Document:

exhibit104_063014.htm

 Exhibit 10.4

 

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (this “Agreement”), dated as of June 24, 2014, is made by and among BUNGE NORTH AMERICA, INC., a New York corporation (“Bunge”), ICM INVESTMENTS, LLC, a Kansas limited liability company (“ICM”), CoBANK, ACB, and its successors and assigns, as Agent (the “Agent”) for itself and for the other commercial, banking or financial institutions whose signatures appear on the signature pages to the Credit Agreement (as defined below) or which hereafter become parties to the Credit Agreement (the “Banks”).  Bunge and ICM are each referred to individually herein as a “Subordinated Noteholder” and, collectively, as the “Subordinated Noteholders.”  Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement.

RECITALS

A.           SOUTHWEST IOWA RENEWABLE ENERGY, LLC, an Iowa limited liability company (“SIRE”), the Agent, and the Banks have entered into a Credit Agreement dated June 24, 2014, (as amended, restated, modified or otherwise supplemented from time to time, the “Credit Agreement”) under which the Banks agreed to extend certain loans in the original principal amount of up to $66,000,000.00 (the “Loans”) to SIRE for the operation of an ethanol production facility (the “Project”).  SIRE’s obligation to repay the Loans is secured by a mortgage on the Project and a security interest in substantially all of the assets of SIRE.

B.           Bunge has provided a term loan to SIRE pursuant to the terms of a Subordinated Term Loan Note dated as of June 23, 2014 (the “Bunge Subordinated Note”) in the principal amount of $19,517,136.99.

C.           ICM has provided a term loan to SIRE pursuant to a Negotiable Subordinated Term Loan Note dated as of June 23, 2014 (the “ICM Subordinated Note”), in an original maximum principal amount of $6,726,757.85.

D.           The Banks require that the Subordinated Noteholders subordinate the payment of the Subordinated Indebtedness to the payment of any and all indebtedness of SIRE to the Banks as provided in the Credit Agreement.

E.           This Agreement replaces and supersedes in its entirety that certain Subordination Agreement, dated as of June 17, 2010, executed by and between Bunge, ICM and parties to predecessor credit facilities, which have been retired.

AGREEMENT

NOW, THEREFORE, in order to induce the Banks to consummate the transactions contemplated by the CoBank Loan Documents, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereby agrees as follows:

  

  

  

1.           Definitions.  As used herein, the following terms have the meanings set forth below:

“CoBank Indebtedness” shall mean all obligations, liabilities and indebtedness of every nature of SIRE from time to time owed to the Banks under the CoBank Loan Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a proceeding under the Bankruptcy Code together with (a) any amendments, modifications, renewals or extensions thereof and (b) any interest accruing thereon after the commencement of a proceeding, without regard to whether or not such interest is an allowed claim.  CoBank Indebtedness shall be considered to be outstanding whenever any loan commitment or loan under the CoBank Loan Documents is outstanding.

“CoBank Loan Documents” shall mean the Credit Agreement and all other notes, mortgages, security agreements, documents, instruments, and assignments and contracts between SIRE and the Banks as the same may be amended, restated, supplemented or otherwise modified from time to time.

“SIRE Default” shall mean a Default or Event of Default as defined in the CoBank Loan Documents, or any other agreement or instrument evidencing, governing, or issued in connection with the Loans, or any default under or breach of any such agreement or instrument.

“Subordinated Debt Documents” shall mean the Bunge Subordinated Note, the ICM Subordinated Note and all indentures, loan agreements, documents and other instruments executed in connection therewith, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Subordinated Indebtedness” shall mean all obligations, liabilities and indebtedness of every nature of SIRE from time to time owed to the Subordinated Noteholders pursuant to the Subordinated Debt Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a proceeding under the Bankruptcy Code together with (a) any amendments, modifications, renewals or extensions thereof and (b) any interest accruing thereon after the commencement of a proceeding, without regard to whether or not such interest is an allowed claim.  The Subordinated Indebtedness shall be considered to be outstanding whenever any loan commitment or loan under a Subordinated Debt Document is outstanding.

  

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2.           Subordination.

(a)           Payment Subordination.  The payment of the Subordinated Indebtedness is hereby expressly subordinated to the CoBank Indebtedness on the terms set forth in this Agreement; provided, however, that SIRE shall have the right to pay, and the applicable Subordinated Noteholder will have the right to accept payment of: (i) without the prior written consent of the Agent all payments of principal and interest on the Subordinated Indebtedness permitted by Section 7.7 of the Credit Agreement, (ii) with the prior written consent of the Agent any principal or interest on: (A) the Bunge Subordinated Note, to the extent such payment constitutes a prepayment of the Bunge Subordinated Note as required by the terms of the Bunge Subordinated Note; (B) the ICM Subordinated Note, to the extent such payment constitutes a prepayment of the ICM Subordinated Note as required by the terms of the ICM Subordinated Note; and (C) any other Subordinated Indebtedness from and after its stated maturity, which shall be not earlier than the maturity date of the Term Loan (as defined in the Credit Agreement).  Nothing in this subsection 2(a) shall be deemed to prohibit (i) any interest from being capitalized and added to the principal balance of any Subordinated Indebtedness in accordance with the terms of the Subordinated Debt Documents or (ii) any Subordinated Noteholder from converting any or all of the Subordinated Indebtedness held by it into the applicable series of units in SIRE upon the terms set forth in the Subordinated Debt Documents.

(b)           Security Interest Subordination.  Regardless of any priority otherwise available to a Subordinated Noteholder by law or by agreement, the Agent for the benefit of the Banks shall hold a first security interest in all collateral securing payment of the CoBank Indebtedness (the “CoBank Collateral”), and any security interest claimed therein (including any proceeds thereof) by any Subordinated Noteholder shall be and remain fully subordinate for all purposes to the security interest of Banks therein for all purposes whatsoever.

3.           Payments Prior to Acceleration or Demand for Payment.  It is understood and agreed that SIRE shall not pay, and no Subordinated Noteholder shall accept, any principal or interest on any Subordinated Indebtedness, except as expressly set forth in subsection 2(a) above.  In the event of receipt of payments by a Subordinated Noteholder described in subsection 2(a) prior such Subordinated Noteholder’s receipt of a notice of acceleration or demand for payment of the CoBank  Indebtedness, such payments shall belong to such Subordinated Noteholder as its own property, and such Subordinated Noteholder shall have no obligation under this Agreement to hold or remit any part of such payments for the account of the Banks.

4.           Payments After Acceleration or Demand for Payment.  In the event of receipt of any payments by a Subordinated Noteholder from SIRE under a Subordinated Debt Document after such Subordinated Noteholder’s receipt of the notice of acceleration or demand for payment in full of the CoBank Indebtedness from Agent (unless Agent has revoked such notice in writing), such payments shall be applied by such Subordinated Noteholder as follows:

	
  

	
(a)

	
All payments received by such Subordinated Noteholder after the receipt of the notice of acceleration or demand for payment in full of the CoBank Indebtedness from Agent shall be held in trust by such Subordinated Noteholder, and shall

  

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promptly be transferred to the Agent and thereafter shall be applied to the payment of the CoBank Indebtedness.

	
  

	
(b)

	
Until all of CoBank Indebtedness has been paid in full, such Subordinated Noteholder shall not, without Agent’s prior written consent, exercise any right of or permit any setoff in respect of any Subordinated Indebtedness.

	
  

	
(c)

	
If such Subordinated Noteholder receives any payment on the Subordinated Indebtedness that such Subordinated Noteholder is not entitled to receive under the provisions of this Agreement, such Subordinated Noteholder will hold the amount so received in trust for the Banks and will forthwith turn over such payment to Agent in the form received (except for the endorsement of such Subordinated Noteholder where necessary) for application to the CoBank Indebtedness (whether or not due).  If such Subordinated Noteholder exercises any right of setoff which such Subordinated Noteholder is not permitted to exercise under the provisions of this Agreement, such Subordinated Noteholder will promptly pay over to Agent, in immediately available funds, an amount equal to the amount of the claims or obligations offset.  If such Subordinated Noteholder fails to make any endorsement required under this Agreement, Agent, or any of its officers or employees or agents on behalf of Agent, is hereby irrevocably appointed as the attorney-in-fact (which appointment is coupled with an interest) for such Subordinated Noteholder to make such endorsement in such Subordinated Noteholder’s name.

	
  

	
(d)

	
In the event of the bankruptcy of, or the appointment of a trustee, receiver or other representative or liquidator for any of the property of SIRE, or if SIRE shall become the subject of any proceeding of any character under any federal or state bankruptcy or insolvency act or law, all monies and other property allocated or allocable to the Subordinated Indebtedness and which would be payable or deliverable to a Subordinated Noteholder in the absence of the provisions of this Agreement shall be paid and delivered directly to Agent for application by Agent as hereinafter provided, regardless of whether a Subordinated Noteholder or Agent or both file a claim on behalf of a Subordinated Noteholder in any such proceeding.  Agent is irrevocably authorized, at its option, but is under no duty or obligation, (a) to represent a Subordinated Noteholder in any such proceeding, and (b) in its own name or otherwise, to make proof of, and receive any payments and property allocated or declared for payment or delivery on account of the Subordinated Indebtedness in any such proceeding; and for said purposes, each Subordinated Noteholder further agrees at Agent’s request to deliver to Agent a separate instrument of assignment assigning the Subordinated Indebtedness to Agent.  Agent may apply all payments and property it receives on such of CoBank Indebtedness as it shall then elect, until full payment of all of CoBank Indebtedness, the excess, if any, to be paid to the Subordinated Noteholders.

	
  

	
(e)

	
The Subordinated Noteholders’ and SIRE’s undertakings and Agent’s rights and remedies shall not be affected or impaired by (a) any neglect or omission on the

  

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part of Agent to look to, or to preserve any collateral at any time securing payment of the CoBank Indebtedness, or (b) any act on the part of Agent in releasing, canceling or surrendering all or part of such collateral, or in extending the time for payment with respect to all or any part of the CoBank Indebtedness or such collateral, or in enforcing or relying upon such collateral, or (c) any other act or omission by  Agent or any Bank.  No notice need be given to any Subordinated Noteholder at any time of the CoBank Indebtedness or the amount thereof, whether now existing or later arising, or any increase or decease therein, or any payment thereof, or with respect to any collateral, or in any other respect.

	
  

	
(f)

	
No Subordinated Noteholder shall, without the prior written consent of Agent, assign, pledge or otherwise transfer, or permit to be assigned, pledged or otherwise transferred or execute any power of attorney with respect to the Subordinated Indebtedness or any part thereof, except to Agent.

	
  

	
(g)

	
The Subordinated Debt Documents shall not be amended or modified without the prior written consent of the Agent.

5.           Continuing Effect.  This Agreement shall constitute a continuing agreement of subordination, and Agent may, subject to the provisions of the CoBank Loan Documents and without notice to or consent by any Subordinated Noteholder, modify any of the CoBank Loan Documents in reliance upon this Agreement.  Without limiting the generality of the foregoing, Agent may, at any time and from time to time, either before or after receipt of any such notice of revocation, without the consent of or notice to any Subordinated Noteholder and without incurring responsibility to any Subordinated Noteholder or impairing or releasing any of Agent’s rights or any of Subordinated Noteholder’s obligations hereunder:

	
  

	
(a)

	
change the interest rate or change the amount of payment or extend the time for payment or renew or otherwise alter the terms of any CoBank Indebtedness or any instrument evidencing the same in any manner;

	
  

	
(b)

	
sell, exchange, release or otherwise deal with any property at any time securing payment of CoBank Indebtedness or any part thereof;

	
  

	
(c)

	
release anyone liable in any manner for the payment or collection of CoBank Indebtedness or any part thereof;

	
  

	
(d)

	
exercise or refrain from exercising any right against SIRE or any other person (including any Subordinated Noteholder); and

	
  

	
(e)

	
apply any sums received by Agent, by whomsoever paid and however realized, to CoBank Indebtedness in such manner as Agent shall deem appropriate.

6.           Notice.  All notices and other communications hereunder shall be in writing and shall be (i) personally delivered, (ii) transmitted by registered mail, postage prepaid, or (iii)

  

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transmitted by telecopy, in each case addressed to the party to whom notice is being given at its address as set forth below:

If to Bunge:

Bunge N.A. Holdings, Inc.

c/o Bunge North America, Inc.

11720 Borman Drive

St. Louis, MO  63146

Facsimile:  (314)292-2110

Attention:  General Manager, Biofuels

With copy to:

Bunge North America, Inc.

11720 Borman Drive

St. Louis, MO  63146

Facsimile:  (314)292-2119

Attention:  General Counsel

If to ICM:

ICM Investments, LLC

310 N. First St.

Colwich, KS 67030

Facsimile: (316)796-0570

Attention: General Counsel

If to Agent:

CoBank, ACB

5500 South Quebec Street

Greenwood Village, CO 80111

Facsimile:

Attention:

or at such other address as may hereafter be designated in writing by that party.  All such notices or other communications shall be deemed to have been given on (i) the date received if delivered personally, (ii) the date of posting if delivered by mail, or (iii) the date of transmission if delivered by telecopy.

7.           Conflict.  In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the CoBank Loan Documents, the provisions of this Agreement shall control and govern.

8.           Headings.  The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof.

  

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9.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.           Severability.  In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement.

11.           Termination of Agreement.  This Agreement shall remain in full force and effect until the indefeasible payment in full in cash of the CoBank Indebtedness and termination of the CoBank Loan Documents after which this Agreement shall terminate without further action on the part of Agent hereto.

12.           Applicable Law.  This Agreement shall be governed by and shall be construed and enforced in accordance with the internal laws of the State of Iowa, without regard to conflicts of law principles.

14.           WAIVER OF JURY TRIAL. EACH SUBORDINATED NOTEHOLDER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.  EACH SUBORDINATED NOTEHOLDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP AND THAT AGENT HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT.  EACH SUBORDINATED NOTEHOLDER REPRESENTS AND WARRANTS THAT IT HAS HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND THIS WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

15.           SUBROGATION. Subject to the payment of the CoBank Indebtedness in full, to the extent cash, property or securities otherwise payable or deliverable to any Subordinated Noteholder shall have been applied to the payment of CoBank Indebtedness pursuant to this Agreement (whether by reason of turnover by such Subordinated Noteholder to the Agent or any Bank or otherwise), then such Subordinated Noteholder shall be subrogated to the rights of the Agent and the Banks to receive payments and distributions of cash, property and securities applicable to the CoBank Indebtedness until the Subordinated Indebtedness is paid in full.  For purposes of such subrogation, no payments or distributions to the Agent or any Bank of any cash, property or securities to which a Subordinated Noteholder would have been entitled except for the provisions of this Agreement, and no payments pursuant to the provisions of this Agreement by a Subordinated Noteholder to the Agent or any Bank, shall, as among SIRE and/or any of SIRE’s creditors (other than the Agent, the Banks and the Subordinated Noteholders), be deemed to be a payment or distribution by SIRE to or on account of any of the CoBank Indebtedness.

 

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above-written.

	 	 	
BUNGE NORTH AMERICA, INC.,

a New York corporation

	 
	 	 	 	 

	 	By:	/s/ Todd A. Bastean	 
	 	Name:	Todd A. Bastean	 
	 	Title:	Vice President	 
	 	 	 	 
	 	 	 	 

	 	 	

ICM INVESTMENTS, LLC,

a Kansas limited liability company

	 
	 	 	 	 

	 	By:	/s/ Brian Burris	 
	 	Name:	Brian Burris	 
	 	Title:	Secretary & General Counsel	 
	 	 	 	 
	 	 	 	 

	 	 	

COBANK, ACB,

and its successors and assigns,

as Agent for itself and the other Banks

	 
	 	 	 	 

	 	By:	/s/ Tom D. Houser	 
	 	Name:	Tom D. Houser	 
	 	Title:	Vice President	 

  

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ACKNOWLEDGEMENT

 

The undersigned hereby acknowledges and agrees to the terms and provisions of this Subordination Agreement. By executing this Acknowledgement, Southwest Iowa Renewable Energy, LLC, through the undersigned authorized manager, agrees to be bound by the provisions of the Subordination Agreement insofar as such provisions relate to the relative rights of Agent and the Subordinated Noteholders thereto as among such parties. The undersigned further agrees that the terms of the Debt Subordination Agreement shall not give the undersigned any substantive rights vis-à-vis the parties and does not affect the undersigned’s obligations under the CoBank Loan Documents or the Subordinated Debt Documents.

 

	

SOUTHWEST IOWA RENEWABLE ENERGY, LLC,

an Iowa limited liability company

	 
	 	 

	By:	/s/ Brett L. Frevert	 
	Name:	Brett L. Frevert	 
	Title:	Chief Financial Officerexhibit105_063014.htm

 

 

Exhibit 10.5

SUBORDINATED TERM LOAN NOTE

 

 

	$19,517,136.99 	 	St. Louis, Missouri
	 	 	June 23, 2014

                                                           

FOR VALUE RECEIVED, the undersigned, SOUTHWEST IOWA RENEWABLE ENERGY, LLC, an Iowa limited liability company (the “Borrower”), hereby promises to pay to the order of BUNGE NORTH AMERICA, INC., a New York corporation (the “Lender”), the principal sum of Nineteen Million Five Hundred Seventeen Thousand One Hundred and Thirty-Six and 99/100ths Dollars ($19,517,136.99) (plus any PIK Interest which is capitalized and added to the outstanding principal balance of this Note) on July 1, 2023.  The Borrower hereby covenants and agrees to pay to the Lender as a mandatory prepayment on this Note, within three (3) Business Days’ after receipt thereof, its Pro-Rata Share (as defined in that certain Intercreditor Agreement by and between Lender and ICM INVESTMENTS, LLC and dated as of the date hereof) (excluding any such securities evidencing senior indebtedness (meaning indebtedness which the payment of this Note is contractually subordinated to), trade payables incurred in the ordinary course of business, and any purchase money indebtedness incurred for the purpose of financing all or any part of the cost of acquiring an asset, together with any refinancings or renewals of the foregoing) after the date of this Note.  Amounts repaid or prepaid under this Note may not be reborrowed.

 

The Borrower further promises to pay to the order of the Lender interest on the from time to time outstanding principal balance of this Note (including any increase in the outstanding principal balance of this Note which is attributable to the capitalization of PIK Interest) prior to the maturity of this Note as follows: (a) so long as no Event of Default under this Note has occurred and is continuing, at a rate per annum equal to Six and One-Quarter Percent (6-1/4%) per annum over and above the Floating Rate (which rate of interest shall fluctuate as and when the Floating Rate shall change), (b) in the event that Borrower fails to make a full quarterly cash payment of Interest for one year of the date it is due and payable, at a rate per annum equal to Seven and One-Half Percent (7-1/2%) per annum over and above the Floating Rate (which rate of interest shall fluctuate as and when the Floating Rate shall change),  and (c) so long as any Event of Default under this Note has occurred and is continuing, at a rate per annum equal to Ten and One-Half Percent (10-1/2%) per annum over and above the Floating Rate (which rate of interest shall fluctuate as and when the Floating Rate shall change), interest, in accordance with the above terms, shall be due and payable quarterly in arrears on each March 31st, June 30th, September 30th and December 31st commencing September 30, 2014, and at the maturity of this Note, whether by reason of acceleration or otherwise; provided, however, that prior to the maturity of this Note, the Borrower, whenever the CoBank Credit Agreement prohibits the payment of such accrued and unpaid interest in cash, shall have the right to capitalize and add any or all of the accrued and unpaid interest on this Note (the “PIK Interest”) to the outstanding principal balance of this Note (and any accrued and unpaid interest on this Note which is not paid in cash on its due date shall automatically be capitalized and added to the outstanding principal balance of this Note on such due date).  From and after the maturity of this Note, whether by reason of acceleration or otherwise, interest shall accrue and be due and payable on the demand of the Lender on the from time to time outstanding principal balance of this Note (including any increase in the outstanding principal balance of this Note which is attributable to the capitalization of PIK Interest) at a rate per annum equal to Ten and One-Half Percent (10-

 

  

  

  

1/2%) per annum over and above the Floating Rate (which rate of interest shall fluctuate as and when the Floating Rate shall change).

 

Interest on this Note shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).  All payments received by the Lender under or in respect of this Note shall be allocated among the principal, interest, collection costs and expenses and other amounts due under this Note in such order and manner as the Lender shall elect.

 

The books and records of the Lender showing the account between the Lender and the Borrower shall be admissible in evidence in any action or proceeding and shall constitute prima facie proof of the items therein set forth.

 

The Borrower shall have the right, upon not less than thirty (30) days’ prior written notice to the Lender, to prepay all at any time or any portion of the from time to time outstanding principal balance of this Note at any time without penalty or premium.

 

The Borrower shall make each payment of principal of, and interest on, this Note and all other amounts payable under this Note not later than 12:00 noon (St. Louis time) on the date when due by wire transferring such amounts to the Lender’s Account No. 910-1026087 at JP Morgan Chase (ABA Routing No. 0210-0002-1) or to such other bank account of the Lender as the Lender may from time to time designate in writing.  Any such payment received by the Lender after 12:00 noon (St. Louis time) shall be deemed to have been paid on the next succeeding Business Day.  Whenever any payment of principal of, or interest on, this Note shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day.  If the date for any payment of principal is extended by operation of law or otherwise, interest thereon, at the then applicable rate, shall be payable for such extended time.  The acceptance by the Lender of any payment of principal or interest due under this Note after the date it is due shall not be held to establish a custom or waive any rights of the Lender to enforce prompt payment of any further payments or otherwise.

 

The Lender shall have the right, at its option and upon at least fifteen (15) days prior written notice to the Borrower, to elect to convert all or any portion of the outstanding principal balance of this Note (excluding any portion of the outstanding principal balance of this Note which is attributable to the capitalization of PIK Interest) into Series U Units of the Borrower.  In the event any such election is made, the number of Series U Units to which the Lender will be entitled shall be equal to the quotient obtained by dividing (a) the portion of the outstanding principal balance of this Note which the Lender has elected to convert, by (ii) a per unit price equal to $3,000.00 (the “Conversion Price”).  On the date of the conversion of all or any portion of the outstanding principal balance of this Note, the Borrower at its expense will issue in the name of and deliver to the Lender a certificate or certificates for the number of Series U Units to which the Lender is entitled as a result of such conversion.  If a fraction of a unit would result upon conversion of this Note pursuant to this paragraph, the Borrower will, in lieu of issuing a fractional unit, pay in cash the amount of principal represented by the fractional unit calculated on the basis of the Conversion Price.  The Lender and the Borrower each agree to execute all necessary documents in connection with the conversion of all or any portion of this Note.

 

  

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The Borrower hereby represents and warrants to the Lender that (a) the Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Iowa, (b) the execution, delivery and performance by the Borrower of this Note and the issuance by the Borrower of any Series U Units pursuant to the conversation rights granted to the Lender in this Note (i) are within the limited liability company powers of the Borrower, (ii) have been duly authorized by all necessary limited liability company action on the part of the Borrower, (iii) require no consent, approval or authorization of, action by or in respect of or filing or recording with any governmental or regulatory body, agency or official or any other third party and (iv) do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in any violation of, the terms of the articles or organization, operating agreement or other organizational documents of the Borrower, any applicable law, rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory body, instrumentality, authority, agency or official or any agreement, document or instrument to which the Borrower is a party or by which the Borrower or any of its property or assets is bound or to which the Borrower or any of its property or assets is subject, (c) this Note has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligation of the Borrower and is enforceable against the Borrower in accordance with its terms, (d) the Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of The Board of Governors of the Federal Reserve System, as amended) and no part of the proceeds of the loan under this Note have been or will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately (i) to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock, or to refund or repay indebtedness originally incurred for such purpose or (ii) for any purpose which entails a violation of, or which is inconsistent with, the provisions of any of the Regulations of The Board of Governors of the Federal Reserve System, including, without limitation, Regulations U, T or X thereof, as amended and (e) the Series U Units to be issued by the Borrower pursuant to the conversion rights granted by terms of this Note have been duly and validly authorized and, when issued to the Lender pursuant to the terms of this Note, will be duly and validly issued, fully paid and non-assessable and free of any security interest, other encumbrance or adverse claim and free of any statutory and contractual preemptive rights, rights of first refusal and/or similar rights.

 

The Borrower hereby covenants and agrees that it will not (a) declare, make or pay any distribution, dividend or other payment of any kind (whether in cash, property, membership interests, other equity interests or otherwise) on any outstanding membership interests or other equity interests of or in the Borrower, unless prior written consent is obtained from the Lender, (b) allow, or propose to allow, any amendment, modification or change to the Borrower’s Articles of Organization or Fourth Amended and Restated Operating Agreement, or enter into any other agreement or instrument, or pass any resolution, which is inconsistent with the terms of this Note, or that would otherwise limit the rights, privileges or preferences of the Lender under the terms of this Note or the rights, privileges or preferences of the Series U Units or other membership interests or other equity interests in existence under the Borrower’s Fourth Amended and Restated Operating Agreement or (c) sell or otherwise issue any membership interests or other equity interests in, or any debt securities of, the Borrower after the date of this Note without giving the Lender at least thirty (30) days prior written notice thereof.

 

  

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If any of the following events (“Events of Default”) shall occur: (a) the Borrower shall fail to make any payment of any principal of interest on or other amount due under this Note as and when the same shall become due and payable, whether by reason of demand, maturity, acceleration or otherwise; (b) the Borrower shall fail to perform or observe any other covenant contained in this Note; (c) any representation or warranty made by the Borrower in this Note shall prove to have been untrue or incorrect in any material respect when made or deemed made; (d) the Borrower shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other Federal, state or foreign bankruptcy, insolvency, receivership, liquidation or similar law, (ii) consent to the institution of, or fail to contravene in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official of itself or a substantial part of its property or assets, (iv) file an answer admitting the material allegations of a petition filed against itself in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any limited liability company action for the purpose of effecting any of the foregoing; (e) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower, or of a substantial part of the property or assets of the Borrower, under Title 11 of the United States Code or any other Federal, state or foreign bankruptcy, insolvency, receivership, liquidation or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official of the Borrower or of a substantial part of the property or assets of the Borrower or (iii) the winding up or liquidation of the Borrower; and any such proceeding or petition shall continue undismissed for thirty (30) consecutive days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for thirty (30) consecutive days; (f) dissolution, termination of existence or operations, merger, consolidation or transfer of a substantial part of the property or assets of the Borrower; (g) the Borrower shall become insolvent in either the equity or bankruptcy sense of the term; (h) a judgment or order is rendered against the Borrower and either (i) enforcement proceedings have been commenced by any creditor upon any such judgment or order or (ii) within thirty (30) days after entry thereof, such judgment or order is not paid or otherwise discharged or execution thereof stayed pending appeal, or within thirty (30) days after the expiration of any such stay, such judgment or order is not paid or otherwise discharged; or a judgment or order in an amount in excess of $100,000.00 is rendered against the Borrower, irrespective of whether such judgment or order is paid or otherwise discharged or stayed pending appeal; (i) any default or event of default shall occur under or within the meaning of any agreement, document or instrument evidencing, securing, guaranteeing the payment of or otherwise relating to any outstanding indebtedness of the Borrower for borrowed money (other than this Note) in a principal amount in excess of $100,000.00 and such default or event of default shall (1) consist of the failure to pay such indebtedness when due (subject to any applicable grace period), whether by reason of maturity, acceleration or otherwise or (2) accelerate the maturity of such indebtedness or permit the holder or holders thereof to accelerate the maturity of such indebtedness of otherwise cause such indebtedness to become due and payable prior to its expressed maturity; (j) any default or event of default by the Borrower shall occur under or within the meaning of any Material Agreement which is not cured within any applicable grace or cure period (if any) and which default or event of default shall (1) consist of a failure by the Borrower to make any required payment thereunder when due, or (2) allow Bunge North America, Inc. or any affiliate thereof to withhold performance or terminate such Material

 

  

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Agreement; or (k) any “Event of Default” (as defined therein) shall occur under or within the meaning of the CoBank Credit Agreement; then, and in each such event (other than an event described in clauses (d) or (e) above), the Lender shall have the right to declare that its obligation to make loans under this Note has terminated, whereupon such obligation of the Lender shall be immediately and forthwith terminated, and the Lender shall have the further right to declare the entire outstanding principal balance of and all accrued and unpaid interest on this Note to be forthwith due and payable, whereupon all of the unpaid principal balance of and all accrued and unpaid interest on this Note shall become and be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower, and the Lender shall have the further right to exercise any and all other rights and remedies which it may have at law or in equity; provided, however, that upon the occurrence of any event described in clauses (d) or (e) above, the Lender’s obligation to make loans under this Note shall automatically terminate and the entire outstanding principal balance of and all accrued and unpaid interest on this Note shall automatically become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower, and the Lender shall have the right to exercise any and all other rights and remedies which it may have at law or in equity.

 

Upon the occurrence and during the continuance of any Event of Default under this Note, the Lender is hereby authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower) and to the fullest extent permitted by law, to set-off and apply any and all indebtedness and other amounts at any time owing by the Lender to or for the credit or account of the Borrower against any and all indebtedness of the Borrower to the Lender evidenced by or arising under or in respect of this Note irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be contingent or unmatured.  The Lender agrees to promptly notify the Borrower after any such set-off and application made by the Lender, provided, however, that the failure to give such notice shall not affect the validity of any such set-off and application.  The rights of the Lender under this paragraph are in addition to any other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have.  Nothing contained in this paragraph shall impair the right of the Lender to exercise any right of set-off or counterclaim it may have against the Borrower and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower unrelated to this Note.

 

In the event that any payment of any principal of or interest on this Note is not paid when due, whether by reason of demand or otherwise, and this Note is placed in the hands of an attorney or attorneys for collection, or if this Note is placed in the hands of an attorney or attorneys for representation of the Lender in connection with the bankruptcy or insolvency proceedings relating to or affecting this Note, the Borrower hereby promises to pay to the order of the Lender, in addition to all other amounts otherwise due on, under or in respect of this Note, the costs and expenses of such collection and representation, including, without limitation, reasonable attorneys’ fees and expenses (whether or not litigation shall be commenced in aid thereof).

 

The Borrower hereby agrees to pay or reimburse the Lender upon demand for (a) all out- of-pocket costs and expenses including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Lender in connection with the preparation, negotiation, execution, administration and/or enforcement of this Note and (b) all out-of-pocket costs and expenses,

 

  

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including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Lender in connection with any amendment, modification, extension, renewal or restatement of this Note.  The Borrower further agrees to pay or reimburse the Lender for any stamp or other taxes which may be payable with respect to the execution, delivery, recording and/or filing of this Note.  All of the obligations of the Borrower under this paragraph shall survive the payment and termination of this Note.

 

This Note may not be changed, nor may any term or condition be waived, modified or discharged orally but only by an agreement in writing, signed by the Lender.  No failure or delay by the Lender in exercising any right, remedy, power or privilege under this Note shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

All parties hereto expressly waive presentment, demand for payment, notice of dishonor, protest and notice of protest.

 

For purposes of this Note, the following terms shall have the following meanings:

 

CoBank Credit Agreement shall mean that certain Credit Agreement dated June 24, 2014, by and among the Borrower, CoBank, ACB, as the Administrative Agent, and the additional commercial, banking or financial institutions party thereto as banks (collectively, the “Banks”), as the same may from time to time be amended, modified, extended, renewed or restated.

 

Business Day shall mean any day except a Saturday, Sunday or legal holiday observed by the Lender or by commercial banks in St. Louis, Missouri or New York, New York.

 

Eurodollar Business Day shall mean any Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in both London and New York, New York.

 

Floating Rate shall mean, as of any Business Day, a rate per annum equal to the British Bankers’ Association interest settlement rates for U.S. Dollar deposits for an interest period of three (3) months as of 11:00 a.m. (London time) on such Business Day (or, if such Business Day is not a Eurodollar Business Day, as of 11:00 a.m. (London time) on the immediately preceding Eurodollar Business Day) as published on Reuters Screen LIBOR01 Page, or if Reuters Screen LIBOR01 Page is not available, as published by Bloomberg Financial Services, Dow Jones Market Services, Telerate or any similar service selected by the Lender.  The Floating Rate shall be determined and reset quarterly on each January 1st, April 1st, July 1st, and October 1st (or, if any such day is not a Business Day, the immediately succeeding Business Day).  The Floating Rate as of the date of this Note is 0.2326% per annum.

 

Material Agreement means any of the following agreements between the Borrower and Bunge North America, Inc. or any affiliate thereof, in each case as the same may be amended, modified, supplemented and restated from time to time: (a) Distillers Grain Purchase Agreement, dated as of October 13, 2006; (b) Ethanol Purchase

 

  

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Agreement, dated as of January 1, 2012; and (c) Grain Feedstock Agency Agreement, dated as of October 13, 2006; (d) Amended and Restated Railcar Sublease dated as of March 25, 2009; and (e) Risk Management Services Agreement dated as of December 15, 2008.

 

Series U Units shall mean the Series U Units of Borrower which have been created and authorized by that Fourth Amended and Restated Operating Agreement, dated March 21, 2014.

 

THE BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE CITY OR COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DIVISION, AS THE LENDER MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, (B) AGREES THAT ALL CLAIMS IN RESPECT TO ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT DOMICILES.  THE BORROWER (AND BY ITS ACCEPTANCE HEREOF, THE LENDER) IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH THE BORROWER AND THE LENDER ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS NOTE.

 

This notice is provided pursuant to Section 432.047, R.S.Mo. As used herein, “borrower(s)” means the Borrower, “creditor” means the Lender and each of “the credit agreement” and “this writing” means this Note.  ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT.  TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

 

This Note shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns; provided, however, that the Borrower may not assign or otherwise transfer any of its rights or delegate any of its obligations or duties under this Note without the prior written consent of the Lender and any purported assignment, transfer or delegation without the prior written consent of the Lender shall be null and void.

 

  

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The Lender’s rights pursuant to this Note are subordinated to the rights of the Banks (as defined in the CoBank Credit Agreement) to the extent set forth in that Subordination Agreement, dated on or about the date hereof, by and among the Lender, ICM INVESTMENTS, LLC and CoBank, ACB.

 

This Note shall be governed by and construed in accordance with the substantive laws of the State of Missouri (without reference to conflict of law principles).

 

This Note is an amendment, restatement, and continuation of, and not a novation of, that certain Subordinated Term Loan Note, dated August 26, 2009, in the principal amount of $27,106,078.55, made by Borrower in favor of Lender, as amended by that certain Subordinated Term Loan Note, dated June 17, 2010, in the principal amount of $28,106,578.97, made by Borrower in favor of Lender.

 

 

	 	 	SOUTHWEST IOWA RENEWABLE 

ENERGY, LLC

	 
	 	 	 	 

 

	 	By:	/s/ Brett L. Frevert	 
	 	Name:	Brett L. Frevert	 
	 	Title:	Chief Financial Officer	 

 

 

 

 

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