Execution Version
Loan Agreement
by and between
Arbor Bank,
as Lead Lender
and
NEDAK Ethanol, LLC,
a Nebraska limited liability company,
as Borrower
Dated as of June 19, 2007
Table of Contents
Page
----
Section 1. Definitions.................................................1
Section 2. Borrower Representations....................................4
Section 3. Lead Lender Representations.................................5
Section 4. The Loan....................................................7
Section 5. The Borrower's Note.........................................7
Section 6. The Pledge..................................................8
Section 7. Loan Repayments and Prepayments.............................9
Section 8. Debt Service Reserve Fund..................................10
Section 9. Capitalized Interest Fund..................................10
Section 10. Disbursement of Loan Proceeds..............................11
Section 11. Transfer and Assignments .................................12
Section 12. Participations.............................................12
Section 13. Assignment of Redevelopment Contract.......................12
Section 14. Defaults and Remedies......................................13
Section 15. Notices....................................................13
Section 16. Severability...............................................13
Section 17. Binding Effect.............................................13
Section 18. This Agreement Governs.....................................14
Section 19. Amendments.................................................14
Section 20. Counterparts...............................................14
Section 21. Governing Law..............................................14
Section 22. Credit Agreement Notice....................................15
Exhibit A Qualified Project Costs
Exhibit B Resolutions of Borrower
Exhibit C Form of Borrower's Note
Exhibit D Form of Security Agreement
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LOAN AGREEMENT
This Loan Agreement (this "Agreement"), dated as of June 19, 2007, is by
and between the NEDAK Ethanol, LLC, a Nebraska limited liability company as
borrower (the "Borrower") and Arbor Bank, a Nebraska banking corporation (the
"Lead Lender").
RECITALS:
A. The Borrower has entered into a Redevelopment Contract (the
"Redevelopment Contract") with the City of Xxxxxxxx, Nebraska (the "Issuer").
B. Pursuant to the Redevelopment Contract, the Borrower agreed to acquire,
construct and equip a 40 million gallon per year nameplate ethanol production
plant (the "Facility") located within the boundaries of the Issuer on land owned
by the Borrower (the "Redevelopment Project") and designated by Issuer as a
redevelopment area pursuant to the Act (as hereinafter defined) (the
"Redevelopment Area").
C. Pursuant to the Redevelopment Contract, the Issuer agreed to provide a
grant (the "Grant") to the Borrower to reimburse the Borrower for expenditures
qualifying under the Act (as hereinafter defined) that Borrower will make or has
made to acquire, construct and equip the Redevelopment Project (the "Qualified
Project Costs") which are payable from the proceeds of TIF Indebtedness (as
hereinafter defined) pursuant to the Act.
D. Pursuant to the Redevelopment Contract, the Issuer agreed to provide the
Grant only after the Borrower has provided to the Issuer satisfactory evidence
that private funds have been committed to the Redevelopment Project in amounts
sufficient to complete the Redevelopment Project.
E. The proceeds of this Loan (the "Loan Proceeds"), together with the
proceeds of the Senior Credit Facility (as defined herein), shall constitute the
private funds in amounts sufficient to complete the Redevelopment Project, as
necessary to induce the Issuer to provide the Grant.
F. Pursuant to this Agreement, the Borrower will use a portion of the Loan
Proceeds to fund the Debt Service Reserve Fund and the Capitalized Interest Fund
required to be established, and will pay a portion of the costs of issuing the
Loan (the "Closing Costs").
G. The Lead Lender proposes to make the Loan, and the Borrower desires to
borrow the Loan Proceeds, upon the terms and conditions set forth in this
Agreement, the Pledge and the Borrower's Note.
The Borrower and the Lead Lender, each in the consideration of the
representations, covenants and agreements of the other as set forth in this
Agreement, mutually represent, covenant and agree as follows:
THE AGREEMENT
Section 1. Definitions. In this Agreement, capitalized terms shall have the
following respective meanings unless the context clearly requires elsewise:
"Act" shall mean Section 2 of Article VIII of the Nebraska Constitution,
Sections 18-2101 through 18-2154 of the Reissue Revised Statutes of Nebraska,
1997, as amended, and acts amendatory or supplemental thereto from time to time,
pursuant to which authority the Issuer pledged the TIF Indebtedness secured by
the Issuer's Series A Note and Issuer's Series B Note.
"Agreement" shall mean this Loan Agreement, dated as of June 19, 2007, by
and between the Borrower and the Lead Lender, as from time to time amended as
permitted herein.
"Borrower" shall mean NEDAK Ethanol, LLC, and its successors and assigns.
"Borrower's Note" shall have the meaning given that term in Section 5
hereof.
"Borrower's Resolutions" shall have the meaning given that term in Section
2(b) and set forth on Exhibit B attached hereto.
"Capitalized Interest Amount" shall mean the amount of $870,850.00 to be
deposited to the Capitalized Interest Fund from Loan Proceeds upon the closing
of the Loan.
"Capitalized Interest Fund" shall mean the capitalized interest account
established and maintained pursuant to Section 9 of this Agreement.
"Closing Costs" shall mean those amounts listed in Section 2(q) hereinbelow
to be paid by the Borrower from the Loan Proceeds upon the closing of the Loan,
which the Lead Lender shall disburse directly to the parties entitled to such
payments as set forth in Section 2(q).
"Debt Service Reserve Fund" shall mean the debt service reserve account
established and maintained pursuant to Section 8 of this Agreement.
"Debt Service Reserve Fund Requirement" shall mean the amount equal to ten
percent (10%) of the original stated principal amount of the Loan, or
$686,400.00, which amount shall be deposited to the Debt Service Reserve Fund by
the Lead Lender on behalf of the Borrower from the Loan Proceeds upon the
closing of the Loan.
"Event of Default" shall have the meaning given that term under Section 14
hereof.
"Excess Pledged Tax Increment Revenues" shall mean all Pledged Tax
Increment Revenues in excess of those required to pay in full the Issuer's
Series A Note (as defined hereinbelow).
"Facility" shall mean the ethanol production facility acquired,
constructed, equipped, owned and operated by the Issuer within the Redevelopment
Area established within the boundaries of the Borrower.
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"First Reset Date" shall have the meaning given that term in Section 4(b)
hereof.
"Grant" shall mean the grant of the TIF Indebtedness incurred as described
on Exhibit C to the Redevelopment Contract, and paid by the Issuer to the
Borrower upon requisition by the Borrower for reimbursement of Qualified Project
Costs set forth on Exhibit A attached hereto and pursuant to Section 3.04 of the
Redevelopment Contract.
"Issuer" shall mean the City of Xxxxxxxx, Nebraska, a body corporate and
politic duly organized under the Constitution and the laws of the State of
Nebraska.
"Issuer's Resolution" shall mean the resolution of the governing body of
the Issuer adopted on June 19, 2007 authorizing, among other things, the
issuance of the Issuer's Series A Note and Issuer's Series B Note.
"Issuer's Series A Note" shall mean the Issuer's Tax Increment Revenue
Note, Taxable Series 2007A (NEDAK Ethanol, LLC Plant Project), dated the date of
issuance and delivery thereof, in the original principal amount of Six Million
Eight Hundred Sixty-Four Thousand Dollars ($6,864,000.00) with a debt service
coverage ratio of 1.20 to 1.00, and an initial interest rate of 9.5%, and a
maturity date on or before December 1, 2021.
"Issuer's Series B Note" shall mean the Issuer's Tax Increment Revenue
Note, Taxable Series 2007B (NEDAK Ethanol, LLC Ethanol Plant Project), dated the
date of issuance and delivery thereof, in a principal amount not to exceed
$4,400,000.00. No proceeds from the Issuer's Series B Note shall be paid until
the Issuer's Series A Note and the Borrower's Note have both been fully paid.
"Lead Lender" shall mean Arbor Bank, a Nebraska banking corporation
established and existing under the laws of the state of Nebraska.
"Legal Fees" shall mean the fees payable to Issuer's Counsel, Placement
Agent's Counsel, Borrower's Counsel and Lead Lender's Counsel.
"Liquidated Damages Amount" shall mean the "Liquidated Damages Amount" as
defined in the Redevelopment Contract.
"Loan" shall mean the loan made by the Lead Lender to the Borrower pursuant
to this Agreement and the Borrower's Note.
"Loan Documents" shall mean this Agreement and any and all ancillary
documents necessary to consummate the transactions contemplated thereby.
"Loan Interest Rate" shall mean nine and one-half percent (9.50%).
"Loan Maturity Date" shall mean December 1, 2021.
"Loan Payment Date" or "Loan Payment Dates" shall mean any date on which
any payment under this Agreement or the Borrower's Note is due.
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"Loan Proceeds" shall mean all funds loaned to Borrower by Lead Lender
pursuant to this Loan, in the original stated principal amount of Six Million
Eight Hundred Sixty-Four Thousand and no/100 Dollars ($6,864,000.00).
"Origination Fees" shall mean the amount of $34,320 payable from the Loan
Proceeds upon the closing of the Loan by the Borrower to the Lead Lender, on
behalf of itself and all Participants, as origination fees for Lead Lender and
all Participants, and distributed by Lead Lender to each Participant on a pro
rata basis.
"Participant" shall mean all participating institutions listed on Schedule
1 attached hereto.
"Payment Direction Letter" shall have the meaning given that term in
Section 7 hereof.
"Permitted Encumbrances" shall mean (a) those encumbrances which secure
indebtedness incurred to acquire, construct and equip the Redevelopment Project
or for any other physical improvements to the Redevelopment Area, as specified
in the Section 5.02 of the Redevelopment Contract, and (b) that interest taken
by the Senior Lender on the Senior Credit Facility.
"PILOT Payments" shall mean the payment in lieu of taxes that the Borrower
is required to make under certain circumstances pursuant to Section 4.07 of the
Redevelopment Contract.
"Placement Agent" shall mean Xxxxxxxxxxx & Co., Inc.
"Placement Agent's Counsel" shall mean Xxxxx & XxXxxxxx, LLP.
"Placement Agent Services Fee" shall have the meaning given that term in
Section 2(q).
"Pledge" shall have the meaning given that term in Section 6 hereof.
"Pledged Revenues" shall mean all revenues pledged by Issuer pursuant to
the Series A Note which includes Pledged Tax Increment Revenues, PILOT Payments
and Liquidated Damages Amount.
"Pledged Tax Increment Revenues" shall mean the Tax Increment Revenues
pledged by the Issuer to the payment of, and as security for, the TIF
Indebtedness pursuant to Section 3.03 of the Redevelopment Contract.
"Qualified Project Costs" shall mean those costs payable from the proceeds
of TIF Indebtedness pursuant to the Act, and as listed in Exhibit A to this
Agreement, and used to reimburse the Borrower for the Project Costs (as defined
in the Redevelopment Contract).
"Redevelopment Area" shall mean certain real property acquired by the
Borrower situated within the boundaries of the Issuer as more particularly
described in Exhibit A to the Redevelopment Contract.
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"Redevelopment Contract" shall mean that certain Redevelopment Contract,
dated June 19, 2007, by and between the Borrower and the Issuer.
"Redevelopment Project" shall mean the entire project, including the
Facility and the land owned by the Borrower on which the Facility shall be
constructed and equipped.
"Second Reset Date" shall have the meaning given that term in Section 4(b)
hereof.
"Security Agreement" shall have the meaning given that term in Section 6(a)
hereof.
"Senior Lender" shall mean Farm Credit Services of Grand Forks, FCLA, along
with its lending syndicate, or any successor lender under the Senior Credit
Facility.
"Senior Credit Facility" shall mean that certain Master Credit Agreement
between Borrower and Senior Lender dated as of February 14, 2007.
"Tax Increment Revenues" shall mean that portion of the ad valorem tax on
real property in the Redevelopment Area in excess of the amount of those ad
valorem taxes on the real property located in the Redevelopment Area which
constitute the proportion of all the ad valorem taxes payable on the real
property in the Redevelopment Area which is produced by the aggregate levy rate
fixed each year by and for all public bodies with respect to the Redevelopment
Area being applied to the Facility valuation (as defined in the Act) for the
period of fifteen (15) years commencing January 1, 2007 as such taxes were
divided by the Issuer pursuant to Section 3.01 of the Redevelopment Contract.
"TIF Indebtedness" shall mean the any bonds, notes, loans and advances of money
or other indebtedness, including interest and premiums, if any, thereon,
incurred by the Issuer pursuant to Article III of the Redevelopment Contract and
secured in whole or in part by the Pledged Tax Increment Revenues.
Section 2. Borrower Representations. The Borrower represents, warrants and
agrees as follows:
(a) the Borrower has been duly organized, validly exists and is in good
standing as a limited liability company under the laws of the State of Nebraska,
is duly qualified to do business in Nebraska, and is duly qualified to enter
into the transactions contemplated by and necessary or incident to the execution
and delivery of the Loan Documents;
(b) attached hereto as Exhibit B are the Resolutions of the Borrower
("Borrower's Resolutions") authorizing the transactions contemplated by the Loan
Documents;
(c) since the date of the last delivery of financial information to the
Lead Lender, there has not been any material adverse change in the business of
the Borrower;
(d) there is no action, suit, proceeding, or to the Borrower's knowledge,
any inquiry or investigation at law or in equity or before or by any public
board or body pending or, to Borrower's knowledge, threatened against or
affecting the Borrower or its property or, to Borrower's knowledge, any basis
therefor, wherein an unfavorable decision, ruling or finding
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would adversely affect the transaction contemplated by or necessary or incident
to the execution and delivery of the Redevelopment Contract or the Loan
Documents or the validity or enforceability of the Redevelopment Contract or the
Loan Documents;
(e) there are no valid material security interests in or liens against the
interest of the Borrower in the Redevelopment Project as of the date hereof,
except those created by the Permitted Encumbrances;
(f) the Borrower has duly authorized, by all necessary company action, the
execution, delivery and due performance of the Loan Documents;
(g) the Loan Documents have been duly executed and delivered by proper
officers of the Borrower. Each of the Loan Documents was executed in
substantially the form in which approved by the Borrower;
(h) the execution and delivery of the Loan Documents by the Borrower and
the performance by the Borrower of its obligations thereunder do not and will
not violate or constitute a default under the Amended and Restated Articles of
Organization or Amended and Restated Operating Agreement of the Borrower or any
court order, and do not and will not violate or constitute a default under any
agreement, indenture, mortgage, lease or any other obligation or instrument to
which the Borrower is bound, and no approval or other action by any governmental
authority or agency is required in connection therewith, other than those which
have been received;
(i) there is no action or proceedings pending or threatened looking toward
the dissolution, liquidation or sale of substantially all of the assets of the
Borrower;
(j) Borrower certifies that it has incurred Qualified Project Costs, as
defined in the Redevelopment Contract, in an amount in excess of $6,822,180.00.
Attached to this Agreement is a true and correct listing of expenditures
incurred with respect to the Project to date, all of which Borrower represents,
warrants and agrees are Qualified Project Costs;
(k) the names and addresses of the persons, firms or corporations to whom
the payments requested hereby are due, the amounts to be disbursed and the
general classification and description of the Qualified Project Costs, or to
reimburse the Borrower for any Qualified Project Costs paid by the Borrower for
which each obligation requested to be paid hereby was incurred are as set forth
on Exhibit A attached hereto and incorporated herein by this reference;
(l) such Qualified Project Costs have been made or incurred by the Borrower
and have been paid by the Borrower, if payment to the Borrower is requested, or,
if payment to the Borrower is not requested, are presently due to the persons to
whom payment is requested, are valid Qualified Project Costs under the
Redevelopment Contract and proper charges against the Loan Proceeds as set forth
herein and no part thereof was included in any other request previously filed
with the Lead Lender under the provisions thereof;
(m) except for Qualified Project Costs for which payment has or will be
requested and except as set forth on Exhibit A attached hereto, there are no
outstanding statements which are now due and payable for labor, wages,
materials, supplies or services in connection with the
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purchase, construction and installation of the Project which, if unpaid, might
become the basis of a vendors', mechanics', laborers or materialmen's statutory
or other similar lien upon the Project or any part thereof. Set forth below is a
description of (1) all disputed statements and the reasons for such disputes,
and (2) all statements in process but not yet presented to the Lead Lender for
payment;
(n) all Qualified Project Costs incurred or to be incurred by the Borrower
are qualified costs and/or expenditures under the Nebraska Community Development
Law, R.R.S. Neb. xx.xx. 18-2101, et. seq.;
(o) unless previously provided to Lead Lender, an executed copy of the
construction contract with respect to the Project is attached hereto;
(p) Borrower hereby requests Lead Lender shall retain the following amounts
from the Loan Proceeds:
i. the Capitilized Interest Amount in the amount of $870,850.00 shall be
retained from the Loan Proceeds and deposited by Lead Lender in the
Capitalized Interest Fund established for the Borrower with respect to
the Project to pay interest on the Loan due through December 1, 2008,
pursuant to Section 9 of this Agreement;
ii. the Debt Service Reserve Fund Requirement in the amount of $686,400.00
shall be retained from the Loan Proceeds by the Lead Lender and
deposited in the Debt Service Reserve Fund, pursuant to Section 8 of
this Agreement;
(q) Borrower hereby requests Lead Lender shall retain the amount of
$380,240 from the Loan Proceeds for the payment of the Closing Costs, as
follows:
i. Lead Lender shall distribute $34,320 ("Origination Fees"), as
origination fees, to itself and each participating bank on a pro rata
basis as per participation in the Loan;
ii. Lead Lender shall distribute $205,920 to the Placement Agent,
Xxxxxxxxxxx & Co. Inc. as its total payment for placement agent
services ("Placement Agent Services Fee");
iii. Lead Lender shall distribute $135,000 to pay Legal Fees as follows:
Issuer's Counsel ($50,000), Placement Agent's Counsel ($50,000),
Borrower's Counsel ($30,000) and Lead Lender's Counsel ($5,000); and
iv. Lead Lender shall retain or distribute an additional $5,000 for
miscellaneous charges (the "Miscellaneous Charges"), as necessary, and
funds not used for Miscellaneous Charges shall be returned to
Borrower;
(r) Borrower hereby requests that Lead Lender distribute directly to
Borrower upon Closing the amount of Four Million Nine Hundred Twenty-Six
Thousand Five Hundred Ten
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and no/100 Dollars ($4,926,510.00), which constitutes the difference of the
entire Loan Proceeds ($6,864,000.00), less the sum of the Capitalized Interest
Amount ($870,850.00), the Debt Service Reserve Fund Requirement ($686,400.00)
and the Closing Costs ($380,240);
(s) Borrower indemnifies, protects, holds harmless and discharges Issuer
and Lead Lender from any and all damages, costs, claims or causes of action
related to distribution of amounts to Borrower pursuant hereto, provided such
parties have carried out their duties without gross negligence or willful
misconduct; and
(t) Borrower has been capitalized through equity contributions of its
members in excess of $49,975,000.00 which, together with the proceeds of the
Senior Credit Facility and the Loan, represents sufficient capitalization for
Borrower to complete and operate the Facility.
Section 3. Lead Lender Representations. The Lead Lender represents,
warrants and agrees as follows:
(a) the Lead Lender is a banking corporation duly organized and existing
under the laws of the State of Nebraska, with full power and authority to enter
into the transactions contemplated by this Agreement;
(b) the Lead Lender is a bank or savings and loan association as defined in
Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Securities Act of 1933, as
amended, acting in its individual or fiduciary capacity;
(c) the Lead Lender recognizes and acknowledges that the Issuer's Series A
Note will never represent or constitute a general obligation, debt, bonded
indebtedness or a pecuniary obligation of the Issuer but are limited obligations
payable solely from Pledged Revenues;
(d) the Lead Lender certifies, under penalties of perjury, that the Lead
Lender is not subject to the backup withholding provisions of Section
3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended; and
(e) the Lead Lender is not making the Loan with a view to distribution of
any interest therein, except through the sale of loan participation interests as
permitted in this Agreement to other banks and lending financial institutions
which constitute "accredited investors" as defined in Rule 501 of Regulation D
under the Securities Act of 1933, as amended and who will purchase such
participation interests subject to this Agreement, including, without
limitation, the making of the representations, warranties and agreements set
forth in this Section.
Section 4. The Loan.
(a) Upon the terms and conditions of this Agreement and any other documents
related thereto, the Lead Lender hereby loans to the Borrower the principal
amount of Six Million Eight Hundred Sixty-Four Thousand and no/100 Dollars
($6,864,000.00). Interest on the unpaid principal amount of the Loan shall be
payable at the rates set forth in the Borrower's Note or determined pursuant to
the terms of the Borrower's Note.
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(b) The Loan Interest Rate shall reset on June 1, 2012 ("First Reset Date")
and June 1, 2017 ("Second Reset Date"). The interest rate on the First Reset
Date shall be equal to the 5-year U.S. Treasury Constant Maturity Index (average
for the prior month) plus 475 basis points for the applicable five-year period.
The interest rate on the Second Reset Date shall be equal to the 5-year U.S.
Treasury Constant Maturity Index (average for the prior month) plus 475 basis
points for the remainder of the term of the Loan.
(c) The Loan shall be repaid in the amounts, at the times and in the manner
set forth in the Borrower's Note.
(d) The Loan is secured by and payable from the grant and pledge by
Borrower to Lead Lender of Issuer's Series A Note, the Pledge by Borrower to
Lead Lender of Pledged Revenues, as described in Section 6 below, consisting of
Pledged Tax Increment Revenues, PILOT Payments, and the Liquidated Damages
Amount and amounts on deposit in the Debt Service Reserve Fund and the
Capitalized Interest Fund, and from the Borrower as obligor under the Borrower's
Note.
Section 5. The Borrower's Note. The Loan shall, in addition to this
Agreement, be evidenced by a promissory note of the Borrower substantially in
the form of Exhibit C (the "Borrower's Note"), dated the date hereof, payable to
the order of the Lead Lender in a principal amount equal to Six Million Eight
Hundred Sixty-Four Thousand and No/100 Dollars ($6,864,000.00). The Borrower's
Note shall evidence the Borrower as the obligor of the Loan.
Section 6. The Pledge. The Pledged Revenues shall be evidenced by the
Issuer's Series A Note, as defined in Section 1.1 herein, made by the Issuer to
the Borrower. To induce the Lead Lender to make the Loan, the Borrower hereby
grants and pledges (the "Pledge") to the Lead Lender for the benefit of the Lead
Lender and all of the Participants, and the Issuer hereby agrees to the
Borrower's pledge and grant of, a security interest in and to the Issuer's
Series A Note, together with the Pledged Revenues, pursuant to the Security
Agreement (the "Security Agreement") similar in form and substance as attached
hereto as Exhibit D.
Section 7. Loan Repayments and Prepayments.
(a) This Loan is evidenced by the Borrower's Note. The principal amount and
interest thereon shall be payable by the Borrower on the dates set forth
therein. In order to comply with the terms of the Borrower's Note and this
Agreement, the Borrower hereby agrees to direct Issuer to pay directly to the
Lead Lender all Pledged Revenues on account of the Loan. The Lead Lender and the
Borrower agree that all such amounts shall be applied by the Lead Lender as
follows and in the following order:
i. to the payment of all fees and expenses of Lead Lender unpaid as
of the date thereof;
ii. to the repayment of all past due interest payments under the
Borrower's Note;
iii. to the repayment of all past due principal payments under the
Borrower's Note;
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iv. to restore the amount on deposit in the Debt Service Reserve Fund
to the Debt Service Reserve Requirement if a deficiency exists
therein;
v. to the payment of all principal due and unpaid under the
Borrower's Note on the applicable Loan Payment Date;
vi. to the prepayment of the unpaid principal amount of the
Borrower's Note as further set forth in Section 7(d) below; and
vii. upon full payment and satisfaction of the Borrower's Note, to
Borrower.
(b) The Lead Lender shall enter in its ledgers and records a record of all
payments made. At least ten (10) days prior to each Loan Payment Date, the Lead
Lender agrees to provide to the Borrower a statement setting forth the amount of
interest and principal due on such Loan Payment Date and the remaining
outstanding principal amount of the Borrower's Note on such Loan Payment Date
assuming the regularly scheduled principal has been paid, being the remaining
outstanding principal amount of the Borrower's Note; provided, however, Lead
Lender's failure to provide such statement should in no way relieve Borrower's
obligation to make such payment on each Loan Payment Date. The Borrower agrees
that all Pledged Revenues payable or paid to the Borrower shall be paid directly
to the Lead Lender so long as the Borrower's Note has not been paid in full.
Borrower agrees to execute and deliver an irrevocable payment direction letter
(the "Payment Direction Letter") and any other documentation requested by Lead
Lender advising Issuer to make all payments under the Issuer's Series A Note,
including all Pledged Revenues, directly to Lead Lender. The Payment Direction
Letter shall be irrevocable except by Borrower until full repayment and
satisfaction of Borrower's Note. In the event the Lead Lender receives any
Pledged Revenues in excess of the amount required to pay all amounts due under
the Borrower's Note in full, the Lead Lender agrees to credit any such
overpayment to the account of Borrower pursuant to Section 7(a)(vi) and Section
7(a)(vii) above.
(c) All payments paid by Issuer under the Issuer's Series A Note shall be
paid to the Lead Lender, pursuant to Section 7(b) immediately above. Any payment
received under the Issuer's Series A Note in excess of the scheduled payment
under the Borrower's Note shall be used to prepay principal thereunder, without
any prepayment penalty to Borrower.
(d) Except for mandatory prepayments of principal pursuant to Section 8(e)
below, any payments of principal paid in advance of the date when payment is
scheduled shall be applied against the scheduled principal payments in reverse
order beginning with the last scheduled payment. Accordingly, the amounts of
each of the principal payments coming due shall not be adjusted except as
necessary with respect to the final principal payment. The Loan Maturity Date
shall be accelerated to reflect the adjusted date of final outstanding principal
payment. Notwithstanding the foregoing, although scheduled principal payments
shall not change, the outstanding principal balance of the Loan shall be reduced
to reflect the prepayments. Accordingly, interest payments shall be adjusted to
the extent necessary to reflect the decreased principal amount. Mandatory
prepayments of principal pursuant to Section 8(e) below shall be ratably
adjusted against any remaining scheduled principal payments for the balance of
the term of the Loan so that the purpose of such mandatory prepayment, which is
to
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decrease the amount of the principal payments and interest payments in order to
achieve the Debt Service Coverage Ratio, is achieved.
(e) Except as expressly provided herein or in the Borrower's Note, the Loan
may not be prepaid in whole or in part prior to June 1, 2009. As of June 1,
2009, the Loan may be prepaid, in whole part, without penalty to Borrower, upon
five (5) days' written notice to the holder of the Borrower's Note. All
prepayments shall include accrued interest through the date of payment.
Section 8. Debt Service Reserve Fund.
(a) The Borrower hereby agrees to establish and maintain, so long as the
Loan remains unpaid, a debt service reserve account with the Lead Lender (the
"Debt Service Reserve Fund") in an amount equal to the Debt Service Reserve Fund
Requirement to be applied as hereinafter set forth.
(b) The Lead Lender shall retain from the Loan Proceeds, an amount equal to
the Debt Service Reserve Requirement upon the closing of the Loan.
(c) The "Debt Service Coverage Ratio" shall mean the ratio of the quotient
obtained by dividing (a) the amount of available Pledged Tax Increment Revenues
plus interest earned on the actual funds held by the Lead Lender in the Debt
Service Reserve Fund to scheduled Debt Service by (b) interest and principal due
and payable to Lead Lender during the applicable Loan Payment Date to 1.00.
Commencing on June 1, 2009, and at all times thereafter for the term of the
Series A Note, the Debt Service Coverage Ratio shall equal or exceed 1.20 to
1.00.
(d) If the Lead Lender determines in its sole and reasonable discretion
that the Debt Service Coverage Ratio will not be achieved on any Loan Payment
Date, the Lead Lender may direct the Borrower to prepay principal in such amount
as reasonably determined by Lead Lender so that the Debt Service Coverage Ratio
shall thereafter be satisfied.
(e) If, upon direction from the Lead Lender, the Borrower does not make
payment as described in Subparagraph (d) above, the Lead Lender may utilize
funds from the Debt Service Reserve Fund to prepay principal in such amount as
reasonably determined by Lead Lender so that the Debt Service Coverage Ratio
shall thereafter be satisfied.
(f) If, after utilizing the Debt Service Reserve Fund to achieve the Debt
Service Coverage Ratio or make payment under the Loan, the Lead Lender
determines that that Debt Service Reserve Fund Requirement is less than ten
percent (10%) of the original principal amount of the Loan, the Lead Lender
shall notify the Borrower in writing of such deficiency. Upon written notice
from Lead Lender, Borrower will replenish the Debt Service Reserve Fund to an
amount equal to ten percent (10%) of the original principal amount of the Loan,
being Six Hundred Eighty-Six Thousand Four Hundred and no/100 Dollars
($686,400.00).
(g) In addition, Lead Lender may use the amounts in the Debt Service
Reserve Fund to make loan repayments falling due on each Loan Payment Date to
the extent that the payment made by the Issuer under the Issuer's Series A Note
on any such Loan Repayment Date is insufficient to pay the amounts due on such
Loan Payment Date, after the application of any
11
amounts on deposit in the Capitalized Interest Fund available to pay interest on
such Loan Payment Date.
(h) The Debt Service Reserve Fund shall be maintained as an interest
bearing account or certificate of deposit with the Lead Lender. All interest
earnings shall be retained in the Debt Service Reserve Fund. On each Loan
Payment Date, if there exists an excess above the Reserve Requirement in the
Debt Service Reserve Fund and no withdrawal is required to pay principal of, and
interest on, the Loan then due, the Lead Lender shall apply such excess to the
prepayment of the principal amount on the Loan. The Debt Service Reserve Fund
shall be valued at the amount actually on deposit and currently available to
withdraw (excluding accrued but unpaid interest earnings) for the purposes of
determining a deficiency.
(i) The Borrower hereby grants a security interest in the Debt Service
Reserve Fund, all amounts on deposit therein and the proceeds thereof to the
Lead Lender to secure all amounts payable on the Loan. If, on any date, the
amount on deposit in the Debt Service Reserve Fund is equal to or greater than
the total principal of, and accrued and unpaid interest on, the Loan, the Lead
Lender shall apply such amounts to the prepayment of the Loan in full. Any
excess amounts in the Debt Service Reserve Fund after such payment of the Loan
in full, shall be paid by the Lead Lender to the Borrower.
Section 9. Capitalized Interest Fund.
(a) The Borrower hereby agrees to establish and maintain, so long as
amounts are on deposit therein, a funded interest account with the Lead Lender
(the "Capitalized Interest Fund") to be applied as hereinafter set forth.
(b) The Lead Lender shall retain from the Loan Proceeds an amount equal to
the Capitalized Interest Amount upon the closing of the Loan.
(c) The amounts in the Capitalized Interest Fund shall be used solely to
pay interest due on the Loan on each Payment Date to the extent of the amount of
interest then due or amounts on deposit in the Capitalized Interest Fund, as the
case may be.
(d) The Capitalized Interest Fund shall be maintained as an interest
bearing account or certificate of deposit with the Lead Lender. All interest
earnings shall be retained in the Capitalized Interest Fund and applied to the
payment of interest on the Loan.
(e) The Borrower hereby grants a security interest in the Capitalized
Interest Fund, all amounts on deposit therein and the proceeds thereof to the
Lead Lender to secure all amounts payable on the Loan.
Section 10. Disbursement of Loan Proceeds.
(a) The Loan Proceeds shall be disbursed entirely on the date of Loan
closing as follows:
i. the Lead Lender, on behalf of the Borrower, shall pay the amount
of $380,240 to the parties entitled thereto the Closing Costs as
set forth in
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Section 2(g);
ii. the Lead Lender shall retain an amount equal to the Debt Service
Reserve Requirement and deposit such amount to the Debt Service
Reserve Fund;
iii. the Lead Lender shall retain an amount equal to the Capitalized
Interest Amount and deposit such amount to the Capitalized
Interest Fund; and
iv. the Lead Lender shall disburse the balance of the Loan Proceeds
to the Borrower.
(b) Receipt by the Lead Lender of the following shall be conditions
precedent to its obligation to disburse the Loan:
i. executed copies of this Agreement and the Borrower's Note;
ii. the Security Agreement, along with possession of the Issuer's
Series A Note;
iii. an opinion of special counsel to the Issuer in form and substance
acceptable to the Lead Lender;
iv. an opinion of counsel to the Borrower in form and substance
acceptable to the Lead Lender;
v. evidence acceptable to the Lead Lender, as confirmed by a
certificate of the Issuer that the Borrower has expended
Qualified Project Costs in an amount at least equal to the
principal amount of the Loan and that the Grant may be made; and
vi. such other showings, certificates and opinions as the Lead Lender
may reasonably require to evidence compliance of the Borrower
with the terms of the Borrower's Note, the Issuer's Series A Note
and this Agreement.
Section 11. Transfer and Assignments.
(a) The Borrower shall not have the right to assign this Agreement or any
of the Borrower's obligations hereunder, or any interest herein, to any other
party unless such assignment has been consented to by Issuer pursuant to
Issuer's rights set forth in the Redevelopment Agreement and by Senior Lender
pursuant to the Senior Credit Facility.
(b) The Lead Lender shall have the right, subject to the further provisions
of this Section 11, to sell or assign all of its interest in this Agreement, the
Borrower's Note and related documents (each such transfer, an "Assignment") to
any commercial lender or other financial institution (and "Assignee").
(c) In addition to assignment of the Loan in whole, the Lead Lender shall
have the right to sell participations in the Loan as set forth in Section 12
below.
13
Section 12. Participations.
(a) The Lead Lender shall have the right, subject to the further provisions
of this Section 12, to grant or sell a participation in all or any part of its
Loan or the Borrower's Note or the Pledge (a "Participation") to any commercial
lender or other financial institution (a "Participant") without the consent of
the Borrower, or any other party hereto.
(b) Notwithstanding anything in the foregoing to the contrary, except in
the instance of an Assignment, (a) no Participant shall have any direct rights
hereunder, (b) the Borrower and the Lead Lender, other than the assigning or
selling lender, shall deal solely with the assigning or selling lender and shall
not be obligated to extend any rights or make any payment to, or seek any
consent of, the Assignee or Participant, (c) no Assignment or Participation
shall relieve the assigning or selling lender from any of its other obligations
hereunder and such lender shall remain solely responsible for the performance
hereof, and (d) no Assignee or Participant, other than an affiliate of the
assigning or selling lender, shall be entitled to require such lender to take or
omit to take any action hereunder, except that such lender may agree with such
Assignee or Participant that such lender will not, without such Assignee's or
Participant's consent, take any action which would, in the case of any
principal, interest or fee in which the Assignee or Participant has an ownership
or beneficial interest: (w) extend the final maturity of any Loans, (x) reduce
the interest rate on the Loans, (y) forgive any principal of, or interest on,
the Loans or any fees, or (z) release all or substantially all of the collateral
security for the Loans.
(c) No lender shall be permitted to enter into any Assignment or
Participation with any Assignee or Participant who is not a United States Person
unless such Assignee or Participant represents and warrants to such lender that,
as at the date of such Assignment or Participation, it is entitled to receive
interest payments without withholding or deduction of any taxes and such
Assignee or Participant executes and delivers to such lender on or before the
date of execution and delivery of documentation of such Participation or
Assignment, a United States Internal Revenue Service Form W8BEN or W8ECI, or any
successor to either of such forms, as appropriate, properly completed and
claiming complete exemption from withholding and deduction of all Federal Income
Taxes. A "United States Person" means any citizen, national or resident of the
United States, any corporation or other entity created or organized in or under
the laws of the United States or any political subdivision hereof or any estate
or trust, in each case that is not subject to withholding of United States
Federal income taxes or other taxes on payment of interest, principal or fees
hereunder.
(d) Each lender may furnish any information concerning the Borrower in the
possession of such lender from time to time to Assignees and Participants and
potential Assignees and Participants.
(e) Notwithstanding any other provision in this Agreement, any lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement.
Section 13. Assignment of Redevelopment Contract. The Borrower covenants
and agrees that it will not assign its rights under the Redevelopment Contract
to any other party.
14
Section 14. Defaults and Remedies. An "Event of Default" shall mean each or
any of the following:
(a) failure of the Borrower to pay any amount due under the Borrower's
Note or this Agreement within fifteen (15) days of when due; or
(b) a breach by Borrower of any covenant, condition, representation or
warranty contained herein or in any of the Loan Documents within ten
(10) days after written notice; or
(c) a default by the Borrower under the Redevelopment Contract after
applicable notice and cure periods under the Redevelopment Contract.
Upon the occurrence of an Event of Default, the Lender may pursue any
remedies available at law.
Section 15. Notices. All notices provided for herein shall be in writing
and shall be deemed to have been given when delivered personally or when
deposited in the United States mail, registered or certified mail, postage
prepaid, addressed as follows:
To the Borrower: NEDAK Ethanol, LLC
00000 Xxxxxxxxx Xxxx - X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, President and General Manager
Phone: 000.000.0000
Fax: 000.000.0000
With a copy to: Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP ("Borrower's Counsel")
0000 Xxxxx Xx., Xxx. 0000
Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Phone: 000.000.0000
Fax: 000.000.0000
To the Lead Lender: Arbor Bank
000 Xxxxxxx Xxx.
X.X. Xxx 000
Xxxxxxxx Xxxx, XX 00000-0000
Attention: Xxx Xxxxxx
Fax: 000.000.0000
15
with a copy to: Yost, Schafersman, Lamme, Hillis, Xxxxxxxx & Xxxxxx, P.C.
("Lead Lender's Counsel")
00 Xxxx 0xx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Phone: 000.000.0000
Fax: 000.000.0000
or addressed to any such party at such other address as such party shall
hereafter furnish by notice to the other parties.
Section 16. Severability. If any section, paragraph or provision of this
Agreement shall be held to be invalid or unenforceable for any reason, the
invalidity or unenforceability of such section, paragraph or provision shall not
affect any of the remaining provisions of this Agreement.
Section 17. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon the Borrower and the Lead Lender and their respective
successors and assigns.
Section 18. This Agreement Governs. In the event of a conflict of any
provision or term of this Agreement with any term or provision of the Borrower's
Note, the terms and provisions of this Agreement shall govern.
Section 19. Amendments. Except as otherwise provided in this Agreement,
this Agreement may not be effectively amended, changed, modified, altered or
terminated by the Borrower or the Lead Lender except in writing executed by both
such parties.
Section 20. Counterparts. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 21. Governing Law. This Agreement shall be governed by the laws of
the state of Nebraska.
Section 22. Credit Agreement Notice. A CREDIT AGREEMENT MUST BE IN WRITING
TO BE ENFORCEABLE UNDER NEBRASKA LAW. TO PROTECT THE BORROWER AND THE LEAD
LENDER FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE,
UNDERTAKING OR OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER
FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OF
EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF OR
SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR
DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.
[remainder of page intentionally left blank; signature page follows]
16
IN WITNESS WHEREOF, Lead Lender and the Borrower have caused this Agreement
to be executed as of the date first above written.
ARBOR BANK,
as Lead Lender
By: /s/ Xxx X. Xxxxxx
Name: Xxx X. Xxxxxx
Its: Omaha President
NEDAK ETHANOL, LLC,
a Nebraska limited liability company
as Borrower
By: /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Its: President and General Manager
Schedule 1
List of Participants
S-1
Exhibit A
Qualified Project Costs
C-1
Exhibit B
Resolutions of Borrower
C-2
Exhibit C
Form of Borrower's Note
June 19, 2007
FOR VALUE RECEIVED, NEDAK ETHANOL, LLC (the "Borrower"), a Nebraska limited
liability company, with an address at 00000 Xxxxxxxxx Xxxx - X.X. Xxx 000,
Xxxxxxxx, Xxxxxxxx 00000, promises to pay to the order of ARBOR BANK, a Nebraska
banking corporation ("Lead Lender"), and having an office at 000 Xxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000, the principal sum of SIX MILLION EIGHT
HUNDRED SIXTY-FOUR THOUSAND and No/100 Dollars ($6,864,000.00), under this Note
from the date of its disbursement until such principal sum shall be fully paid.
Interest and principal shall be payable in installments as set forth in Section
3 below. The total principal sum, or the amount thereof outstanding, together
with any accrued but unpaid interest, shall be due and payable in full on
December 1, 2021 (the "Maturity Date").
Section 1. Loan Agreement. This Note is issued pursuant to the terms,
provisions and conditions of that certain Loan Agreement (as amended, the "Loan
Agreement") dated as of even date, between the Borrower and Lead Lender, and
evidences the loan (the "Loan") made pursuant thereto. Capitalized terms used
herein which are not otherwise specifically defined shall have the same meaning
herein as in the Loan Agreement.
Section 2. Interest Rate. All principal amounts outstanding under this Note
shall bear interest at the then-applicable Interest Rate.
Section 3. Payment of Interest and Principal.
(a) Payment and Calculation of Interest. Subject to the provision of
Section 5(b) of this Note dealing with payments falling due on dates that are
not "Business Days," all interest shall be: (a) payable commencing on December
1, 2007 and on June 1 and December 1 for each year thereafter (each a "Loan
Payment Date") until the principal together with all interest and other charges
payable with respect to the Loan shall be fully paid; and (b) calculated on the
basis of a 360-day year and the actual number of days elapsed and by the
provisions set forth in Section 4 of the Loan Agreement. Interest at the
then-applicable Interest Rate shall be computed from and including the first day
of the applicable Interest Period (hereinafter defined), up to and including the
last day thereof. Proceeds from this Note in the amount of $870,850.00 (the
"Capitalized Interest Amount" as further defined in Section 9 of the Loan
Agreement) shall be retained by Lead Lender to pay for interest on the Loan due
in 2008 and 2009, pursuant to the Loan Agreement. Interest shall be paid in
accordance with Schedule 1 attached hereto.
(b) Interest Rate. The "Interest Rate" commencing on the date of the
closing of the Loan shall be nine and one-half percent (9.50%) simple interest.
The Interest Rate shall reset on June 1, 2012 ("First Reset Date") and June 1,
2017 ("Second Reset Date"). The interest rate on the First Reset Date shall be
equal to the 5-year U.S. Treasury Constant Maturity
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Index (average for the prior month) plus 475 basis points for the applicable
five-year period. The interest rate on the Second Reset Date shall be equal to
the 5-year U.S. Treasury Constant Maturity Index (average for the prior month)
plus 475 basis points for the remainder of the term of the Loan.
(c) "Interest Period" shall mean, in the case of the first Interest Period,
the period commencing on the closing of the Loan and ending on the last day
before the first Loan Payment Date; or, thereafter, the period commencing on
each Loan Payment Date and ending on the last day before the next successive
Loan Payment Date until the Maturity Date.
(d) Principal Repayment. Principal shall be paid in accordance with the
Schedule 1 attached hereto.
(e) Excess Cash Flow. All payments paid by City of Xxxxxxxx, Nebraska under
the Series A Note and all other payments or distributions of Pledged Revenues
shall be paid to the Lead Lender. Any payment received under the Series A Note
in excess of the scheduled payment under this Note shall be used to prepay
principal hereunder, without any prepayment penalty to Borrower, in accordance
with Section 7(d) of the Loan Agreement.
(f) Payment upon Maturity Date. The entire remaining principal balance and
any unpaid interest or other amount due and owing shall be due and payable in
full upon the Maturity Date.
(g) Prepayment. Except as expressly provided herein or in the Loan
Agreement, this Note may not be prepaid in whole or in part prior to June 1,
2009, except for mandatory prepayments as set forth herein or in the Loan
Agreement. As of June 1, 2009, this Note may be prepaid, in whole part, without
penalty to Borrower, upon five (5) days' written notice to the holder of this
Note, in accordance with Section 7(d) of the Loan Agreement. All prepayments
shall include accrued interest through the date of payment.
(h) Maturity Date. Upon the Maturity Date of the Loan, all accrued
interest, principal and other charges due with respect to the Loan shall be due
and payable in full and the principal balance and such other charges, but not
unpaid interest, shall continue to bear interest at the Default Rate until so
paid.
(i) Date of Credit. Payments shall be credited on the Business Day on which
immediately available funds are received prior to one o'clock P.M. Central
Standard Time; payments received after one o'clock P.M. Central Standard Time
shall be credited to the Loan on the next Business Day.
(j) Xxxxxxxx. Lead Lender may submit xxxxxxxx reflecting payments due;
however, any changes in the interest rate which occur between the date of
billing and the due date may be reflected in the billing for a subsequent
payment period. Neither the failure of Lead Lender to submit a billing nor any
error in any such billing shall excuse the Borrower from the obligation to make
full payment of all payment obligations of the Borrower when due.
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(k) Default Rate. The Borrower shall pay upon billing therefor, an interest
rate ("Default Rate") which is four percent (4%) per annum above the Interest
Rate: (a) following Borrower's failure to make a required payment, for that
period between the due date and the date of payment, (b) following any Event of
Default, unless and until the Event of Default is expressly and specifically
waived in writing by Lead Lender or (c) after the Maturity Date.
(l) Late Charges. The Borrower shall pay, upon billing therefor, a "Late
Charge" equal to five percent (5%) of the amount of any payment of principal
(other than principal due on the Maturity Date of the Loan), interest, or both,
which is not paid in full within ten (10) days of the due date thereof. Late
charges (a) are payable in addition to, and not in limitation of, the Default
Rate, (b) are intended to compensate the Lead Lender for administrative and
processing costs incident to late payments, (c) are not interest and (d) shall
not be subject to refund or rebate or credited against any other amount due.
Section 4. Debt Service Coverage Event.
(a) The Borrower hereby agrees to establish and maintain, so long as the
Loan remains unpaid, a debt service reserve account with the Lead Lender (the
"Debt Service Reserve Fund") in an amount equal to the ten percent (10%) of the
original stated principal amount of the Loan, which amount shall be deposited to
the Debt Service Reserve Fund by the Lead Lender on behalf of the Borrower from
the Loan Proceeds upon the closing of the Loan (the "Debt Service Reserve Fund
Requirement").
(b) The "Debt Service Coverage Ratio" shall mean the ratio of the quotient
obtained by dividing (a) the amount of available Pledged Tax Increment Revenues
plus interest earned on the actual funds held by the Lead Lender in the Debt
Service Reserve Fund to scheduled Debt Service by (b) interest and principal due
and payable to Lead Lender during the applicable Loan Payment Date to 1.00.
Commencing on June 1, 2009, and at all times thereafter for the term of the
Series A Note, the Debt Service Coverage Ratio shall equal or exceed 1.20 to
1.00.
(c) If the Lead Lender determines in its sole and reasonable discretion
that the Debt Service Coverage Ratio will not be achieved on any Loan Payment
Date, the Lead Lender may direct the Borrower to prepay principal in such amount
as reasonably determined by Lead Lender so that the Debt Service Coverage Ratio
shall thereafter be satisfied.
(d) If, upon direction from the Lead Lender, the Borrower does not make
payment as described in Subparagraph (c) above, the Lead Lender may utilize
funds from the Debt Service Reserve Fund to prepay principal in such amount as
reasonably determined by Lead Lender so that the Debt Service Coverage Ratio
shall thereafter be satisfied.
(e) If, after utilizing the Debt Service Reserve Fund to
achieve the Debt Service Coverage Ratio or make payment under the Loan, the Lead
Lender determines that that Debt Service Reserve Fund Requirement is less than
ten percent (10%) of the original principal amount of the Loan, the Lead Lender
shall notify the Borrower in writing of such
C-5
deficiency. Upon written notice from Lead Lender, Borrower will replenish the
Debt Service Reserve Fund to an amount equal to ten percent (10%) of the
original principal amount of the Loan, being Six Hundred Eighty-Six Thousand
Four Hundred and no/100 Dollars ($686,400.00).
(f) In addition, Lead Lender may use the amounts in the Debt Service
Reserve Fund to make loan repayments falling due on each Loan Payment Date to
the extent that the payment made by the Issuer under the Issuer's Series A Note
on any such Loan Repayment Date is insufficient to pay the amounts due on such
Loan Payment Date, after the application of any amounts on deposit in the
Capitalized Interest Fund available to pay interest on such Loan Payment Date.
(g) The Debt Service Reserve Fund shall be maintained as an interest
bearing account or certificate of deposit with the Lead Lender. All interest
earnings shall be retained in the Debt Service Reserve Fund. On each Loan
Payment Date, if there exists an excess above the Reserve Requirement in the
Debt Service Reserve Fund and no withdrawal is required to pay principal of, and
interest on, the Loan then due, the Lead Lender shall apply such excess to the
prepayment of the principal amount on the Loan. The Debt Service Reserve Fund
shall be valued at the amount actually on deposit and currently available to
withdraw (excluding accrued but unpaid interest earnings) for the purposes of
determining a deficiency.
Section 5. Definitions.
(a) "Banking Day" means a day on which banks are not required or authorized
by law to close in Nebraska.
(b) "Business Day" means any Banking Day. If any day on which a payment is
due is not a Business Day, then the payment shall be due on the next day
following which is a Business Day.
(c) "Debt Service Coverage Ratio" for the purposes of this Note and the
Loan Agreement, means 1.20 to 1.00.
(d) "Dollars" or "$" means lawful money of the United States.
(e) "Interest Rate" means the interest rate for applicable Interest Period,
in an amount not to exceed nine and one-half percent (9.5%).
(f) "Series A Note" means the Tax Increment Revenue Note, Taxable Series
2007A (NEDAK Ethanol, LLC Plant Project), issued by the City of Xxxxxxxx,
Nebraska and dated the date of issuance and delivery thereof, in the original
principal amount of not less than Six Million Eight Hundred Sixty-Four Thousand
Dollars ($6,864,000.00).
Section 6. Acceleration Due to an Event of Default. At the option of the
holder, this Note and the indebtedness evidenced hereby shall become immediately
due and payable without further notice or demand, and notwithstanding any prior
waiver of any breach or default, or other indulgence, upon the occurrence at any
time and during the continuance of any one or more of
C-6
the following events, each of which shall be an "Event of Default" hereunder and
under the Loan Agreement and each other Loan Document: (i) default continuing
uncured beyond the applicable notice and grace period, if any, set forth herein
or in the Loan Agreement, in making any payment of interest, principal, other
charges or payments due hereunder; (ii) an Event of Default as defined in or as
set forth in the Loan Agreement or any other Loan Document, each as the same may
from time to time hereafter be amended; or (iii) an event which pursuant to any
express provision of the Loan Agreement, or of any other Loan Document, gives
Lead Lender the right to accelerate the Loan.
Section 7. Certain Waivers, Consents and Agreements. Each and every party
liable hereon or for the indebtedness evidenced hereby whether as maker, (i)
agrees to any substitution, exchange, release, surrender or other delivery of
any security or collateral now or hereafter held hereunder or in connection with
the Loan Agreement, or any of the other Loan Documents, and to the addition or
release of any other party or person primarily or secondarily liable; (ii)
agrees that if any security or collateral given to secure this Note or the
indebtedness evidenced hereby or to secure any of the obligations set forth or
referred to in the Loan Agreement, or any of the other Loan Documents, shall be
found to be unenforceable in full or to any extent, or if Lead Lender or any
other party shall fail to duly perfect or protect such collateral, the same
shall not relieve or release any party liable hereon or thereon nor vitiate any
other security or collateral given for any obligations evidenced hereby or
thereby; (iii) agrees to pay all reasonable costs and expenses incurred by Lead
Lender or any other holder of this Note in connection with the indebtedness
evidenced hereby, including, without limitation, all reasonable attorneys' fees
and costs for (a) the administration and implementation of the Loan, (b) the
syndication and/or participation of the Loan, (c) the collection of the
indebtedness evidenced hereby and (d) for the enforcement of rights and remedies
hereunder or under the other Loan Documents, whether or not suit is instituted;
and (iv) consents to all of the terms and conditions contained in this Note, the
Loan Agreement, and all other instruments now or hereafter executed evidencing
or governing all or any portion of the security or collateral for this Note and
for such Loan Agreement, or any one or more of the other Loan Documents.
Section 8. Delay Not A Bar. No delay or omission on the part of the holder
of this Note in exercising any right hereunder or any right under any instrument
or agreement now or hereafter executed in connection herewith, or any agreement
or instrument which is given or may be given to secure the indebtedness
evidenced hereby or by the Loan Agreement, or any other agreement now or
hereafter executed in connection herewith or therewith shall operate as a waiver
of any such right or of any other right of such holder, except as expressly set
forth therein, nor shall any delay, omission or waiver on any one occasion be
deemed to be a bar to or waiver of the same or of any other right on any future
occasion.
Section 9. Partial Invalidity. The invalidity or unenforceability of any
provision hereof, of the Loan Agreement, of the other Loan Documents, or of any
other instrument, agreement or document now or hereafter executed in connection
with the Loan made pursuant hereto and thereto shall not impair or vitiate any
other provision of any of such instruments, agreements and documents, all of
which provisions shall be enforceable to the fullest extent now or hereafter
permitted by law.
C-7
Section 10. Use of Proceeds. All proceeds of the Loan shall be used solely
for the purposes more particularly provided for and limited by the Loan
Agreement.
Section 11. Notices. Any notices given with respect to this Note shall be
given in the manner provided for in the Loan Agreement.
Section 12. Governing Law. It is understood and agreed that all of the Loan
Documents were negotiated, executed and delivered in the State of Nebraska,
which State the parties agree has a substantial relationship to the parties and
to the underlying transactions embodied by the Loan Documents. This Note and
each of the other Loan Documents shall in all respects be governed, construed,
applied and enforced in accordance with the internal laws of the State of
Nebraska without regard to principles of conflicts of law.
Section 13. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 14. No Oral Change. This Note and the other Loan Documents may only
be amended, terminated, extended or otherwise modified by a writing signed by
the party against which enforcement is sought. In no event shall any oral
agreements, promises, actions, inactions, knowledge, course of conduct, course
of dealing, or the like be effective to amend, terminate, extend or otherwise
modify this Note or any of the other Loan Documents.
Section 15. Rights of the Holder. This Note and the rights and remedies
provided for herein may be enforced by Lead Lender or any subsequent holder
hereof. Wherever the context permits each reference to the term "holder" herein
shall mean and refer to Lead Lender or the then subsequent holder of this Note.
Section 16. Right to Pledge to Federal Reserve. Lead Lender may at any time
pledge or assign all or any portion of its rights under the Loan Documents
including any portion of this Note to any of the twelve (12) Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or assignment or enforcement thereof shall release Lead
Lender from its obligations under any of the Loan Documents.
Section 17. General Rights of Assignment and Participation. In accordance
with and subject to the terms and conditions of the Loan Agreement, Lead Lender
shall have the unrestricted right at any time or from time to time, and without
Borrower's or any other person's
C-8
consent, to assign all or any portion of its rights and obligations hereunder
and to grant participating interests in the obligations of Lead Lender.
Section 18. Replacement Note. Upon receipt of an affidavit of an officer of
Lead Lender as to the loss, theft, destruction or mutilation of the Note or any
other security document which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon cancellation of the Note or
other security document, the Borrower will issue, in lieu thereof, a replacement
note or other security document in the same principal amount thereof and
otherwise of like tenor.
[Signatures appear on following page]
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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
as of the date and year set forth above as a sealed instrument at Omaha,
Nebraska.
WITNESS: BORROWER:
_______________________
NEDAK ETHANOL, LLC,
a Nebraska limited liability company
By:______________________________
Name: __________________________
Title: _______________________
Hereunto duly authorized
C-10
Exhibit D
Form of Security Agreement
SECURITY AGREEMENT
This Security Agreement dated as of the 19th day of June, 2007 (this
"Security Agreement"), by and between NEDAK Ethanol, LLC, a Nebraska limited
liability company, having an address of 00000 Xxxxxxxxx Xxxx - X.X. Xxx 000,
Xxxxxxxx, Xxxxxxxx 00000 ("Pledgor") and Arbor Bank, a Nebraska banking
corporation ("Pledgee").
RECITALS:
WHEREAS, Pledgee made a loan to Pledgor in the original principal amount of
$6,864,000.00 (the "Loan"), pursuant to that certain Loan Agreement of even date
herewith by and between Pledgee and Pledgor (the "Loan Agreement"); and
WHEREAS, the Loan will be disbursed to Pledgor in one or more advances and
is evidenced by that certain Promissory Note dated of even date herewith from
Pledgor to Pledgee ("Note"); and
WHEREAS, in order to induce Pledgee to make the Loan, Pledgor is willing to
enter into this Security Agreement and grant Pledgee a security interest in the
Series A Note and the Pledged Revenues (as hereinafter defined).
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and in order to induce
Pledgee to make the Loan and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Pledgor does hereby
agree with Pledgee, as follows:
1. Definitions.
"Capitalized Interest Fund" shall have the meaning given that term in the
Loan Agreement.
"Chief Executive Office State" shall mean the State in which the Chief
Executive Offices of Pledgor are located.
"Code" shall mean the Uniform Commercial Code, as enacted in the State of
Nebraska, as amended.
"Collateral State" shall mean any State in which Collateral is issued
and/or held.
"Debt Service Reserve Fund" shall have the meaning given that term in the
Loan Agreement.
D-1
"Financing Statement" shall have the meaning given that term under the
Code.
"Insurance Proceeds" shall mean all the proceeds of any insurance policies
of Pledgor.
"Interest" shall have the meaning set forth in the Loan Agreement.
"Issuer" shall mean The City of Xxxxxxxx, Nebraska, as issuer of the Series
A Note.
"Loan Documents" shall mean the Loan Agreement and any and all ancillary
documents necessary to consummate the transactions contemplated thereby.
"Obligations" shall mean (a) the aggregate unpaid principal amount of, and
accrued Interest on, the Note; (b) all other fees and other amounts owing by
Pledgor to Pledgee under the Note; and (c) each and all of the representations,
warranties, covenants, obligations, liabilities, indemnities and duties of
Pledgor under the Loan Documents.
"Pledged Revenues" shall mean all revenues pledged by Issuer pursuant to
the Series A Note, which includes Pledged Tax Increment Revenues, PILOT Payments
and Liquidated Damages Amount, as such terms are defined in the Loan Agreement.
"Pledgor State" shall mean any State in which Pledgor is authorized or
licensed to conduct business.
"Series A Note" shall mean the Issuer's Tax Increment Revenue Note, Taxable
Series 2007A (NEDAK Ethanol, LLC Plant Project), dated the date of issuance and
delivery thereof, in the original principal amount of Six Million Eight Hundred
Sixty-Four Thousand Dollars ($6,864,000.00) with a debt service coverage ratio
of 1.20 to 1.00, and an initial interest rate of 9.5%, and a maturity date on or
before December 1, 2021.
"Senior Lender" shall mean Farm Credit Services of Grand Forks, FCLA, along
with its lending syndicate, or any successor lender under the Senior Credit
Facility.
"Senior Credit Facility" shall mean that certain Master Credit Agreement
between Borrower and Senior Lender dated as of February 14, 2007.
2. Grant of Security Interest. As security for the full payment and
performance of the Obligations when due, Pledgor hereby grants, assigns and
pledges, a continuing lien on and security interest in, and, as a part of such
grant, assignment and pledge, hereby transfers and assigns to Pledgee as
security, all of the following (the "Collateral") whether now owned or hereafter
acquired: (i) the Series A Note and all of Pledgor's right, title and interest
in and to the Series A Note; (ii) all Insurance Proceeds, subject, however, to
the right of Senior Lender pursuant to the Senior Credit Facility; (iii) all of
Pledgor's interest in all distributions to which Pledgor shall at any time be
entitled in respect of the Series A Note; (iv) all of Pledgor's right, title and
interest in and to the Pledged Revenues; (v) the Capitalized Interest Fund; (vi)
the Debt Service Reserve Fund; and (vii) to the extent not otherwise included,
all proceeds of any or all of the foregoing.
3. Perfection of Security Interests.
D-2
(a) Pledgor authorizes Pledgee to file a Financing Statement
describing the Collateral.
(b) Pledgee shall receive, prior to the Closing of the Loan, an
official report from the Secretary of State of each Collateral State, Chief
Executive Office State and the Pledgor State indicating that Pledgee's
interest is prior to all other security interest or other interests
reflected in the report.
4. Perfection by Possession. Pledgor shall have possession of the Series A
Note.
5. Representations, Warranties and Covenants. Pledgor hereby covenants
with, and represents and warrants to, Pledgee as follows:
(a) Pledgor will defend Pledgee's right, title and interest in and to
the Collateral pledged by Pledgor pursuant hereto or in which it has
granted a security interest pursuant hereto against the claims and demands
of all other persons.
(b) Pledgor is the legal beneficiary of the Series A Note in which it
has granted a security interest pursuant hereto, free and clear of all
claims or security interests of every nature whatsoever, except such as are
created pursuant to this Security Agreement, and has the unqualified right
to pledge and grant a security interest in the same as herein provided
without the consent of any other person other than any such consent that
has been obtained.
(c) The Series A Note have been validly acquired by Pledgor and are
duly and validly pledged hereunder. All consents and approvals required for
the execution and delivery of this Security Agreement and the consummation
of the transactions contemplated by this Security Agreement have been
obtained.
6. Application of Collateral. All proceeds of any Collateral now or at any
time hereafter received or retained by Pledgee pursuant to the provisions of
this Security Agreement (including, without limitation, any proceeds from the
sale of all or any portion of the Series A Note, including all Pledged Revenues,
and all distributions received by Pledgee in respect of the Series A Note,
including the Pledged Revenues) shall be applied by Pledgee to the Obligations.
7. Remedies. If an Event of Default shall occur and then be continuing:
(a) Pledgee may exercise all of the rights and remedies of a secured
party under the Code.
(b) Pledgee shall also have the right to, at any time and from time to
time, (i) cause any or all of the Series A Note to be registered in or
transferred into the name of Pledgee or into the name of a nominee or
nominees, or designee or designees, of Pledgee; and/or (ii) sell, resell,
assign and deliver, in its sole discretion, any or all of the Series A Note
or any other collateral security for the Obligations and all right, title
and interest, claim and demand therein and right of redemption thereof, at
public or private sale, for cash, upon credit or for future delivery, and
in connection therewith Pledgee may grant options and may impose reasonable
conditions such as requiring any purchaser to represent that any
"securities" constituting any part of the collateral are being purchased
for investment only, Pledgor hereby waiving and releasing
D-3
any and all equity or right of redemption. If all or any of the Series A
Note is sold by Pledgee upon credit or for future delivery, Pledgee shall
not be liable for the failure of the purchaser to purchase or pay for the
same and, in the event of any such failure, Pledgee may resell such
collateral.
(c) Pledgee may exercise, either by itself or by its nominee or
designee, in the name of Pledgor, all of the rights, powers and remedies
granted to Pledgee in Section 2 hereof in respect of the Series A Note and
may exercise and enforce all of Pledgee's rights and remedies hereunder and
under law.
8. Events of Default. An "Event of Default" shall mean each or any of the
following:
(a) if Pledgor fails to pay any payment of principal due under the
Note or the Loan Agreement, together with all accrued and unpaid Interest,
if any, which is due under the Note, or declared due and payable whether at
maturity or by acceleration; or
(b) if any Event of Default under the Note has occurred or is
occurring; or
(c) if any Event of Default under the Loan Documents has occurred or
is occurring; or
(d) if any Event of Default under this Security Agreement has occurred
or is occurring.
9. Waivers; Modifications. None of the terms and conditions of this
Security Agreement may be discharged, changed, waived, modified or varied in any
manner unless in a writing duly signed by the parties hereto.
10. Remedies Cumulative. All rights and remedies afforded to Pledgee by
reason of this Security Agreement are separate and cumulative remedies, and
shall be in addition to all other rights and remedies in favor of Pledgee
existing at law or in equity or otherwise. No one of such remedies, whether or
not exercised by Pledgee, shall be deemed to exclude, limit, or prejudice the
exercises of any other legal or equitable remedy or remedies available to
Pledgee.
11. Notices. Any demand, notice or other communication in connection with
this Security Agreement will be deemed to be made, given and received:
(a) if mailed by prepaid registered mail addressed as set forth below,
on the day following the day on which it was mailed, during a period of
uninterrupted mail service, whether or not the same be returned
undelivered;
(b) if delivered or sent by prepaid courier service to the address set
forth below, or personally served upon any director, officer, servant,
employee or partner of the Pledgor or Pledgee, at the time of such delivery
or service; or
(c) if sent prepaid by telefax or other similar means of electronic
communication, to the number set forth below or where the Pledgor or
Pledgee has such facilities
D-4
to receive such communication, provided that a copy thereof is sent on the
same day by prepaid mail, at the time of such sending.
Until further notice, notices under this Security Agreement shall be addressed
as follows:
If to Pledgee:
Arbor Bank
000 Xxxxxxx Xxx.
X.X. Xxx 000
Xxxxxxxx Xxxx, XX 00000-0000
Attention: Xxx Xxxxxx
Fax: 000.000.0000
If to Pledgor:
NEDAK Ethanol, LLC
00000 Xxxxxxxxx Xxxx - X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, President and General Manager
Phone: 000.000.0000
Fax: 000.000.0000
12. Binding Effect and Assignments. This Security Agreement shall be
binding upon and inure to the benefit of Pledgor and its successors and assigns.
This Security Agreement shall be binding upon and shall inure to the benefit of
Pledgee and its successors and assigns.
13. Severability. In case any one or more of the provisions contained in
this Security Agreement shall be found to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, and this Security Agreement shall continue in full force and effect in
accordance with its remaining terms.
14. Further Assurances. Pledgor agrees to do such further acts and things
and to execute and deliver to Pledgee such additional conveyances, assignments,
agreements and instruments as Pledgee from time to time may reasonably require
or deem advisable to carry into effect this Security Agreement or to further
assure and confirm unto Pledgee its rights, powers and remedies hereunder.
15. Release. Pledgee agrees to release its security interest in the Series
A Note upon satisfaction of all of the following conditions precedent:
(a) that the documents to effect such release be prepared by counsel
for Pledgor; and
(b) that (i) the principal amount of the Note evidencing the Loan and
the other Obligations, shall have been fully paid and satisfied, and (ii)
accrued Interest on the Note
D-5
evidencing the Loan and any costs, commitment and other fees, expenses and
other sums owing to Pledgee as provided in the Note, shall have been fully
paid; and
(c) that all costs, fees, expenses and other sums paid or incurred by
or on behalf of Pledgee in exercising any of its rights, powers, options,
privileges and remedies hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, shall have been fully paid.
If the Series A Note is so released, Pledgee, at the request and sole cost and
expense of Pledgor made at the time of any such release, will execute and
deliver to Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Security Agreement, and will duly assign,
transfer and deliver without recourse and without any representation or
warranty, express or implied (except that Pledgee shall represent that such
release has been and is duly authorized, that all necessary consents to the
execution and delivery thereof have been obtained and that it has not assigned
or encumbered the Collateral), to Pledgor such of the Series A Note as may be in
the possession of Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Security Agreement, together with any
moneys at the time held by Pledgee hereunder and not applied to the payment of
the Obligations.
16. Governing Law. This Security Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Nebraska
applicable to contracts entered into and to be performed entirely within such
State and without regard to the conflicts or choice of laws or rules of such
State.
17. Interpretation. All grammatical changes in gender, tense and number
required to give meaning to any provision herein shall be deemed to be made.
References to "this Agreement," "hereof," "herein," "hereto" and like references
are to this Security Agreement and not to any particular article, section or
other subdivision of this Security Agreement. The insertion of headings in this
Security Agreement is for convenience of reference only and will not affect the
construction or interpretation of this Security Agreement. Unless otherwise
specified herein, all statements of or reference to dollar amounts in this
Security Agreement will mean lawful money of the United States of America.
18. Counterparts. This Security Agreement may be executed in one or more
counterparts each of which shall be deemed and constitute an original and
binding agreement.
[signature page follows; remainder of page intentionally left blank]
D-6
[signature page to Security Agreement]
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Security Agreement as of the day and year first above written.
PLEDGOR
NEDAK ETHANOL, LLC,
a Nebraska limited liability company
as Borrower
By:_______________________________________
Name: Xxxxxx Xxxxxxxxx
Its: President and General Manager
PLEDGEE
Arbor Bank,
a Nebraska banking corporation
By_________________________________________
Its________________________________________
