Exhibit 10.28
February 11, 1997
Alliance Farms Cooperative Association
0000 Xxxxx Xxx Xxxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: President
Gentlemen:
Reference is made to the Master Loan Agreement (MLA No. E039), dated as of May
19, 1995 (the "MLA"), between CoBank, ACB ("CoBank") and Alliance Farms
Cooperative Association (the "Company"), as supplemented by the Multiple Advance
Term Loan Supplement (Loan No. E039T01), dated as of May 19, 1995 (the "Multiple
Advance Supplement"), and the Revolving Term Loan Supplement (Loan No. E039T02),
dated as of May 19, 1995 (the "Revolver Supplement"), and to the related Loan
Agreement (No. T2300), dated September 21, 1994 (the "Original Loan Agreement"),
as amended by the Term Loan Amendment (Loan No. 2300A), dated as of May 19, 1995
(the MLA and the Original Loan Agreement, as so supplemented and amended,
together with all promissory notes, mortgages, deeds of trust, security
agreements, waivers, consents and other documentation entered into with respect
thereto or as contemplated thereby, being referred to herein as the "CoBank Loan
Documentation").
Reference is further made to the Loan Agreement, dated as of November 27, 1996,
between the Company and Farmland Industries, Inc. ("Farmland"), together with
all promissory notes, mortgages, deeds of trust, security agreements, waivers,
consents and other documentation entered into with respect thereto or as
contemplated thereby, each in the form furnished to CoBank by the Company (the
"Farmland Loan Documentation"), and to the Excess Feeder Pig Purchase Agreement
(the "Farmland Pig Agreement") to be entered into between the Company and
Farmland, in the form furnished to CoBank by the Company.
Reference is further made to the Subordination Agreement (the "Subordination
Agreement") to be entered into between CoBank and Farmland, pursuant to which
the loan evidenced by the Farmland Loan Documentation is being subordinated to
the loan evidenced by the CoBank Loan Documentation.
As you know, pursuant to the CoBank Loan Documentation, CoBank has committed to
make loans to the Company from time to time to finance the debt portion of the
construction, development and start-up costs of up to five farrowing units and
related support facilities upon the Company attaining specified equity
investment levels. To date, CoBank has provided debt financing for two such
farrowing units and related support facilities. We understand that, pursuant to
the Farmland Loan Documentation, Farmland has committed to make up to $1,360,000
of loans (the "Farmland Loan") to the Company to finance a portion of the
construction, development and start-up costs of the Company's second Xxxxx
County, Illinois farrowing unit and related support facilities (the "Second
Illinois Facilities"). In this regard, we note that the provision to the
Company of the Farmland Loan, as well as the creation and incurrence of liens
arising as a result thereof, presently are permitted under the second sentence
of Section 9(A) and Section 9(B)(vii) of the MLA, based on your certification
that the conditions specified in said sections have been satisfied..
The purpose of this letter is to inform you that CoBank hereby acknowledges,
consents and agrees as follows:
1.Pursuant to the exclusive right and privilege granted to CoBank under
Section 3 of the Multiple Advance Supplement to extend the term of the
Commitment (as defined in Section 1 of the Multiple Advance Supplement)
beyond the scheduled February 28, 1997 expiration date, CoBank hereby
extends the term of the Commitment (as defined in Section 1 of the
Multiple Advance Supplement), subject to the conditions set forth in the
Multiple Advance Supplement, up to but not including August 31, 1997.
2.Subject to Farmland's execution and delivery of the Subordination
Agreement, for purposes of the CoBank Loan Documentation, including,
without limitation, Section 10(B) of the MLA, Section 1 of the Multiple
Advance Supplement and Section 1 of the Revolver Supplement, the
Farmland Loan shall be treated by CoBank as, or considered by CoBank in
substitution for, an equity investment in the Company equal to
$1,360,000 (i.e., "member's equity") until it is repaid in accordance
with the Farmland Loan Documentation.
3.CoBank hereby acknowledges, consents and agrees that neither the
Company's execution and delivery of the Farmland Loan Documentation, nor
the provision to the Company of the Farmland Loan and the continued
existence of any indebtedness or liability for borrowed money with
respect thereto, nor the creation, incurrence and continued existence of
any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance on any property or assets, real or personal, of the Company
in connection with the Farmland Loan, shall cause the Company to be in
violation of any of its representations, warranties, covenants and
agreements in the CoBank Loan Documentation and shall not constitute a
default or event of default thereunder.
4.CoBank hereby consents to the performance by the Company, subject to the
terms and conditions of the Subordination Agreement, of the Company's
obligations, covenants and agreements under the Farmland Loan
Documentation in accordance with the terms and conditions thereof,
including, without limitation, the repayment in full of the principal
and accrued interest under the promissory note evidencing the Farmland
Loan on the first to occur of (a) the closing date with respect to the
Company's next issuance and sale of a block of at least 17 shares of its
common stock, $.01 par value, and (b) the 27th day of November 2006.
5.CoBank hereby consents to the Farmland Pig Agreement, and to the
performance by the Company of its obligations, covenants and agreements
thereunder in accordance with the terms and conditions thereof.
Please be advised that the effect of this letter shall be limited to the matters
addressed herein and shall not otherwise operate as a waiver of (a) any right,
power or remedy of CoBank under the CoBank Loan Documentation, or (b) any Event
of Default under the CoBank Loan Documentation. Except as contemplated hereby,
all of the terms conditions and covenants of the CoBank Loan Documentation shall
remain unaltered and in full force and effect and are hereby ratified and
confirmed. Please acknowledge your receipt and acceptance of this letter by
signing a copy of this letter in the space provided below and returning such
copy to the undersigned.
Sincerely,
COBANK, ACB
By:
RECEIVED AND ACCEPTED THIS
11th DAY OF FEBRUARY, 1997
ALLIANCE FARMS COOPERATIVE ASSOCIATION
By:
