Document:

Exhibit 10.3

  MONITORED REVOLVING CREDIT SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated May 3, 2010 (the "MLA"), is entered into as of May 12, 2011 between CoBANK, ACB ("CoBank") and SOUTH DAKOTA SOYBEAN PROCESSORS, LLC, Volga, South Dakota (the "Company"), and amends and restates the Supplement dated October 14, 2010 and numbered RIB051SO1M.

SECTION 1. The Revolving Credit Facility. On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not   to exceed, at any one time outstanding, $40,000.000.00 (the Commitment"); provided, however that the amount available under the Commitment shall not exceed the "Borrowing Base" (as calculated pursuant to the Borrowing Base Report attached hereto as Exhibit A) on the date for which Borrowing Base Reports arc required pursuant to Section 6 below. Within the limits of the Commitment, the Company may borrow, repay, and reborrow.

SECTION 2. Purpose. The purpose of the Commitment is to finance the inventory and receivables referred to in the Borrowing Base Report.

SECTION 3. Term. The term of the Commitment shall be from the date hereof, up to and including June 1, 2012, or such later date as CoBank may, in its sole discretion, authorize in writing.

SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loan(s) in accordance with one or more of the following interest rate options, as selected by the Company:

(A)         One-Month LIBOR Index Rate. At a rate (rounded upward lo the nearest 1/100 th and adjusted for reserves required on "Eurocurrency Liabilities" [as hereinafter defined] for banks subject to "FRB Regulation D" [as hereinafter defined] or required by any other federal law or regulation) per annum equal at all times to 4.00% above the rate quoted by the British Bankers Association (the "BBA") at 11:00 a.m. London time for the offering of one (l)-month U.S. dollars deposits, as published by Bloomberg or another major information vendor listed on BBA's official website on the first "U.S. Banking Day" (as hereinafter defined) in each week, with such rate to change weekly on such day. The rate shall be reset automatically, without the necessity of notice being provided to the Company or any other party, on the first "U.S. Banking Day" of each succeeding week, and each change in the sale shall be applicable to all balances subject to this option. Information about the then-current rate shall be made available upon telephonic request. For purposes hereof: (1) "U.S. Banking Day" shall mean a day on which CoBank is open for business and banks are open for business in New York, New York; (2) "Eurocurrency Liabilities" shall have the meaning as set forth in "FRB Regulation D"; and (3) "FRB Regulation D" shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

(B)          Quoted Rate. At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to CoBank in its sole discretion in each instance, provided that: (1) the minimum fixed period shall be 30 days; (2) amounts may be fixed in increments of $500,000.00 or multiples thereof; and (3) the maximum number of fixes in place at any one time shall be ten.

 

  

  

  

 

The Company shall select the applicable rate option at the lime it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed for periods expiring after the maturity date of the loans and rates may not be fixed in such a manner as to cause the Company to have to break any fixed rate balance in order to pay any installment of principal. All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 Noon Company's local time. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on such other day in such month as CoBank shall require in a written notice to the Company.

SECTION 5. Promissory Note. The Company promises to repay the unpaid principal balance of the loans on the last day of the term of the Commitment. In addition to the above, the Company promises to pay interest on the unpaid principal balance of the loans at the limes and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

SECTION 6. Borrowing Base Reports, Etc. The Company agrees to furnish a Borrowing Base Report to CoBank at such times or intervals as CoBank may from time to time request. Until receipt of such a request, the Company agrees to furnish a Borrowing Base Report to CoBank within 30 days after each month end calculating the Borrowing Base as of the last day of the month for which the report is being furnished. However, if no balance is outstanding hereunder on the last day of such month, then no Report need be furnished. If on the dale for which a Borrowing Base Report is required the amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately notify CoBank and repay so much of the loans as is necessary to reduce the amount outstanding under the Commitment to the limits of the Borrowing Base.

SECTION 7. Letters of Credit. If agreeable to CoBank in its sole discretion in each instance, in addition to loans, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit will be issued within a reasonable period of time after CoBank's receipt of a duly completed and executed copy of CoBank's then current form of Application and Reimbursement Agreement or, if applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. Any draw under any letter of credit issued hereunder shall be deemed a loan under the Commitment and shall be repaid in accordance with this Supplement. Each letter of credit must be in form and content acceptable to CoBank and must expire no later than the maturity date of the Commitment. Notwithstanding the forgoing or any other provision hereof, the maximum amount capable of being drawn under each letter of credit must be statused against the Borrowing Base in the same manner as if it were a loan, and in the event that (alter repaying all loans) the maximum amount capable of being drawn under the letters of credit exceeds the Borrowing Base, then the Company shall immediately notify CoBank and pay to CoBank (to be held as cash collateral) an amount equal to such excess.

SECTION 8. Security. The Company's obligations hereunder and, to the extent related hereto, the MLA including without limitation any future advances under any existing mortgage or deed of trust, shall be secured as provided in the Security Section of the MLA.

SECTION 9. Collateral Inspections. In consideration of the loans made hereunder, the Company will permit CoBank or its representatives, agents or independent contractors, during normal business hours or at such other limes as CoBank and the Company may agree to: (A) inspect or examine the Company's properties, books and records; (B) make copies of the Company's books and records; and (C) discuss the Company's affairs, finances and accounts with its officers, employees and independent certified public accountants. Without limiting the foregoing, the Company will permit CoBank, through an employee of CoBank or through an independent third party contracted by CoBank, to conduct on an annual basis a review of the collateral covered by the Security Agreement. The Company further agrees to pay to CoBank a collateral inspection fee designated by CoBank and reimburse CoBank all reasonable costs and expenses incurred by CoBank in connection with such collateral inspection reviews performed by CoBank employees or its agents.

 

  

  

  

  

SECTION 10. Amendment Fee. In consideration of the amendment, the Company agrees to pay to CoBank on the execution hereof a fee in the amount of $2,500.00.

SECTION 11. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 0.25% per annum (calculated on a 360-day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be payable for each month (or portion thereof) occurring during the original or any extended term of the Commitment. For purposes of calculating the commitment fee only, the "Commitment" shall mean the dollar amount specified in Section 1 hereof, irrespective of the Borrowing Base.

IN WITNESS WFIEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

 

	
CoBANK, ACH

	
 

	
SOUTH DAKOTA SOYBEAN

	
 

	
 

	
 

	
PROCESSORS, LLC

	
 

	
 

	
 

	  	
 

	
By:

	
/s/ Janet Sharma

	
 

	
By:

	
/s/ Thomas J. Kersting

	
 

	
 

	
 

	  	
 

	
Title:

	
Assistant Corp. Secretary

	
 

	
Title:

	
CEOUnassociated Document

Termination Agreement Under Factoring and Security Agreement

This Termination Agreement Under Factoring and Security Agreement (this “Agreement”) is entered into this 24 day of June, 2011, by and between Zoo Publishing, Inc., a New Jersey corporation (the “Seller”), and Working Capital Solutions, Inc., a Delaware corporation (the "Purchaser").

 

Background:

 

The Seller and the Purchaser previously entered into that certain Factoring and Security Agreement dated as of September 9, 2009 (as amended, restated, supplemented or otherwise modified, the "Factoring Agreement").  (Capitalized terms used but not defined in this Consent Agreement shall have the meanings given to them in the Factoring Agreement).  In order to secure its Obligations to the Purchaser, the Seller granted the Purchaser first priority perfected security interest in the Collateral.

 

At this time, the Seller and the Purchaser desire to (i) provide for the payment of all Obligations owed to the Purchaser, and (ii) terminate the Factoring Agreement as between the Seller and the Purchaser, through an assignment of all of the Purchaser’s right, title, and interest in and to the Factoring Agreement and all Collateral to Panta Distribution, LLC (the “Assignee”) in accordance with the terms and conditions of the “Limited Recourse Assignment” annexed hereto marked Exhibit “A”.  Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller and the Purchaser agree as follows:

 

	
1.

	
Termination and assignment of factoring agreement.:   the factoring agreement is hereby terminated as between the purchaser and the seller, and the seller agrees that the purchaser shall have no continuing liability or responsibility thereunder.  From and after the execution and delivery of the limited recourse assignment, the assignee shall be the “purchaser” and shall have all liability and responsibility thereunder.  Except as expressly provided in this agreement and in the limited recourse assignment, the purchaser has and shall have no further liability or obligation to the seller thereunder.

   

The Seller is liable to the Purchaser and obligated to pay to the Seller the following amounts under the Factoring Agreement (the “Obligations”):

 

	
Principal:

	 	$	713,014.92	 
	
Accrued Fees:

	 	$	40,523.19	 
	
Costs, expenses, and attorneys fees:

	 	$	31,928.80	 
	
Reserve for Exposed Payments:

	 	$	50,000.00	1
	
Early Termination Fee:

	 	$	340,000.00	 

 

 

 

  

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Upon the execution of this Agreement, the Purchaser shall assign the Factoring Agreement and all of the Collateral to the Assignee in accordance with the Limited Recourse Assignment.

 

	
2.

	
Repayment of obligations.   The Seller shall repay the Obligations, as follows:

 

a.   Upon the execution of this Agreement by the Seller and the Purchaser and the execution of the Limited Recourse Assignment by the Purchaser and the Assignee:

   

i.   $785,466.91 shall be paid to the Purchaser by the Assignee in cash via federal wire transfer in immediately available funds to pay in full the (x) principal, (y) accrued and unpaid fees, and (z) costs, expenses, and attorneys fees components of the Obligations.

 

ii.  $50,000.00 shall be paid to the Purchaser by the Assignee in cash via federal wire transfer in immediately available funds to pay in full the Reserve for Exposed Payments component of the Obligations.

     

iii.   As a compromise, and as an accommodation to the Seller, the Purchaser shall accept a discounted payment of the Early Termination Fee.  In this regard, $340.000.00 shall be paid to the Purchaser, and the Purchaser shall accept as payment in full of the Early Termination Fee (with the Purchaser hereby agreeing to waive $1,158,703.00 of the Early Termination Fee in excess of $340,000.00), as follows:

    

a).   $157,000.00 shall be paid to the Purchaser by the Assignee in cash via federal wire transfer in immediately available funds; and

          

b).   $183,000.00 shall be paid to the Purchaser by the Seller in accordance with the terms and conditions of the “Deficiency Promissory Note” annexed hereto marked Exhibit “B”, as follows:

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On or before September 30, 2011, the Assignor shall refund to the Assignee any unused or unneeded portion of the Reserve for Exposed Payments or attorneys fees and expenses paid as a portion of the Purchase Price, as provided in Paragraph 1(a) above, after satisfying all fees, costs, expenses, legal fees, and/or other items incurred by the Assignor, together with an itemization of all amounts paid with supporting documentation in form and substance reasonably acceptable to the Assignee.  The Seller hereby agrees to pay and shall be liable to reimburse the Assignor for all additional fees, costs, expenses, legal fees, or other items to the extent that the funds maintained in the Reserve for Exposed Payments and the funds paid towards legal fees and expenses are insufficient to cover all of those items and fees, costs, expenses, and legal fees.

 

  

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i)   $100,000.00 on or before the earlier of (x) the closing on any equity raise (other than with respect to any existing options or warrants), or (y) July 21, 2011; and

     

ii)   $83,000.00 on or before the earlier of (x) the closing on any master distribution agreement, or (y) July 21, 2011.

     

b.   Any unused portion of the Reserve for Exposed Payments and the Indemnification Reserve shall be refunded to the Assignee for the account of the Seller in accordance with the terms and conditions of the Limited Recourse Assignment.

 

	
3.

	
Unsecured obligations.   The purchaser agrees that any and all obligations of the seller and any guarantors of the seller’s obligations to the purchaser under this agreement, the deficiency promissory note, and any other documents executed in connection with or simultaneously herewith are unsecured.  As provided in the limited recourse assignment entered into on this date between the purchaser, as assignor, and the assignee, in the event the purchaser hereafter receives any payments on account of collections on the seller’s accounts previously purchased by the purchaser, or any other funds received relating to the borrower (other than funds due and owning to the purchaser in accordance with the terms of the limited recourse assignment), but assigned to the assignee under the limited recourse assignment, the purchaser shall immediately pay to the assignee such amounts or turn over in kind any items or proceeds so received.

 

	
4.

	
Seller’s continuing obligations under the factoring agreement.  Seller hereby acknowledges that notwithstanding this agreement with purchaser, its obligations under the factoring agreement remain in full force and effect with the assignee.

 

  

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	5.	
Release.  The seller and each of the guarantors, by executing this agreement where indicated below, and their respective subsidiaries, parents, affiliates, predecessors, successors, assigns, agents, and, representatives, as applicable, each hereby releases and forever discharges the purchaser and its officers, directors, employees, representatives, affiliates, predecessors, successors, and assigns of and from any and all actions, causes of action, suits, debts, demands, accounts, covenants, damages, judgments, liabilities, and claims whatsoever, at law or in equity, known or unknown, which any of them ever had, now has, or may have against the purchaser and its officers, directors, employees, representatives, affiliates, successors, and assigns upon or by reason of any matter, cause, or thing arising out of or in any way related to the financing arrangement evidenced by the factoring agreement or otherwise.

 

	6.	
Applicable law. This agreement shall be governed by and construed in accordance with the law of the state of illinois, without regard to principles of conflicts of laws.

 

	7.	
Counterparts.  This agreement may be executed in counterparts each of which shall constitute an original, and each of which when taken together shall constitute a single agreement.  The delivery of an executed counterpart of a signature page of this consent by telecopier or other electronic format shall be effective as delivery of a manually executed counterpart of this agreement.

   

[Signatures Follow]

 

 

  

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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be duly executed as a sealed instrument by their respective authorized officers as of the date first written above.

 

	
PURCHASER

 

	
SELLER

 

	
WORKING CAPITAL SOLUTIONS,

INC.

	
ZOO PUBLISHING, INC.

	  	  
	
By: /s/ Thomas G. Siska

	
By: /s/ David Fremed

	 	 
	
Name: Thomas G. Siska

	
Name:   David Fremed

	 	 
	
Title:  President         

	
Title:  CFO                             

	  	  

Acknowledged and Agreed:

ZOO ENTERTAINMENT, INC.

By: _/s/ David Fremed___________

Name: __David Fremed________

Title: _______CFO_______________

ZOO GAMES, INC.

By: _/s/ David Fremed_________

Name: __David Fremed________

Title: _______CFO____________

_/s/ Mark E. Seremet__________

Mark E. Seremet, Individually

 

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