SERIES C UNIT ISSUANCE AGREEMENT
THIS SERIES C UNIT ISSUANCE AGREEMENT (this "Agreement") is entered into as
of the 7th day of March, 2008, by and among ICM, Inc. a corporation organized
and existing under the laws of Kansas ("ICM"), and Southwest Iowa Renewable
Energy, LLC, a limited liability company organized and existing under the laws
of Iowa ("SIRE," and together with ICM, the "Parties" and each individually a
"Party").
RECITALS
WHEREAS, ICM holds Series C Units in SIRE pursuant to the terms of that
certain Second Amended and Restated Operating Agreement of SIRE, as amended
effective March 7, 2008 (the "Operating Agreement");
WHEREAS, pursuant to that certain Promissory Note of SIRE dated the date
hereof and payable to the order of Commerce Bank (the "Bridge Lender") in the
maximum principal amount of up to $35,800,000.00 (as the same may from time to
time be amended, modified, extended, renewed or restated, the "Bridge Note"),
the Bridge Lender has agreed to make a term loan to SIRE in the maximum
principal amount of up to $36,000,000) (as the same may from time to time be
amended, modified, extended, renewed or restated, the "Bridge Loan") to finance
a portion of the costs incurred or to be incurred by SIRE in connection with
SIRE's construction of an ethanol facility in Council Bluffs, Iowa (the
"Facility");
WHEREAS, in connection with the transactions contemplated by the Bridge
Loan: (1) ICM has caused Intrust Bank, N.A. Bank (the "ICM L/C Bank") to issue
its Irrevocable Letter of Credit No. 08SBLC0345 of even date herewith in the
original face amount of $8,640,000 for the account of ICM and for the benefit of
the Bridge Lender (as the same may from time to time be amended, modified,
extended, renewed or restated, the "ICM L/C"); (2) ICM has executed and
delivered to the ICM L/C Bank a Reimbursement Agreement of even date herewith
(as the same may from time to time be amended, modified, extended, renewed or
restated, the "ICM Reimbursement Agreement") pursuant to which ICM is required
to reimburse the ICM L/C Bank for all payments made by the ICM L/C Bank to the
Bridge Lender under or in respect of the ICM L/C; (3) Bunge has caused UMB Bank
(the "Bunge L/C Bank") to issue its Irrevocable Letter of Credit No. 08SBLC0345
of even date herewith in the original face amount of $27,360,000 for the account
of Bunge and for the benefit of the Bridge Lender (as the same may from time to
time be amended, modified, extended, renewed or restated, the "Bunge L/C"); and
(4) Bunge has executed and delivered to the Bunge L/C Bank a Reimbursement
Agreement of even date herewith (as the same may from time to time be amended,
modified, extended, renewed or restated, the "Bunge Reimbursement Agreement")
pursuant to which Bunge is required to reimburse the Bunge L/C Bank for all
payments made by the Bunge L/C Bank to the Bridge Lender under or in respect of
the Bunge L/C;
WHEREAS, in connection with the transactions contemplated by this
Agreement, SIRE is undertaking a private placement of Units (as defined in the
Operating Agreement) pursuant to an exemption from registration under the
Securities Act of 1933 and the regulations promulgated thereunder (the "Private
Placement"); and
WHEREAS, in order to induce ICM to cause the ICM L/C Bank to issue the ICM
L/C for the benefit of the Bridge Lender and in partial consideration for ICM
causing the ICM L/C to be issued, SIRE has agreed to issue Series C Units to ICM
upon the terms and subject to the conditions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and other
consideration hereinafter set forth, the receipt and sufficiency of which hereby
are acknowledged, the Parties agree as follows:
1. Issuance of Series C Units With Respect to L/C. If (a) the ICM L/C Bank
makes any payment to the Bridge Lender under or in respect of the ICM L/C or (b)
ICM makes any payment to the Bridge Lender which reduces amounts owed by SIRE
under or in respect of the Bridge Loan when any such amounts become due and
payable (whether such amounts consist of principal, interest, fees and/or other
amounts) (and SIRE hereby agrees that ICM shall have the right to make any such
payments for the account and benefit of SIRE at any time in ICM's sole and
absolute discretion after such amounts become due and payable), then ICM shall
notify SIRE in writing (the "L/C Payment Notice") of the making of, and the
amount of, any such payments made by the ICM L/C Bank or ICM pursuant to (a) or
(b) above (each, a "Bridge Loan Payment") and SIRE shall immediately (but in no
event later than three (3) business days following SIRE's receipt of the L/C
Payment Notice from ICM of the applicable Bridge Loan Payment) reimburse ICM for
the amount of the Bridge Loan Payment (the "L/C Reimbursement Obligation") by
issuing to ICM (no later than three (3) business days following SIRE's receipt
of the L/C Payment Notice from ICM of the applicable Bridge Loan Payment) that
number of Series C Units which are determined by dividing the amount of the
Bridge Loan Payment contained in the L/C Payment Notice by the lesser of (y)
$3,000, or (z) one half (1/2) of the lowest purchase price paid by any party for
a Unit who acquired (or who has entered into any agreement, instrument or
document to acquire) such Unit after the date hereof but prior to the date of
the Bridge Loan Payment as part of the Private Placement.. Any portion of the
L/C Reimbursement Obligation which is not paid or satisfied in full on or before
the date which is three (3) business days following the date of SIRE's receipt
of the L/C Payment Notice from ICM of the applicable Bridge Loan Payment shall
bear interest from its due date until paid in full at a rate per annum equal to
the lesser of (a) ___% per annum, and (b) the maximum rate allowable under
applicable law. "LIBOR" means the daily average of interbank offered rates for
US Dollar deposits in the London market based on quotations at major banks, as
published under the heading "London Interbank Offered Rates (LIBOR)" in the
"Money Rates" column of The Wall Street Journal for the one month maturity.
2. Preemptive Right to Purchase Units. ICM shall have the right to purchase
its Pro Rata Share of any Units that SIRE may from time to time issue after the
date of this Agreement. ICM's "Pro Rata Share" for purposes of this right is the
ratio of (a) the number of Series C Units any other Units of SIRE then owned by
ICM (and including any Series C Units which must be issued to ICM pursuant to
either Section 1 or Section 2), and (b) the total number of Units of SIRE then
outstanding. In addition to ICM's rights under the Operating Agreement, if SIRE
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proposes to issue any Units, it shall give ICM written notice of its intention
to issue such Units (a "Unit Notice"), describing the purchase price and the
general terms upon which SIRE proposes to issue such Units. ICM shall have ten
(10) business days from the date of actual receipt of any such Unit Notice to
agree in writing to purchase up to its Pro Rata Share of Units upon the terms
contained in the Notice. ICM shall exercise such right by giving written notice
to SIRE and stating therein the quantity of Units to be purchased (not to exceed
ICM's Pro Rata Share). If ICM fails to so agree in writing within such ten (10)
day period to purchase ICM's full Pro Rata Share of any Units, then ICM shall
forfeit the right hereunder to purchase that part of its Pro Rata Share of such
new Units that ICM did not so agree to purchase. The foregoing shall not
preclude ICM from purchasing more than its Pro Rata Share of Units to the extent
offered by SIRE.
3. Representations of SIRE. SIRE hereby represents and warrants to ICM as
follows: (a) the Units to be issued by SIRE pursuant to the terms of this
Agreement have been duly and validly authorized and, when issued to ICM pursuant
to the terms of this Agreement, will be duly and validly issued, fully paid and
non-assessable and free of any security interest, other encumbrance or adverse
claim and free of any statutory and contractual preemptive rights, rights of
first refusal and similar rights; and (b) the execution, delivery and
performance of this Agreement by SIRE, the issuance of the Units to ICM in
accordance with the terms of this Agreement, and the consummation of the
transactions contemplated hereby will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any event which, with
notice, lapse of time or both, would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness the right to
require the repurchase, redemption or repayment of all or a part of such
indebtedness under) (or result in the creation or imposition of a lien, charge
or encumbrance on any property or assets of SIRE under) (i) the Articles of
Organization of SIRE or the Operating Agreement, or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument
to which SIRE is a party or by which any of its properties may be bound or
affected, or (iii) any federal, state, local or foreign law, regulation or rule,
or (iv) any decree, judgment or order applicable to SIRE or any of its
properties.
4. Covenants. SIRE covenants and agrees that:
(a) its Board of Managers shall not allow, or propose to allow, any
amendment, modification or change to SIRE's Articles of Organization or the
Operating Agreement, or enter into any other agreement or instrument, which is
inconsistent with the terms of this Agreement, or that would otherwise limit the
rights, privileges or preferences of ICM under the terms of this Agreement or
the rights, privileges or preferences of the Units in existence under the
Operating Agreement as amended and restated on the date hereof;
(b) in the event that (a) the Bunge L/C Bank makes any payment to the
Bridge Lender under or in respect of the Bunge L/C or (b) Bunge makes any
payment to the Bridge Lender which reduces amounts owed by SIRE under or in
respect of the Bridge Loan (whether such amounts consist of principal, interest,
fees and/or other amounts) (and SIRE hereby agrees that Bunge shall have the
right to make any such payments when any such amounts become due and payable for
the account and benefit of SIRE at any time in Bunge's sole and absolute
discretion
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after such amounts become due and payable), then SIRE shall either reimburse
Bunge for the amount of such payments (on a pro-rata basis with SIRE's payments
of the L/C Reimbursement Obligation) or in lieu thereof issue to Xxxxx Series C
Units as set forth in that certain Series C Unit Issuance Agreement between SIRE
and Bunge of even date herewith and SIRE shall not issue any other series of
Units to Bunge in connection with any such payments made by Bunge. SIRE may not
amend such Series C Unit Issuance Agreement without the prior written consent of
ICM;
(c) SIRE will use best efforts to raise funds in the Private Placement, or
in such other form of equity or debt financing which SIRE's Board of Directors
deems necessary, in an amount sufficient to pay off the Bridge Loan in full
prior to its maturity and SIRE will use all funds received by SIRE pursuant to
the Private Placement or such other equity or debt financing first to reduce
amounts owed by SIRE under or in respect of the Bridge Loan;
(d) SIRE shall pay to ICM a fee in an amount equal to 6% per annum
(computed on an actual day, 360 day year basis) of the undrawn face amount of
the ICM L/C (the "Fee"). The Fee shall be due and payable on the maturity date
of the Bridge Loan, or if later, on the date of the expiration or termination of
the ICM L/C. SIRE shall also reimburse ICM for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, paid or incurred by ICM in connection with the transactions
contemplated by this Agreement. ICM shall invoice SIRE for all such costs and
expenses on a monthly basis. SIRE shall pay all invoices within ten (10) days of
receipt by SIRE. Any amounts not paid by SIRE when due shall bear interest at a
rate per annum equal to the lesser of (a) ___% per annum; and (b) the maximum
rate allowable under applicable law; and
(e) upon execution of this Agreement, and upon each issuance to ICM of
Units pursuant to the terms of this Agreement, counsel for SIRE shall deliver to
ICM a legal opinion in the form of Exhibit A attached hereto.
5. Miscellaneous.
(a) Amendment; Entire Agreement; No Third Party Beneficiaries. No
amendments or modifications of this Agreement shall be valid unless evidenced in
writing and signed by duly authorized representatives of both the Parties. This
Agreement constitutes the entire agreement among the Parties with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, among the Parties with respect to the subject matter
hereof and is not intended to confer upon any other person any rights or
remedies hereunder.
(b) Successors and Assigns. This Agreement shall not be assignable by
either Party without the prior written consent of the other Party hereto.
Subject to the foregoing sentence, this Agreement shall be binding upon and
inure to the benefit of the Parties and their successors and permitted assigns.
(c) Notices. Any written notice, direction, instruction, request or other
communication required or permitted under this Agreement shall be deemed to have
been duly
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given on the date of receipt, and shall be either served personally or by
facsimile to the Party to whom notices are to be given, or mailed to the Party
to whom notices are to be given, by first class registered or certified mail,
return receipt requested, postage prepaid, and addressed to the addressee at the
address stated opposite its name below, or at the most recent address specified
by written notice given to the other Party in the manner provided in this
Section 5(c).
If to ICM:
ICM, Inc.
000 X. Xxxxx Xx.
Xxxxxxx, XX 00000
Attn: _______________
Facsimile: 000-000-0000
If to SIRE:
Southwest Iowa Renewable Energy, LLC
000 X. Xxx 0, XX Xxx 000
Xxxxxxx, XX 00000-0000
Attn: General Manager
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Husch Xxxxxxxxx Xxxxxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Facsimile: (000) 000-0000
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Missouri (without reference
to conflict of law principles).
(e) Injunctive Relief. In addition to its right to damages and any other
right it may have, each Party hereto shall have the right to obtain injunctive
or other equitable relief to restrain any breach or threatened breach of or
otherwise to specifically enforce this Agreement, it being agreed that money
damages alone would be inadequate to compensate such Party and would be an
inadequate remedy for such breach.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and the Parties hereto may execute this Agreement by signing any
such counterpart.
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(g) Publicity. No Party shall, without the approval of the other, make any
press release or other public announcement concerning the existence of this
Agreement or the terms of this Agreement, except as and to the extent such Party
determines that such action is advisable or required by law, in which case the
other Party shall be advised and the Parties shall use their reasonable efforts
to cause a mutually agreeable release or announcement to be issued.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
Southwest Iowa Renewable Energy, LLC
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
Title: President & CEO
ICM, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice-President - Finance
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EXHIBIT A
OPINION OF HUSCH XXXXXXXXX XXXXXXX LLP
March 7, 2008
ICM, Inc.
000 X. Xxxxx Xx.
Xxxxxxx, XX 00000
Re: Series C Unit Issuance Agreement, dated March 7, 2008, by and among
ICM, Inc. and Southwest Iowa Renewable Energy, LLC
Dear Ladies and Gentlemen:
We have acted as counsel for Southwest Iowa Renewable Energy, LLC, an Iowa
limited liability company ("SIRE"), in connection with the execution of that
certain Series C Unit Issuance Agreement, dated March 7, 2008, by and among ICM,
Inc. ("ICM") and SIRE (the "Transaction Document"). This opinion is delivered
pursuant to Section 5(e) of the Transaction Document. Capitalized terms used
herein without definition shall have the respective meanings ascribed to them in
the Transaction Document.
Section 1. In rendering this opinion, we have reviewed an original as
signed, or a copy of the original showing signatures and identified to us as a
true copy of the original as signed, of the Transaction Document.
In rendering the following opinions, as to factual matters that affect our
opinions, we have, with your approval, relied on (and assumed the accuracy of)
certificates, statements and other representations of officers of SIRE and
others including certificates of public officials (the "Public Documents"). We
have also reviewed the organizational documents of SIRE, including its Articles
of Organization, Amended and Restated Operating Agreement and such other matters
as we have deemed appropriate to giving the opinions contained herein.
Section 2. Based on the foregoing and in reliance thereon and on the
assumptions and subject to the qualifications and limitations set forth in this
opinion, we are of the opinion that:
2.1 SIRE is a limited liability company, duly organized, validly existing
and in good standing under the laws of the State of Iowa.
2.2 SIRE has the limited liability company power and authority to enter
into the Transaction Document and to consummate the transactions provided for
therein.
2.3 The Transaction Document has been duly authorized, executed and
delivered by SIRE, and is a valid and binding agreement, enforceable against
SIRE in accordance with its terms.
2.4 The execution, delivery and performance by SIRE of the Transaction
Document is not in contravention of or in conflict with any term or provision of
the Articles of Organization and Amended and Restated Operating Agreement of
SIRE or violate and will not violate any provision of any law, statute, rule or
regulation, to our knowledge, presently in effect having applicability to SIRE.
2.5 To the best of our knowledge, the execution, delivery and performance
by SIRE of the Transaction Document will not constitute a material breach or
default under any material agreements to which SIRE is a party.
Section 3. Our opinions are based on the assumptions (upon which we have
relied with your consent) and subject to the qualifications and limitations, set
forth in this letter, including the following:
3.1 We express no opinion as to any laws other than the laws of the State
of Iowa. We express no opinion as to the effect on the Transaction Document of
local law which shall include charters, ordinances, administrative opinions and
rules and regulations of cities, counties, towns, municipalities and special
political subdivisions (whether created or enabled through legislative action at
the federal, state or regional level).
3.2 We have assumed for purposes of this opinion that: (a) the parties to
the Transaction Document other than SIRE (the "Other Parties") are duly
organized, validly existing and in good standing with full power and authority
to enter into, execute, deliver and perform the Transaction Document and their
respective obligations thereunder; (b) the Transaction Document has been duly
authorized by the Other Parties and the Other Parties have duly executed and
delivered the Transaction Document to which they are a signatory; (c) the Other
Parties have satisfied those legal requirements that are applicable to each of
them to the extent necessary to make the Transaction Document enforceable
against each of them; (d) the Other Parties have complied with all legal
requirements pertaining to each of their status as such status relates to their
rights to enforce the Transaction Document against SIRE; (e) each natural person
executing the Transaction Document is legally competent; (f) all signatures are
genuine, the Transaction Document submitted to us as original is authentic and
any copies submitted to us conform to the original; (g) the Transaction Document
is complete (including, without limitation, all amendments and exhibits
thereto); (h) any certifications dated prior to closing remain true as of
closing; (i) each Public Document is accurate, complete and authentic and all
official public records are accurate and complete; (j) there has not been any
mutual mistake of fact or fraud, duress or undue influence; (k) the conduct of
the parties to the Transaction Document has complied with any requirement of
good faith, fair dealing and conscionability; (l) the Other Parties and any
agent acting for the Other Parties in connection with the Transaction Document
have acted in good faith and without notice of any defense against the
enforcement of any rights created by, or adverse claim to any property or
security interest transferred or created as part of, the Transaction Document;
and (m) there are no agreements or understandings among the parties,
written or oral, and there is no usage of trade or course of prior dealing among
the parties that would, in either case, define, supplement or qualify the terms
of the Transaction Document.
3.3 Our opinions are subject to: (i) the effect of applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent transfer or
fraudulent conveyance and other similar laws affecting creditor's rights
generally and judicially developed doctrines relevant to any of the foregoing
laws, such as substantive consolidation of entities; (ii) limitations imposed by
equitable doctrines, including without limitation, limitations upon the specific
enforceability of provisions of the Transaction Document, concepts of
materiality, reasonableness (including commercial reasonableness of the sale or
disposition of collateral), good faith and fair dealing, and the availability of
injunctive relief or other equitable remedies (regardless whether considered in
a proceeding in equity or at law); and (iii) judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other costs.
Enforceability of certain provisions purporting to waive the benefits of
statutory provisions or constitutional or common law rights or providing for
indemnification, exculpation or release may be limited or otherwise affected by
limitations based on statutes, case law or public policy. The opinions in this
letter do not include any opinion as to the enforceability of (a) any choice of
law provision; (b) a remedy under certain circumstances where another remedy has
been elected; and (c) the balance of the Transaction Document, where parts of
the Transaction Document may be unenforceable under circumstances in which the
unenforceable portion is an essential part of the agreed upon exchange.
3.4 As to matters of fact, we have assumed all representations of SIRE and
the Other Parties in the Transaction Document are true. When an opinion is
stated to be "to the best of our knowledge" or the statement is made that "we
have no knowledge," or other words of similar import appear, the language means
only that we have no actual knowledge to the contrary and does not indicate or
imply any investigation or inquiry, of SIRE or others, on our part, other than
our review of the representations and warranties contained in the Transaction
Document. For this purpose, "we" means only those attorneys within our firm who
have done substantive work on this opinion.
3.5 We express no opinion with respect to the application or effect of the
securities or environmental laws, regulations or codes of the State of Iowa or
any other jurisdiction.
3.6 We neither express nor imply any opinion as to the creation, perfection
or priority of any security interest or lien against the real or personal
property of SIRE.
3.7 This opinion is limited to the matters specifically stated in this
letter, and no further opinion is to be implied or may be inferred beyond the
opinions specifically stated herein. Unless otherwise stated herein, we have
made no independent investigation regarding factual matters. This opinion is
based solely on the state of the law as of the date of this opinion, and we
specifically disclaim any obligation to monitor any of the matters stated in
this opinion or to advise the persons entitled to rely on this opinion of any
change in law or fact after the date of this opinion which might affect any of
the opinions stated herein.
This opinion is rendered solely for your benefit in connection with the
execution and delivery by SIRE of the Transaction Document, and may not be
released to or relied upon by any other person or for any other purpose without
our prior written consent.
Yours very truly,
