit, Agent, and all subparticipants being made whole (on a present value basis) for the actual
or imputed funding losses incurred by Farm Credit, Agent, and all subparticipants as a result
thereof; or (ii) $300.00. Notwithstanding the foregoing, in the event any fixed rate balance is
repaid as a result of the Company refinancing the loan with another lender or by other means, then
in lieu of the foregoing, the Company shall pay to Agent a surcharge in an amount sufficient (on a
present value basis) to enable Farm Credit, Agent, and all subparticipants to maintain the yield
they would have earned during the fixed rate period on the amount repaid. Such surcharges will be
calculated in accordance with methodology established by Farm Credit, Agent, and all
subparticipants (copies of which will be made available to the Company upon request).
SECTION 15. Complete Agreement, Amendments. This agreement, all Supplements, and all other
instruments and documents contemplated hereby and thereby, are intended by the parties to be a
complete and final expression of their agreement. No amendment, modification, or waiver of any
provision hereof or thereof, and no consent to any departure by either party herefrom or
therefrom, shall be effective unless signed by all parties hereto, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given. In
the event this agreement is amended or restated, each such amendment or restatement shall be
applicable to all Supplements hereto.
SECTION 16. Other Types of Credit. From time to time, Farm Credit may extend other types of
credit to or for the account of the Company. In the event the parties desire to do so under the
terms of this agreement, such extensions of credit may be set forth in any Supplement hereto and
this agreement shall be applicable thereto.
SECTION 17. Applicable Law. Except to the extent governed by applicable federal law, this
agreement and each Supplement shall be governed by and construed in accordance with the laws of
the State of Colorado, without reference to choice of law doctrine.
SECTION 18. Notices. All notices hereunder shall be in writing and shall be deemed to be
duly given upon delivery if personally delivered or sent by telegram or facsimile transmission, or
three days after mailing if sent by express, certified or registered mail, to the parties at the
following addresses (or such other address for a party as shall be specified by like notice):
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If to Agent, as follows:
|
If to the Company, as follows: | |
For general correspondence purposes:
|
Western Iowa Energy, LLC | |
CoBank, ACB
|
XX Xxx 000 | |
X.X. Xxx 0000
|
Xxxx Xxxx, Xxxx 00000 | |
Xxxxxx, Xxxxxxxx 00000-0000 |
||
| Attention: Manager | ||
For direct delivery purposes, when desired:
|
Fax No.: (000) 000-0000 | |
CoBank, ACB |
||
0000 Xxxxx Xxxxxx Xxxxxx |
||
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000 |
||
Attention: Credit Information |
||
Services Fax No.: (000) 000-0000 |
SECTION 19. Taxes and Expenses. To the extent allowed by law, the Company agrees to pay all
reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained
or employed by Agent, including expenses of in-house counsel of Agent) incurred by Agent and any
participants from Farm Credit in connection with the administration, collection, and enforcement
of this agreement and the other Loan Documents, including, without limitation, all costs and
expenses incurred in perfecting, maintaining, determining the priority of, and releasing any
security for the Company’s obligations to Farm Credit, and any stamp, intangible, transfer, or
like tax payable in connection with this agreement or any other Loan Document.
SECTION 20. Effectiveness and Severability. This agreement shall continue in effect until:
(i) all indebtedness and obligations of the Company under this agreement, all Supplements, and all
other Loan Documents shall have been paid or satisfied; (ii) Agent has no commitment to extend
credit to or for the account of the Company under any Supplement; and (iii) either party sends
written notice to the other terminating this agreement. Any provision of this agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof.
SECTION 21. Successors and Assigns. This agreement, each Supplement, and the other Loan
Documents shall be binding upon and inure to the benefit of the Company and Farm Credit and their
respective successors and assigns, except that the Company may not assign or transfer its rights
or obligations under this agreement, any Supplement or any other Loan Document without the prior
written consent of Agent.
SECTION 22. Participations, Etc. From time to time, Farm Credit may sell to one or more banks,
financial institutions or other lenders a participation in one or more of the loans or other
extensions of credit made pursuant to this agreement. However, no such participation shall relieve
Farm Credit of any commitment made to the Company under any Supplement hereto. In connection with
the foregoing, Farm Credit may disclose information concerning the Company and its Subsidiaries to
any participant or prospective participant, provided that such participant or prospective
participant agrees to keep such information confidential. Farm Credit agrees to give written
notification to the Company of any sale of
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participation interests other than to the Agent. Retained loans by Farm Credit shall be
entitled to patronage distributions as provided under the bylaws of Farm Credit.
SECTION 23. Administrative Fee. The Company agrees to pay to Agent on June
30, 2006, and on each June 30 thereafter, for as long as the Company has commitments from Farm
Credit, an administrative fee in the amount of $10,000.00.
SECTION 24. Counterpart Signatures. This agreement, each Supplement and any other
Loan Document may be executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original and
shall be binding upon all parties and their respective permitted successors and assigns, and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed by
their duly authorized officers as the date shown above.
| FARM CREDIT SERVICES OF AMERICA, FLCA |
WESTERN IOWA ENERGY, LLC | |||||
By:
|
/s/ Xxxxx Xxxxx | By: | /s/ Xxxx Xxxxx | |||
Title:
|
Vice President | Title: | Chairman | |||
