Document:

Exhibit 10.1

 

MGM Resorts International

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of May 14, 2013 and entered into by and among MGM RESORTS INTERNATIONAL, a Delaware corporation (the “Company”),  MGM GRAND DETROIT, LLC, a Delaware limited liability company (“Detroit”),  BANK OF AMERICA, N.A., as Administrative Agent, at the direction of and on behalf of the Lenders described in Section 2.B hereof, and, for purposes of Section 5 hereof, the Guarantors (as defined in Section 5 hereof) listed on the signature pages hereof, and is made with reference to that certain Amended and Restated Credit Agreement dated as of December 20, 2012 (as amended prior to the date hereof, the “Credit Agreement”), by and among Company, Detroit, Lenders and the Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

 

Section 1.              AMENDMENTS AND CONSENTS

 

A.                                    Subject to the fulfillment of the condition precedent set forth in Section 2B, Section 1.01 of the Credit Agreement is hereby amended by deleting clause (b) of the definition of “Applicable Rate” in its entirety and substituting the following therefor: “(b) in respect of the Term B Facility, 1.50% per annum for Base Rate Loans and 2.50% per annum for Eurodollar Rate Loans.”

 

Section 2.              CONDITIONS TO EFFECTIVENESS

 

This Amendment shall become effective only upon the satisfaction of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “Second Amendment Effective Date”):

 

A.                                    The Administrative Agent shall have received an executed written consent approving the amendments and consents set forth herein and authorizing the Administrative Agent to enter into this Amendment from Lenders constituting the Required Lenders.

 

B.                                    (i) The Company shall have confirmed in writing to the Administrative Agent that the offered interest rate in respect of the Term Loan B following the Second Amendment Effective Date is acceptable to the Company, (ii) each Term B Lender that has withheld its consent to this Amendment shall be replaced as a Lender as provided in Section 4 of this Amendment on the Second Amendment Effective Date and the Company shall have paid the fee described in Section 2.08(c) of the Credit Agreement to each such non-consenting Term B Lender and (iii) a fee shall have been paid to each Term B Lender that has delivered its consent to this Amendment in an amount equal to 1.0% of the aggregate principal of amount of Term B Loans in respect of which this Amendment was approved pursuant to such consent (it being understood for the avoidance of doubt that the fee described in this clause (iii) shall not be payable in respect of any Term B Loans acquired via assignment from a non-consenting Lender as provided in Section 4 of this Amendment).

 

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Section 3.              COMPANY’S REPRESENTATIONS AND WARRANTIES

 

In order to induce the Administrative Agent, on behalf of the Lenders, to enter into this Amendment, each Loan Party represents and warrants to each Lender and the Administrative Agent that the following statements are true, correct and complete:

 

A.                                    Corporate Power and Authority.  Each Loan Party has all requisite corporate or other organizational power and authority to enter into this Amendment and each Borrower has all requisite corporate or other organizational power and authority to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”).

 

B.                                    Authorization of Agreements. Each of the Loan Parties has taken all necessary corporate or other organizational action to authorize the execution and delivery of this Amendment and each Borrower has taken all necessary organizational action to authorize the performance of the Amended Agreement.

 

C.                                    No Conflict. The execution and delivery of this Amendment by each Loan Party and the performance of the Amended Agreement by the Borrowers do not and will not:

 

(i)                                     require any consent or approval not heretofore obtained of any member, partner, director, stockholder, security holder or creditor of such party;

 

(ii)                                  violate or conflict with any provision of such party’s charter, articles of incorporation, operating agreement or bylaws, as applicable, any provision of the indentures governing the public Indebtedness of the Borrowers and the Restricted Subsidiaries;

 

(iii)                               result in or require the creation or imposition of any Lien upon or with respect to any Property of the Borrowers and the Restricted Subsidiaries, other than Liens permitted by Section 8.03 of the Credit Agreement; and

 

(iv)                              violate any Requirement of Law applicable to such party.

 

D.                                    Governmental Consents. Except as obtained or made on or prior to the Second Amendment Effective Date, and except for the approval of the Illinois Gaming Control Board with respect to Nevada Landing Partnership and of the Nevada Gaming Commission in respect of the pledges of equity securities granted on the Closing Date (subject to such approval), no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Authority is or will be required to authorize or permit under applicable Laws the execution or delivery of this Amendment by the Loan Parties or the performance, validity or enforceability of the Amended Agreement by or against the Borrowers.

 

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E.                               Binding Obligation. This Amendment has been duly executed and delivered by each Loan Party and the Amended Agreement is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms, except as enforcement may be limited by Debtor Relief Laws, Gaming Laws or equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion.

 

F.                                Absence of Default. On the Second Amendment Effective Date, no Default shall exist or will result from the execution of this Amendment.

 

G.                              Representation and Warranties from Credit Agreement. The representations and warranties of the Borrowers contained in Article V of the Credit Agreement are true and correct in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date.

 

Section 4.              REPLACEMENT OF NON-CONSENTING LENDERS

 

Concurrently with the effectiveness of this Amendment, Borrowers shall be deemed to have exercised their rights under Section 11.13 of the Credit Agreement to require each Term B Lender to assign any portion of its Term B Loans as to which it has not approved this Amendment as of such time to Bank of America, N.A. By its execution of this Amendment, Bank of America, N.A. agrees to accept such assignments and approves this Amendment in its capacity as the assignee of any such Term B Loans.

 

Section 5.              ACKNOWLEDGEMENT AND CONSENT

 

Each Person listed on the signatures pages hereof (each, a “Guarantor”) hereby acknowledges and agrees that the Guaranty, each Collateral Document and each other Loan Document (each, a “Credit Support Document”) to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment. Each Guarantor represents and warrants that all representations and warranties contained in the Credit Support Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement.

 

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Section 6.              MISCELLANEOUS

 

A.                                    Reference to and Effect on the Credit Agreement and the Other Loan Documents. On and after the Second Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof’, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof’ or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under, the Credit Agreement or any of the other Loan Documents.

 

B.                                    Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.

 

C.                                    Applicable Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL EACH BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

D.                                    Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

	
 
    	
Borrowers:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MGM RESORTS INTERNATIONAL
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ John M. McManus
    
	
 
    	
Name: 
    	
John M. McManus
    
	
 
    	
Title:
    	
Executive Vice President, General Counsel and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MGM GRAND DETROIT, LLC
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ John M. McManus
    
	
 
    	
Name: 
    	
John M. McManus
    
	
 
    	
Title:
    	
Secretary
    

 

[Signature Page to Second Amendment to Credit Agreement]

 

 

Guarantors:

 

1.                                 350 LEASING COMPANY I, LLC, a Nevada limited liability company

2.                                 350 LEASING COMPANY II, LLC, a Nevada limited liability company

3.                                 450 LEASING COMPANY I, LLC, a Nevada limited liability company

4.                                 550 LEASING COMPANY I, LLC, a Nevada limited liability company

5.                                 550 LEASING COMPANY II, LLC, a Nevada limited liability company

6.                                 AC HOLDING CORP., a Nevada corporation

7.                                 AC HOLDING CORP. II, a Nevada corporation

8.                                 ARIA RESORT & CASINO, LLC, a Nevada limited liability company

9.                                 BEAU RIVAGE RESORTS, INC., a Mississippi corporation

10.                          BELLAGIO, LLC, a Nevada limited liability company

11.                          BUNGALOW, INC., a Mississippi corporation

12.                          CIRCUS CIRCUS CASINOS, INC., a Nevada corporation

13.                          MGM RESORTS MISSISSIPPI, INC., a Mississippi corporation

14.                          CITYCENTER FACILITIES MANAGEMENT, LLC, a Nevada limited liability company

15.                          CITYCENTER REALTY CORPORATION, a Nevada corporation

16.                          DESTRON, INC., a Nevada corporation

17.                          DIAMOND GOLD, INC., a Nevada corporation

18.                          GALLEON, INC., a Nevada corporation

19.                          GOLD STRIKE FUEL COMPANY, LLC, a Nevada limited liability company

20.                          GOLD STRIKE L.V., a Nevada partnership

 

By: Diamond Gold Inc., a Nevada corporation, Partner

By: M.S.E. Investments, Incorporated, a Nevada corporation, Partner

 

21.                          GRAND LAUNDRY, INC., a Nevada corporation

22.                          IKM MGM MANAGEMENT, LLC, a Nevada limited liability company

23.                          IKM MGM, LLC, a Nevada limited liability company

24.                          JEAN DEVELOPMENT COMPANY, LLC, a Nevada limited liability company

25.                          JEAN DEVELOPMENT NORTH, LLC, a Nevada limited liability company

26.                          JEAN DEVELOPMENT WEST, LLC, a Nevada limited liability company

27.                          JEAN FUEL COMPANY WEST, LLC, a Nevada limited liability company

28.                          LV CONCRETE CORP., a Nevada corporation

29.                          M.I.R. TRAVEL, a Nevada corporation

30.                          M.S.E. INVESTMENTS, INCORPORATED, a Nevada corporation

31.                          MAC, CORP., a New Jersey corporation

32.                          MANDALAY CORP., a Nevada corporation

33.                          MANDALAY EMPLOYMENT, LLC, a Nevada limited liability company

34.                          MANDALAY PLACE, a Nevada corporation

35.                          MANDALAY RESORT GROUP, a Nevada corporation

36.                          METROPOLITAN MARKETING, LLC, a Nevada limited liability company

37.                          MGM SPRINGFIELD, LLC, a Massachusetts limited liability company

38.                          MGM GRAND CONDOMINIUMS, LLC, a Nevada limited liability company

 

[Signature Page to Second Amendment to Credit Agreement]

 

 

39.                          MGM GRAND CONDOMINIUMS II, LLC, a Nevada limited liability company

40.                          MGM GRAND CONDOMINIUMS III, LLC, a Nevada limited liability company

41.                          MGM GRAND CONDOMINIUMS EAST-TOWER I, LLC, a Nevada limited liability company

42.                          MGM GRAND DETROIT, INC., a Delaware corporation

43.                          MGM GRAND HOTEL, LLC, a Nevada limited liability company

44.                          MGM RESORTS ADVERTISING, INC., a Nevada corporation

45.                          MGM RESORTS AIRCRAFT HOLDINGS, LLC, a Nevada limited liability company

46.                          MGM RESORTS INTERNATIONAL DESIGN, a Nevada corporation

47.                          MGM RESORTS ENTERTAINMENT AND SPORTS, a Nevada corporation

48.                          MGM HOSPITALITY, LLC, a Nevada limited liability company

49.                          MGM INTERNATIONAL, LLC, a Nevada limited liability company

50.                          MGM RESORTS INTERNATIONAL MARKETING, INC., a Nevada corporation

51.                          MGM RESORTS LAND HOLDINGS, LLC, a Nevada limited liability company

52.                          MGM RESORTS MANAGEMENT AND TECHNICAL SERVICES, LLC, a Nevada limited liability company

53.                          MGM RESORTS MANUFACTURING CORP., a Nevada corporation

54.                          MGM RESORTS ONLINE, LLC, a Nevada limited liability company

55.                          MGM RESORTS INTERNATIONAL OPERATIONS, INC., a Nevada corporation

56.                          MGM RESORTS RETAIL, a Nevada corporation

57.                          MH, INC., a Nevada corporation

58.                          MIRAGE LAUNDRY SERVICES CORP., a Nevada corporation

59.                          MIRAGE LEASING CORP., a Nevada corporation

60.                          MIRAGE RESORTS, INCORPORATED, a Nevada corporation

61.                          MMNY LAND COMPANY, INC., a New York corporation

62.                          MRGS, LLC, a Nevada limited liability company

63.                          NEW CASTLE CORP., a Nevada corporation

64.                          NEW PRMA LAS VEGAS, INC., a Nevada corporation

65.                          NEW YORK-NEW YORK HOTEL & CASINO, LLC, a Nevada limited liability company

66.                          NEW YORK-NEW YORK TOWER, LLC, a Nevada limited liability company

67.                          OE PUB, LLC, a Nevada limited liability company

68.                          PRMA LAND DEVELOPMENT COMPANY, a Nevada corporation

69.                          PRMA, LLC, a Nevada limited liability company

70.                          PROJECT CC, LLC, a Nevada limited liability company

71.                          RAILROAD PASS INVESTMENT GROUP LLC, a Nevada limited liability company

72.                          RAMPARTS, INC., a Nevada corporation

73.                          SIGNATURE TOWER I, LLC, a Nevada limited liability company

74.                          SIGNATURE TOWER 2, LLC, a Nevada limited liability company

75.                          SIGNATURE TOWER 3, LLC, a Nevada limited liability company

76.                          THE CRYSTALS AT CITYCENTER MANAGEMENT, LLC, a Nevada limited liability company

77.                          THE SIGNATURE CONDOMINIUMS, LLC, a Nevada limited liability company

78.                          THE MIRAGE CASINO-HOTEL, a Nevada corporation

79.                          TOWER B, LLC, a Nevada limited liability company

80.                          TOWER C, LLC, a Nevada limited liability company

 

[Signature Page to Second Amendment to Credit Agreement]

 

 

81.                               VDARA CONDO HOTEL, LLC, a Nevada limited liability company

82.                               VENDIDO, LLC, a Nevada limited liability company

83.                               VICTORIA PARTNERS, a Nevada partnership

 

By: MRGS LLC, a Nevada limited liability company, Partner 

By: Gold Strike L.V., a Nevada partnership, Partner

 

84.                               VIDIAD, a Nevada corporation

85.                               VINTAGE LAND HOLDINGS, LLC, a Nevada limited liability company

86.                               VINTAGE LAND HOLDINGS II, LLC, a Nevada limited liability company

87.                               MGM RESORTS AVIATION CORP., a Nevada corporation

88.                               MGM RESORTS CORPORATE SERVICES, a Nevada corporation

89.                               MGM RESORTS DEVELOPMENT LLC, a Nevada limited liability company

90.                               MGM RESORTS INTERNATIONAL GLOBAL GAMING DEVELOPMENT, LLC, a Nevada limited liability company

91.                               MGM RESORTS MACAO, LLC, a Nevada limited liability company

 

[The remainder of this page is intentionally left blank. Signature on the following page.]

 

[Signature Page to Second Amendment to Credit Agreement]

 

 

	
 
    	
By: 
    	
/s/ John M. McManus
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
John M. McManus
    
	
 
    	
Title:
    	
Authorized representative of each of the foregoing
    

 

[Signature Page to Second Amendment to Credit Agreement]

 

 

	
 
    	
BANK OF AMERICA, N.A., as 
    
	
 
    	
Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Alan Tapley
    
	
 
    	
Name: 
    	
Alan Tapley
    
	
 
    	
Title:
    	
Assistant Vice President
    

 

[Signature Page to Second Amendment to Credit Agreement]EXHIBIT 10.1

 

CERTAIN INFORMATION INDICATED BY [ * * * ] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

 

FIFTH AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

THIS FIFTH AMENDED AND RESTATED FORBEARANCE AGREEMENT (the “Agreement”) is made as of the 10th day of May, 2013 (“Effective Date”), between HERON LAKE BIOENERGY,  LLC, a Minnesota limited liability company (“HLBE”) and AGSTAR FINANCIAL SERVICES, PCA, an United States instrumentality (“AgStar”).

 

RECITALS

 

A.                                    HLBE is indebted to AgStar under an Amended and Restated Term Note dated September 1, 2011, in the principal amount of $40,000,000.00 (“Note 1”), and an Amended and Restated Term Revolving Note dated September 1, 2011, in the principal amount of $8,008,689.00 (“Note 2,” and together with Note 1, the “Notes”).  The loans extended to HLBE and evidenced by the Notes are referred to herein collectively as the “Loans.”

 

B.                                    HLBE’s obligations to AgStar are further evidenced by the Fifth Amended and Restated Master Loan Agreement dated to be effective as of September 1, 2011, (the “MLA”).

 

C.                                    The Loans were made by AgStar to HLBE for the purpose of constructing and operating an ethanol production facility in or near Heron Lake, Minnesota (the “Project”).

 

D.                                    As collateral for the Notes, HLBE has granted to AgStar (among other things):

 

(i)                                     a Mortgage, Security Agreement and Assignment of Rents and Leases dated September 29, 2005 and recorded in the Office of the County Recorder of Jackson County on September 30, 2005, as Instrument No. 244879; as amended and restated by that certain Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated November 20, 2006 and recorded in the Office of the County Recorder of Jackson County on December 6, 2006 as Instrument No. 248498; and further amended by that certain Second Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated December 27, 2006 and recorded in the Office of the County Recorder of Jackson County on December 27, 2006 as Instrument No. 248658; and further amended by that certain Third Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated May 18, 2007 and recorded in the Office of the County Recorder of Jackson County on June 4, 2007 as Instrument No. A 250019; and further amended by that certain Fourth Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated September 1, 2011, recorded in the Office of the County Recorder of Jackson County on September 8, 2011 as Document No. A262710; and further amended by that certain Fifth Amended and Restated Mortgage, Security Agreement and Assignment of

 

 

Rents and Leases dated September 20, 2011, recorded in the Office of the County Recorder of Jackson County on November 1, 2011 as Document No. A263140, (collectively, the “Mortgage”) under which AgStar has a lien in certain real property in Jackson County, Minnesota, as further described in the Mortgage (the “Real Property”);

 

(ii)                                  security interests in all of the assets of HLBE, including without limitation, inventory, chattel paper, accounts, equipment, general intangibles, deposit accounts, and commodity accounts, (collectively, the “Collateral”) pursuant to the provisions of a Security Agreement dated September 29, 2005 (the “Security Agreement”);

 

(iii)                               collateral assignments of all material contracts related to the Project, including, without limitation, construction agreements, ethanol and distillers grains marketing agreements, grain procurement contracts  and coal supply and transport agreement (collectively, the “Assignments”); and

 

(iv)                              unconditional continuing guarantees from Lakefield Farmers Elevator, LLC and HLBE Pipeline Company, LLC (as amended and restated from time to time, the “Guarantees”).

 

E.                                     The MLA, Notes, Mortgage, Security Agreement, Assignments, Guarantees and all other documents evidencing the obligations of HLBE under the Loans are referred to in this Agreement as the “Loan Documents.”  All capitalized terms not otherwise defined in this Agreement shall have the meaning attributed to such terms in the Loan Documents.

 

F.                                      HLBE has failed to make the required monthly installments of principal required by the Notes on February 1, 2013, March 1, 2013 and April 1, 2013.  HLBE has also failed to maintain the financial covenants of Section 5.01(d), (e) and (g) of the MLA.  On account of such defaults, AgStar has the right to declare the Notes fully and immediately due and payable without defense or right of setoff.

 

G.                                    Lakefield Farmers Elevator, LLC, the wholly-owned subsidiary of HLBE, has sold substantially all of the real property and personal property used in connection with the operation of its grain storage and handling facilities to FCA Co-op and has remitted the net sales proceeds to AgStar.

 

H.                                   HLBE previously entered into an Asset Purchase Agreement dated January 22, 2013, by which it has proposed to sell substantially all of the real property and personal property used in connection with the operation of its ethanol production facility to Guardian Energy Heron Lake, LLC, or an affiliated entity (the “Ethanol Plant APA”).  The Ethanol Plant APA was terminated by HLBE on April 4, 2013.

 

I.                                        HLBE and AgStar previously entered into (i) a Forbearance Agreement dated December 21, 2012, which required entry into an Asset Purchase Agreement with Guardian for the sale and purchase of the ethanol plant by January 10, 2013, and closing of the transaction by

 

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January 31, 2013; (ii) an Amended and Restated Forbearance Agreement dated January 22, 2013, which extended the closing date of the sale of the ethanol plant to March 1, 2013; (iii) a Second Amended and Restated Forbearance Agreement dated February 12, 2013, which further extended the closing date of the sale of the ethanol plant to March 31, 2013, (iv) a Third Amended and Restated Forbearance Agreement dated March 29, 2013, which further extended the closing of the transaction contemplated by the Ethanol Plant APA to April 12, 2013, and (v) a Fourth Amended and Restated Forbearance Agreement dated April 12, 2013, which further extended the term of the Forbearance Period (defined therein) to accommodate certain proposals relating to recapitalization and restructuring of the Loans (the “Forbearance Agreement”).

 

J.                                        As of May 9, 2013, the outstanding principal balance of the indebtedness evidenced by the Notes was as follows: Note 1 $35,810,313.29 ($17,867,966.54 variable interest rate portion, and $17,942,346.75 fixed interest rate portion), and Note 2 $1,980,962.67.

 

K.                                   Interest continues to accrue on the Notes at the Default Rate of interest set forth in the MLA and the Notes.  In addition, on account of the failure of HLBE to comply with the terms of the MLA and the Notes, AgStar is entitled to collect from HLBE the late charges set forth in the MLA and the Notes, and to recover from HLBE its costs and expenses, including reasonable attorney fees incurred in connection with the negotiation and execution of this Agreement and the compliance by HLBE with its terms.

 

L.                                     HLBE has requested AgStar extend the Forbearance Agreement and forbear from exercising its legal and contractual rights and remedies provided in the Loan Documents and by applicable law from the date of this Agreement until [ * * * ] (the “Forbearance Period”) in order to permit HLBE additional time to document and implement the written management, governance improvement and capitalization plan generally described in paragraph 4 of this Agreement.  AgStar has agreed to do so subject to the terms and conditions set forth in this Agreement and in lieu of AgStar exercising its rights under the Loan Documents, including, but not limited to, the right to foreclose the real estate mortgages and security agreements and to obtain the appointment of a receiver pursuant to applicable law.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the facts set forth in these Recitals, which the parties agree are true and correct, and in consideration of the mutual covenants and agreements set forth in this Agreement, the parties hereto agree as follows:

 

1.                                      Acknowledgment of Default.  HLBE acknowledges due execution and delivery of the Loan Documents and agrees and acknowledges that the same are valid and enforceable by AgStar against HLBE in accordance with their terms.  HLBE acknowledges that it is in default under the MLA, Notes and other Loan Documents and that, as a result of such defaults, AgStar is entitled to declare that the indebtedness evidenced by the Loan Documents due and owing without any claims, defenses, counterclaims, offsets, and/or cross-complaints, or demands of any kind or nature whatsoever.

 

2.                                  Acknowledgment of Debt.  HLBE acknowledges that the principal balances owed AgStar and evidenced by the Notes as of the May 9, 2013, are as set forth in the Recitals

 

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set forth above.  In addition to the outstanding principal balances, interest will continue to accrue on such indebtedness and AgStar has incurred, and will continue to incur, costs and legal expenses as a result of HLBE’s defaults under the Loan Documents which amounts are, in accordance with the terms of the Loan Documents, due and payable by HLBE.

 

3.                                      Mortgage.  On or before [ * * * ], HLBE will execute and deliver an amended and restated mortgage acceptable to AgStar and its counsel covering certain real property of approximately 6 acres previously omitted from the Mortgage.

 

4.                                      Management and Governance Improvement Plan. HLBE has prior to the date of this Agreement provided AgStar with a written management, governance, and capitalization plan (the “Plan”).  HLBE agrees to use commercially reasonable efforts to complete the items covered by the Plan prior to the expiration of the Forbearance Period, except to the extent the Plan requires completion after the expiration date of the Forbearance Period.

 

5.                                      Interest Rates and Payments.  The parties agree that the Loans shall accrue interest and be repaid in accordance with the following terms:

 

a.                                      Interest.  Interest shall continue to accrue on the unpaid principal balance of the Notes at the rates provided in the Loan Documents (including, as applicable, interest at the Default Rate specified in the Loan Documents).

 

b.                                      Payments.  During the Forbearance Period, HLBE shall pay to AgStar all regularly scheduled periodic payments of interest required under the MLA and Notes on each Monthly Payment Date.

 

6.                                      Advances on Term Revolving Loan.  Notwithstanding any provisions contained in the MLA, advances pursuant to Note 2 on or after the date hereof shall only be advanced to HLBE for the purpose of funding normal operating expenses during the Forbearance Period, including the payment of interest to AgStar in accordance with paragraph 5.  Such advances will be available and shall not exceed $[ * * * ].  Any request for advances on Note 2 shall further be subject to the terms and conditions set forth in the MLA.  No advances will be made by AgStar on Note 2 after [ * * * ].

 

7.                                      Conditions Precedent.  As conditions precedent to AgStar’s agreements under this Agreement, the following agreements, documents, and other items shall have been executed and/or delivered to AgStar, and the following events shall have occurred:

 

a.                                      Execution and Delivery of Agreement.  HLBE shall have executed and delivered to AgStar this Agreement and any other documents and agreements ancillary or incident hereto.

 

b.                                      Other Documentation.  HLBE shall have obtained and delivered to AgStar any and all further documentation reasonably requested by AgStar.

 

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c.                                       Fees.  HLBE shall have paid to AgStar all costs and expenses incurred by AgStar in connection with the preparation, negotiation and execution of this Agreement, including, without limitation, reasonable attorneys’ fees.

 

8.                                      Distributions Pending Closing.  Notwithstanding any provisions contained in the Loan Documents to the contrary, HLBE shall not make, or cause to be made, any Distributions during the Forbearance Period.

 

9.                                      Representations and Warranties of HLBE.  HLBE represents and warrants to AgStar that the statements contained in this paragraph 9 are correct and complete as of the date of this Agreement.

 

a.                                      Organization and Good Standing.   HLBE is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Minnesota and qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary.  HLBE has the power and authority to own and operate its assets and to carry on its business and to execute, deliver, and perform its obligations under this Agreement.

 

b.                                      Authorization of Transactions.  HLBE has full power and authority, corporate or otherwise, to enter into and perform its obligations under this Agreement.  This Agreement and the ancillary agreements attached to this Agreement as Exhibits constitute valid and legally binding obligations of the parties hereto and thereto, as applicable, enforceable in accordance with their respective terms and conditions.

 

c.                                       Noncontravention.  Neither the execution and the delivery of this Agreement or the ancillary documents attached to this Agreement as Exhibits to which HLBE is a party, nor the consummation of the contemplated transactions will (a) violate any law, order or regulation to which HLBE is subject; (b) violate any provision of the governing documents of HLBE; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which HLBE is a party or is bound or to which any of such HLBE’s assets are subject.

 

d.                                      Broker Fees.  HLBE has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which AgStar could become liable or obligated.

 

e.                                       Legal Compliance; Litigation.  HLBE has complied with all applicable laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed, commenced or alleged against it.  There are no pending or threatened claims, actions, suits, proceedings, hearings or investigations affecting HLBE or its assets.  HLBE is not operating under or subject to, or in default with respect to, any order, writ, injunction or decree of any court or governmental agency.

 

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f.                                        Enforceability.  This Agreement is, and each of the ancillary documents attached to this Agreement as an exhibit are, or when delivered will be, legal, valid and binding obligations of HLBE set forth in such ancillary documents enforceable against such HLBE in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity.

 

g.                                       Environmental.

 

(i)                                     to HLBE’s knowledge, the current business operations of HLBE comply with, and are not subject to any claim or order concerning environmental, health or safety matters (“Environmental Laws”), and HLBE has received no notice, either written or to any HLBE’s knowledge otherwise, alleging that the activities of the business are in violation of any Environmental Laws.

 

(ii)                                  to HLBE’s knowledge, there has been no release of any hazardous substances that requires reporting under applicable Environmental Laws at, on or under any of the Real Property, and none of such properties has been used by any person as a landfill or storage, treatment or disposal site for any type of hazardous substance or non-hazardous solid wastes as defined under the Resource Conservation and Recovery Act of 1976, as amended.

 

(iii)                               HLBE has obtained all permits needed for the ownership of its assets and operation of the business of HLBE as currently operated under applicable Environmental Laws; HLBE is in compliance with all material conditions of such permits; the permits have not expired, and HLBE has timely applied to renew all such Permits.  There is no proceeding pending or, to HLBE’s knowledge, threatened that would reasonably be expected to result in the termination, revocation, suspension or restriction of, or the loss of any benefit to which such HLBE would obtain from, any permit needed for the ownership of its assets and operation of the business as currently operated under applicable Environmental Laws or the imposition of any fine, penalty or other sanctions for the violation of any applicable law relating to such Permit.

 

h.                                      Consents.  No consent approval, authorization or order of any court, governmental agency or body, or third party is required for HLBE to consummate the transactions contemplated by this Agreement.

 

i.                                          Other Information.  The information concerning HLBE set forth in this Agreement and the schedules and exhibits attached to this Agreement and any statement or certificate of HLBE furnished or to be furnished to AgStar pursuant to this Agreement, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light

 

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of the circumstances in which they are made, not false or misleading.

 

10.                               Acknowledgement of Guarantors.  By signing the Acknowledgement and Agreement of Guarantors attached hereto, each Guarantor, as guarantor of all present and future obligations of HLBE to AgStar, consents and agrees to the terms of this Agreement and acknowledges that all indebtedness arising under the Loan Documents shall continue to constitute obligations guaranteed under each of the Guarantees.  Such confirmation shall not be deemed to limit the terms of any of the Guarantees in any manner.

 

11.                               Events of Default.  For purposes of this Agreement, “Event of Default” means (a) any Event of Default under the Loan Documents first occurring after the Effective Date, or at any prior date but regarding which AgStar did not have actual knowledge (excluding Events of Default relating to the matters expressly set forth in this Agreement), or (b) the occurrence of any one or more of the following:

 

a.                                      Payment Defaults.  HLBE shall fail to pay, when due, any amounts required to be paid hereunder, including any amounts owed on the expiration of the Forbearance Period, provided that failure to make the required monthly installment of principal required by the Notes on May 1, 2013 shall not constitute a payment default hereunder.

 

b.                                      Nonmonetary Defaults.  HLBE shall fail to observe or perform any covenant, condition, or agreement to be observed or performed by them under this Agreement for a period of five (5) Business Days after written notice, specifying such default and requesting that it be remedied, provided however that no Event of Default shall be deemed to exist if, within said five (5) day period, HLBE has commenced appropriate action to remedy such failure and shall diligently and continuously pursue such action until such cure is completed, unless such cure is or cannot be completed within thirty (30) days after written notice shall have been given.

 

c.                                       Bankruptcy.  HLBE shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future state or federal bankruptcy law or under any similar federal or state law, or shall have an order for relief pursuant to 11 U.S.C. § 303 entered in any such proceeding brought by any other creditor, or shall make a general assignment for the benefit of their creditors.

 

d.                                      Creditor Proceedings.  The commencement of foreclosure or other proceeding to obtain possession of the Real Property and/or the Collateral, whether by judicial proceeding, self-help, repossession, garnishment, execution or any other method, by any creditor of HLBE.

 

f.                                        Weekly Financial Reporting.  HLBE shall fail to deliver to AgStar by 3:00 p.m. (Minneapolis, MN Time) on each Friday during the term of this Agreement: (i) weekly financial and operating reports, including without limitation its statements of cash flows and income statements; and (ii) such other reports relating to the financial condition or operation of the Project, in each case in a form and substance acceptable to AgStar in its sole discretion.

 

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12.                               Remedies.  Upon the occurrence of an Event of Default:

 

a.                                      the entire unpaid balance of the Loans, including all unpaid principal, accrued interest, default charges and costs and expenses incurred by AgStar in connection with the Loans, including attorney fees shall be immediately due and payable by HLBE;

 

b.                                      AgStar may, in its sole discretion, and without further demand or notice to HLBE, protect and enforce all of its legal, contractual and equitable rights and remedies under the Loan Documents and this Agreement;

 

c.                                       AgStar may apply all amounts that HLBE has on deposit with AgStar, including, without limitation, all escrowed funds, to the payment of the outstanding principal balance, accrued interest, default charges, and the costs and expenses of collection, including attorneys’ fees, in such order as AgStar may deem appropriate; and

 

d.                                      Each and every power or remedy herein specifically given shall be in addition to every other power or remedy, existing or implied, given now or hereafter existing at law or in equity, and each and every power and remedy herein specifically given or otherwise so existing may be exercised from time to time and as often and in such order as may be deemed expedient by AgStar, and the exercise or the beginning of the exercise of one power or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any other power or remedy. No delay or omission of AgStar in the exercise of any right or power accruing hereunder shall impair any such right or power or be construed to be a waiver of any default or acquiescence therein.

 

13.                               Waiver and Release.  To the extent any claims or defenses may exist, HLBE, on behalf of themselves and their respective successors and assigns, hereby forever and irrevocably releases AgStar and its officers, representatives, agents, attorneys, employees, predecessors, successors, and assigns, from any and all such claims and defenses, whether known or unknown arising out of any acts or omissions occurring prior to the date of this Agreement (including without limitation, those relating to late fees currently outstanding or previously paid), provided that HLBE does not waive any rights afforded it hereunder.

 

14.                               Effect of Agreement.  Except as expressly provided in this Agreement, the Loan Documents remain in full force and effect in accordance with their respective terms, and this Agreement shall not be construed to: (i) impair the validity, perfection or priority of any security interest or lien securing the Loans; (ii) waive or impair any rights, powers or remedies of AgStar under the Loan Documents; or (iii) constitute an agreement by AgStar or require it to waive any further defaults by HLBE, grant any forbearance, or otherwise forego the exercise of any rights or remedies under the Loan Documents or applicable law.

 

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15.                               Further Assurances.  If at any time after the date of this Agreement any further action is necessary or desirable to carry out the purposes of this Agreement and its contemplated transactions, each of the Parties will take such further action (including the execution and delivery of further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party.

 

16.                               Reinstatement.  If notwithstanding the provisions of this Agreement, any transfers made by HLBE pursuant to this Agreement are rescinded, or must otherwise be restored or returned by AgStar, by order of court, to or for the benefit of any HLBE or its legal representative or estate, whether upon any insolvency, bankruptcy, dissolution, liquidation or reorganization of HLBE, or otherwise, then (a) HLBE shall return, to AgStar, any and all transfers made to HLBE, or on HLBE’s behalf, by AgStar hereunder and (b) HLBE’s obligations under the terms of the Loan Documents shall be reinstated, and shall be effective, just as though the releases granted by AgStar in this Agreement had not been made.  As part of such reinstatement (i) the then outstanding indebtedness, including all default interest that would have accrued thereunder and any additional amounts due under the Loan Documents, shall be due and payable in full and (ii) the assets so returned shall remain subject to the Loan Documents including, but not limited to, the perfection and priority of the Loan Documents as of the Closing Date.

 

17.                               Miscellaneous.

 

a.                                      Recitals Incorporated.  The Recitals set forth at the beginning of this Agreement are deemed incorporated herein, and the parties hereto represent they are true, accurate and correct.

 

b.                                      Acknowledgement of Distressed Loan Notice.  HLBE acknowledges that AgStar has provided HLBE with a notice of its rights under to 12 CFR § 617.7410(a)(2), pursuant to the Distressed Loan Restructure Policy, and the materials necessary to submit an application for restructure provided to HLBE on April 17, 2013 (the “Borrower Rights Notice”).   In response to the Borrower Rights Notice, HLBE has submitted to AgStar a loan restructuring plan dated April 26, 2013. Negotiation between HLBE and AgStar has resulted in an agreement being reached for the restructuring of the Loans.

 

c.                                       Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

 

d.                                      Severability.  If any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, such provision shall be severable from the remainder of such agreement and the validity, legality and enforceability of the remaining provisions shall not be adversely affected or impaired thereby and shall remain in full force and effect.

 

e.                                       Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument.  The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and

 

9

 

may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

 

f.                                        Entire Agreement.  This Agreement, together with the Exhibits set forth the entire agreement between the parties pertaining to the transactions contemplated by this Agreement.  This Agreement may be amended or modified only by a written instrument signed by the party against which enforcement is sought.

 

[Remainder of page intentionally blank.  Signature page immediately follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date and year first above written.

 

 

	
Dated: May 10, 2013
    	
HERON LAKE BIOENERGY, LLC,
    
	
 
    	
a Minnesota limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert J. Ferguson
    
	
 
    	
 
    	
Robert J. Ferguson
    
	
 
    	
 
    	
Its: Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated: May 10, 2013
    	
AGSTAR FINANCIAL SERVICES, PCA,
    
	
 
    	
a United States instrumentality,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Grosland
    
	
 
    	
 
    	
Steven Grosland
    
	
 
    	
 
    	
Its: Senior Lending Services Executive
    

 

[Signature page to Fifth Amended and Restated Forbearance Agreement dated May 10, 2013]

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS

 

Each of the undersigned hereby (i) acknowledges receipt of the foregoing Fifth  Amended and Restated Forbearance Agreement (the “Forbearance Agreement”) and acknowledges and agrees that this Acknowledgement is executed by the undersigned in order to induce AgStar to enter into the Forbearance Agreement; (ii) consents and agrees to the terms of the Forbearance Agreement and the execution thereof; (iii) reaffirms the undersigned’s obligations to AgStar pursuant to the terms of the Guarantees (as defined in the Forbearance Agreement), (iv) acknowledges that AgStar may amend, restate, extend, renew or otherwise modify the Loan Documents (as defined in the Forbearance Agreement) and any indebtedness or agreement of HLBE, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under the Guarantees for all of HLBE’s present and future indebtedness to AgStar; and (v) acknowledges to and agrees with AgStar that no events, conditions or circumstances have arisen or exist as of the date hereof which would give the undersigned the right to assert a defense, counterclaim and/or setoff to any claim by AgStar for the payment and performance of the obligations of each of such parties under the Guarantees, or to the extent that any such defense, counterclaim and/or setoff exist as of the date hereof, the same are hereby absolutely and forever waived and released.

 

GUARANTORS:

 

	
Dated: May 10, 2013
    	
LAKEFIELD FARMERS ELEVATOR, LLC, a Minnesota limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert J. Ferguson
    
	
 
    	
 
    	
Robert J. Ferguson
    
	
 
    	
 
    	
Its: President and Chief Manager
    
	
 
    	
 
    
	
Dated: May 10, 2013
    	
HLBE PIPELINE COMPANY, LLC,
    
	
 
    	
a Minnesota limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert J. Ferguson
    
	
 
    	
 
    	
Robert J. Ferguson
    
	
 
    	
 
    	
Its: President
    

 

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