Section 7.01 Amendments, etc.
Section 7.02 Notices, etc.
Section 7.03 No Waiver; Remedies
Section 7.04 Costs, Expenses and Taxes.
Section 7.05 Right of Set-off
Section 7.06 Severability of Provisions
Section 7.07 Binding Effect; Successors and Assigns; Participations.
Section 7.08 Consent to Jurisdiction.
Section 7.09 Governing Law
Section 7.10 Execution in Counterparts
Section 7.11 Survival
Section 7.12 Reserved
Section 7.13 Waiver of Jury Trial
Section 7.14 Entire Agreement
Section 7.15 Sale of Real Estate
LIST OF SCHEDULES AND EXHIBITS
| Schedule 3.01(d) | Real Property |
| Schedule 4.01(a) | Description of Certain Transactions Related to the Borrower’s Stock |
| Schedule 4.01(f) | Description of Certain Threatened Actions, etc. |
| Schedule 4.01(k) | Location of Inventory and Farm Products; Third Parties in Possession; Crops |
| Schedule 4.01(l) | Office Locations; Fictitious Names; Etc. |
| Schedule 4.01(p) | Intellectual Property |
| Schedule 4.01(t) | Environmental Compliance |
| Schedule 5.01(o) | Management |
| Schedule 5.02(a) | Description of Certain Liens, Lease Obligations, etc. |
| Schedule 5.02(k) | Transactions with Affiliates |
| Schedule 5.02(l) | Management Fees and Compensation |
| Exhibit A | Compliance Certificate |
MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT (this “Agreement” ), dated as of March 8, 2010, between AGSTAR FINANCIAL SERVICES, PCA (the “Lender” ) and REG NEWTON, LLC , an Iowa limited liability company (the “Borrower” ).
A. The Borrower has requested the Lender extend to the Borrower various credit facilities for the purposes of the Acquisition and operating a biodiesel production facility located in or near Newton, Iowa (the “ Plant ”).
B. Lender has agreed to make such loans to the Borrower on the term and conditions contained in this Agreement and the related documents.
NOW, THEREFORE, in consideration of the foregoing, intending to be legally bound hereby, and in consideration of Lender making one or more loans to the Borrower, Lender and the Borrower agree as follows:
DEFINITIONS AND ACCOUNTING MATTERS
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“ Acquisition ” means the acquisition of the assets of Central Iowa Energy, LLC, by the Borrower pursuant to the Acquisition Agreement and the other Acquisition Documents.
“ Acquisition Advance ” means the initial advance made to the Borrower for purposes of making payment to Lender on the CIE Loan.
“ Acquisition Agreement ” means that certain Purchase Agreement, dated as of May 8, 2009, as amended and restated as of August 7, 2009, by and among the Borrower and Central Iowa Energy, LLC, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof and hereof.
“ Acquisition Documents ” means the Acquisition Agreement and all other documents related thereto and executed in connection therewith.
“ Advances ” means the Loans provided the Borrower pursuant to this Agreement and the Supplements to this Agreement.
“ Affiliate ” means, as to any Person, any other Person: (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such Person; (b) that directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting stock or membership interests (units) of such Person; or (c) ten percent (10%) or more of the voting stock or membership interests (units) of which is directly or indirectly beneficially owned or held by the Person in question. The term “control” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however , in no event shall the Lender or any Bank be deemed an Affiliate of the Borrower or any of their subsidiaries.
“ Agreement ” means this Agreement, as this Agreement may be amended, modified or supplemented from time to time, together with all supplements, exhibits and schedules attached to or made a part of this Agreement from time to time.
“ Allowed Distributions ” has the meaning specified in Section 5.02(b).
“ Applicable Rate ” means, in relation to any Loan which bears interest on a variable rate, the interest rate per annum which is equal to the greater of the (i) LIBOR Rate and (ii) two percent (2.0%).
“ Avista ” means Avista Trade OY.
“ Borrower ” means REG Newton, LLC, an Iowa limited liability company.
“ Borrower Rights ” means all statutory or regulatory rights of a borrower to disclosure of effective interest rates, differential interest rates, review of credit decisions, distressed loan restructuring, and rights of first refusal, as may be provided by the Agricultural Credit Act of 1987, 12 U.S.C. §§ 2199-2202e, and the implementing Farm Credit Administration regulations, 12 C.F.R. §617.7000, et seq.
“ Business Day ” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of the State of Minnesota, or are in fact closed in, the state where the Lender’s Office is located and, if such day relates to any LIBOR Rate, means any such day on which dealings in dollar deposits are conducted by and between banks in the applicable offshore dollar interbank market.
“ Capital Expenditures ” means, for any period, the sum of all amounts that would, in accordance with generally accepted accounting principles consistently applied, be included as additions to property, plant and equipment on a statement of cash flows for the Borrower during such period, with respect to: (a) the acquisition, construction, improvement, replacement or betterment of land, buildings, machinery, equipment or of any other fixed
assets or leaseholds; or (b) other capital expenditures and other uses recorded as capital expenditures having substantially the same effect.
“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
“ CIE Loan ” mean that certain revolving line of credit loan dated September 26, 2006 from Lender to Central Iowa Energy, LLC.
“ Collateral ” means and includes, without limitation, all property and assets granted as collateral security for the Loans or other indebtedness, in favor of the Lender, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, assignment of rents, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever; whether created by law, contract or otherwise.
“ Commitment ” means the respective amounts committed to by Lender under this Agreement, the Supplements and the Notes.
“ Compliance Certificate ” means a certificate of the Treasurer, or any other officer reasonably acceptable to the Lender, of the Borrower, substantially in the form attached hereto as Exhibit A, setting forth the calculations of current financial covenants and stating: (a) the financial statements are true and correct and, other than the unaudited interim financial statements, have been prepared in accordance with generally accepted accounting principles consistently applied; (b) whether they have knowledge of the occurrence of any Event of Default under this Agreement, and if so, stating in reasonable detail the facts with respect thereto; and (c) reaffirm and ratify the representations and warranties, as of the date of the certificate, contained in this Agreement.
“ Current Portion of Long Term Debt ” means that portion of Funded Debt payable within the twelve months prior to the date of such determination, determined in accordance with GAAP.
“ Debt ” means: (A) indebtedness for borrowed money or for the deferred purchase price of property or services; (B) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (C) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (A) or (B) above or (E) through (G) below; (D) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (E) indebtedness in respect of mandatory redemption or mandatory dividend rights on equity interests but excluding dividends payable
solely in additional equity interests; (F) all obligations of a Person, contingent or otherwise, for the payment of money under any noncompete, consulting or similar agreement entered into with the seller of a company or its assets or any other similar arrangements providing for the deferred payment of the purchase price for an acquisition permitted hereby or an acquisition consummated prior to the date hereof; and (G) all obligations of a Person under any Hedging Agreement.
“ Debt Service Reserve Amount ” has the meaning specified in Section 2.14.
“ Debt Service Reserve Account ” means that certain account maintained by the Borrower for the benefit of the Lender, for the purpose set forth in Section 2.14 of this Agreement.
“ Default Rate ” means the lesser of: (a) the Maximum Rate; or (b) the rate per annum which shall from day-to-day be equal to five percent (5%) in excess of the then applicable rate of interest under the applicable Supplement or Note.
“ Deposit Account ” means all demand, times savings, passbook and similar accounts maintained by Borrower with a financial institution.
“ Distribution ” means any dividend, distribution, payment, or transfer of property by the Borrower to any member of the Borrower.
“ Effective Date ” means March 8, 2010.
“ Environmental Laws ” means all federal, state and local laws, statutes, rules, regulations, ordinances, programs, permits, guidances, orders and consent decrees relating to health, safety and environmental matters applicable to the Borrower and its business, assets and property, including, without limitation, the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq ., as amended; CERCLA; the Toxic Substance Act, 15 U.S.C. § 2601 et seq ., as amended; the Clean Water Act, 33 U.S.C. § 466 et seq ., as amended; the Clean Air Act, 42 U.S.C. § 7401 et seq ., as amended; state and federal superlien and environmental cleanup programs; and U. S. Department of Transportation regulations.
“ EBITDA ” means for any period, the total of the following each calculated without duplication for the Borrower for such period: (i) Net Income +/- Extraordinary Items; plus (ii) any provision for (or less any benefit from) Income Taxes included in determining such Net Income; plus (iii) Interest Expense deducted in determining such Net Income; plus (iv) amortization and depreciation expense deducted in determining such Net Income.
“ ERISA ” means the Employee Retirement Income Security Act of 1974.
“ Events of Default ” has the meaning specified in Section 6.01.
“ Excess Cash Flow ” means EBITDA, less the sum of: (i) required payments in respect of
Funded Debt, the final payment in respect of the Revolving Line of Credit Loan on the Revolving Line of Credit Maturity Date; (ii) Interest Expense; (iii) any increase in Working Capital from the prior calculation of Excess Cash Flow until total Working Capital exceeds $6,000,000.00; (iv) without duplication, Maintenance Capital Expenditures in an aggregate amount not to exceed $500,000.00 per fiscal year; (v) Allowed Distributions; and (vi) funding of Debt Service Reserve Account.
“ Excess Cash Flow Payment ” has the meaning specified in Section 2.15.
“ Excess Distributions ” has the meaning specified in Section 5.02(b).
“ Extraordinary Items ” means items which are material and significantly different from the Borrower’s typical business activities, including, without limitation, any payments received from Avista in settlement or satisfaction of the claims asserted by Central Iowa Energy, LLC, against Avista, determined in accordance with GAAP.
“ Fixed Charge Coverage Ratio ” means the ratio of EBITDA to the sum of: Current Portion of Long Term Debt + Interest Expense + Distributions + Maintenance Capital Expenditures.
“ Food Security Act ” means the Food Security Act of 1985, 7 U.S.C. §1631, as amended, and the regulations promulgated thereunder.
“ Funded Debt ” means the principal amount of all Debt of the Borrower having a final maturity of more than one year from the date of origin thereof (or which is renewable or extendible at the option of the obligor for a period or periods more than one year from the date of origin) excluding, however, any line of credit used by Borrower for working capital purposes, all determined in accordance with GAAP applied for the period in question.
“ GAAP ” means generally accepted accounting principles of the United States of America, consistently applied.
“ Governmental Authority ” means and includes any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipality, city, or otherwise) whether now or hereafter in existence.
“ Guaranty” / “Guaranties ” shall mean those guaranties given by the Guarantor, pursuant to which the Guarantor shall guarantee the prompt payment and performance of the Borrower under the Notes and this Agreement subject to the terms thereof.
“ Guarantor ” means REG.
“ Hedging Agreement ” means any interest rate swap, interest rate caps, interest rate collars or other similar agreements enabling a Person to fix or limit its interest expense or pursuant to any foreign exchange, currency hedging, commodity hedging, security hedging or other
agreement enabling a Person to limit the market risk of holding currency, a security or a commodity in either the cash or futures markets.
“ Income Taxes ” means the applicable state, local or federal tax on the net income of the Borrower.
“ Intellectual Property ” has the meaning specified in Section 4.01(p).
“ Interest Expense ” means for any period, the total interest expense of the Borrower calculated on a consolidated basis.
“ Interest Period ” means (for each Loan) (a) initially, the period beginning on (and including) the date on which the Loan is made and ending on (but excluding) the first day of the next calendar month thereafter; and (b) thereafter, each period commencing on the first day of each succeeding calendar month thereafter and ending on the last day of such month. Notwithstanding the foregoing: (a) any Interest Period which would otherwise extend beyond the Maturity Date shall end on the Maturity Date, and (b) other than the initial Interest Period and the final Interest Period, no Interest Period shall have a duration of less than one (1) month.
“ Inventory ” means all of the Borrower’s inventory, as such term is defined in the UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts or components, supplies or materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located.
“ Lender ” means AgStar Financial Services, PCA, and its successors and assigns.
“ LIBOR Rate ” (London Interbank Offered Rate) means the One Month London Interbank Offered Rate (“One Month LIBOR”), rounded upward to the nearest ten thousandth of one percent, reported on the tenth day of the month preceding each Interest Period by the Wall Street Journal in its daily listing of money rates, defined therein as the average of interbank offered rates for dollar deposits in the London market. If a One Month LIBOR rate is not reported on the tenth day of a month, the One Month LIBOR rate reported on the first business day preceding the tenth day of the month will be used. If this index is no longer available, Lender will select a new index which is based upon comparable information.
“ Loan Documents ” means this Agreement, any and all Supplements to this Agreement, the Notes, the Security Agreement, the Mortgage and all other agreements, documents, instruments, and certificates of the Borrower delivered to, or in favor of, the Lender under this Agreement or in connection herewith or therewith, including, without limitation, all agreements, documents, instruments, and certificates delivered in connection with the extension of Advances by the Lender.
“ Loan Obligations ” means all obligations, indebtedness, and liabilities of the Borrower to the Lender, arising pursuant to any of the Loan Documents, whether now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the obligation of the Borrower to repay the Advances, interest on the Advances, and all fees, costs, and expenses (including, without limitation, reasonable attorneys’ fees and expenses) provided for in the Loan Documents.
“ Loan/Loans ” means and includes the Term Loan, the Revolving Line of Credit Loan and any other financial accommodations extended to the Borrower by the Lender pursuant to the terms of this Agreement and any Supplements.
“ Long Term Debt ” means indebtedness that matures more than one year after the date of determination thereof.
“ Long Term Marketing Agreement ” means any contract, agreement or understanding of the Borrower having a term of one year or more after the date of determination thereof relating to the sale of any raw materials, inventory, products or by-products of the Borrower.
“ Maintenance Capital Expenditures ” means all Capital Expenditures, not to exceed an aggregate amount of $500,000 per fiscal year, made in the ordinary course of business to maintain existing business operations of the Borrower in any fiscal year, determined in accordance with GAAP.
“ Material Adverse Effect ” means any set of circumstances or events which: (i) has any material adverse effect upon the validity or enforceability of any Loan Documents or any material term or condition contained therein; (ii) is material and adverse to the condition (financial or otherwise), business assets, operations, or property of the Borrower; or (iii) materially impairs the ability of the Borrower to perform the obligations under the Loan Documents.
“ Material Contract ” means (i) any contract or any other agreement, written or oral, of the Borrower involving monetary liability of or to any such person in an amount in excess of $500,000.00 per annum; and (ii) any other contract or agreement, written or oral, of the Borrower the failure to comply with which could reasonably be expected to have a Material Adverse Effect on the Borrower; provided, however, that any contract or agreement which is terminable by a party other than the Borrower without cause upon notice of 90 days or less shall not be considered a Material Contract.
“ Maturity Date ” means March 8, 2013.
“ Maximum Rate ” means the maximum nonusurious interest rate, if any, at any time, or from time to time, that may be contracted for, taken, reserved, charged or received under applicable state or federal laws.
“ Mortgage ” means that certain Mortgage of even date herewith, as amended, modified or supplemented from time to time, pursuant to which a mortgage interest shall be granted by
the Borrower to the Lender in the Real Property to secure payment to the Lender of the Loan Obligations.
“ Net Income ” means net income as determined in accordance with GAAP.
“ Note/Notes ” means and includes the Term Note, Revolving Line of Credit Note and all other promissory notes executed and delivered to the Lender by the Borrower pursuant to the terms of this Agreement and any Supplements as the same may be amended, modified, supplemented, extended or restated from time to time.
“ Ordinary Trade Payable Dispute ” means trade accounts payable, in an aggregate amount not in excess of $200,000.00 with respect to the Borrower, and with respect to which: (a) there exists a bona fide dispute between Borrower and the vendor; (b) the Borrower is contesting the same in good faith by appropriate proceedings; and (c) the Borrower has established appropriate reserves on its financial statements.
“ Permitted Liens ” shall have the meaning ascribed to the term in Section 5.02(a).
“ Person ” means any individual, corporation, business trust, association, company, partnership, joint venture, governmental authority, or other entity.
“ Personal Property ” means all equipment, fixtures, improvements, building supplies and materials and other personal property now or hereafter attached to, located in, placed in or necessary to the use of the improvements on the Real Property including, but without being limited to, all machinery, fixtures, equipment, furnishings, and appliances, as well as all renewals, replacements, additions, and substitutes thereof, and all products and proceeds thereof, and including without limitation all inventory, farm products, accounts, instruments, chattel paper, other rights to payment, money, deposit accounts, commodity accounts, investment property, insurance proceeds and general intangibles of the Borrower, whether now owned or hereafter acquired.
“ Plant ” means the biodiesel production facility owned by Borrower and located in or near Newton, Jasper County, Iowa.
“ REG ” means Renewable Energy Group, Inc., a Delaware corporation.
“ Real Property ” means that real property located in Jasper County, Iowa, owned by the Borrower, upon which the Plant is located and which is described in Schedule 3.01(d).
“ Related Documents ” means and includes without limitation all promissory notes, credit agreements, loan agreements, supplements, guaranties, security agreements, mortgages, deeds of trust, assignments and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the indebtedness.
“ Revolving Loans ” means the Revolving Line of Credit Loan and any other revolving loan provided by the Lender to the Borrower pursuant to the terms and conditions provided for in this Agreement and in any revolving loan supplement.
“ Revolving Line of Credit Loan ” means that line of credit from the Lender to the Borrower in the amount not to exceed $2,350,000.00 and pursuant to the terms and conditions provided for in this Agreement and the Second Supplement to the Agreement.
“ Revolving Line of Credit Note ” means that certain promissory note of even date herewith executed and delivered to the Lender by the Borrower in the amount of $2,350,000.00 and pursuant to the terms and conditions provided for in this Agreement and the Second Supplement to this Agreement.
“ Revolving Line of Credit Loan Maturity Date ” means the maturity date set forth in the Second Supplement to this Agreement.
“ SARA ” means the Superfund Amendment and Reauthorizations Act of 1986, as amended.
“ Security Agreement ” means and includes, without limitation, any agreements, promises, covenants, arrangements, understandings, or other agreements, whether created by law, contract, or otherwise, which evidence, govern, represent, or create a Security Interest, as the same has been and may hereafter be amended or otherwise modified.
“ Security Interest ” means and includes without limitation any type of collateral security, whether in the form of a lien, charge, mortgage, assignment of rents, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.
“ Subordinated Debt ” means all Debt that is subject to a subordination agreement acceptable to the Lender in its sole discretion.
“ Supplement ” has the meaning set forth in Section 2.01 of this Agreement.
“ Tangible Net Worth ” means the excess of total assets over total liabilities except Subordinated Debt, total assets and total liabilities each to be determined in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 5.01(c) for the Borrower, excluding, however, from the determination of total assets: (i) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, and other similar intangibles; (ii) treasury stock; (iii) securities which are not readily marketable; (iv) cash held in a sinking or other analogous fund established for the purpose of redemption, retirement or prepayment of capital stock or
Debt; (v) any write-up in the book value of any asset resulting from a revaluation thereof subsequent to the Effective Date; (vi) any write down in the book value of any asset resulting from purchase accounting adjustments required by GAAP; (vii) amortized start-up costs; and (viii) any items not included in clauses (i) through (vii) above which are treated as intangibles in conformity with generally accepted accounting principles.
“ Term Loan ” means any amortizing loan with a maturity of greater than one year provided by the Lender to the Borrower pursuant to the terms and conditions of this Agreement and the First Supplement to this Agreement.
“ Term Note ” means that certain promissory note of even date herewith executed and delivered to the Lender by the Borrower in the amount of $23,610,731.50 and pursuant to the terms and conditions provided for in this Agreement and the First Supplement to this Agreement.
“ Working Capital ” means the current assets of the Borrower (excluding the Debt Service Reserve Amount and cash), less the current liabilities of the Borrower (excluding the Current Portion of Long Term Debt) as determined in accordance with GAAP.
“ Working Capital Ratio ” means the ratio of current assets of the Borrower to current liabilities of the Borrower, excluding Current Portion of Long Term Debt and the Acquisition Advance from current liabilities.
Section 1.02. Accounting Matters . All accounting terms not specifically defined herein shall be construed in accordance with GAAP, except as otherwise stated herein. To enable the ready and consistent determination of compliance by the Borrower with its obligations under this Agreement, the Borrower will not change the manner in which either the last day of its fiscal year or the last days of the first three fiscal quarters of its fiscal years is calculated. Unless otherwise stated herein, accounting matters shall be determined solely with respect to the Borrower and not as consolidated with any other party.
Section 1.03. Construction . Wherever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate. The headings, captions or arrangements used in any of the Loan Documents are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of the Loan Documents, nor affect the meaning thereof.
AMOUNTS AND TERMS OF THE LOANS
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from time to time, a “ Supplement ” and, collectively, the “ Supplements ”). Each Supplement will set forth Lender’s commitment to make a Loan to the Borrower, the amount of the Loan(s), the purpose of the Loan(s), the interest rate or rate options applicable to the Loan(s), the repayment terms of the Loan(s), and any other terms and conditions applicable to the Loan(s). Each Supplement will also be accompanied by a Note of the Borrower setting forth the Borrower’s obligation to make payments of interest on the unpaid principal balance of the Loan(s), and fees and premiums, if any, and to repay the principal balance of the Loan(s). Each Loan will be governed by the terms and conditions contained in this Agreement and in the Note and the Supplement relating to that Loan.
Section 2.02. Term Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Agreement, the Lender has agreed to lend to Borrower and Borrower has agreed to borrow from Lender as of the Effective Date an amount not to exceed $23,610,731.50 for the purpose of the Acquisition. Such amount shall be loaned by Lender pursuant to the terms and conditions set forth in this Agreement and the First Supplement to this Agreement.
Section 2.03. Revolving Line of Credit Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Agreement, the Lender has agreed to lend to Borrower and Borrower has agreed to borrow from Lender, as of the Effective Date and from time to time thereafter, on a revolving basis an amount not to exceed $2,350,000.00. Such amount shall be loaned by Lender pursuant to the terms and conditions set forth in this Agreement and the Second Supplement to this Agreement. Pursuant to the terms and conditions in this Agreement, the Lender may extend additional Revolving Loans to the Borrower. Any such future Revolving Loans shall be provided by Lender pursuant to the terms and conditions of a future term Revolving Loan Supplement.
Section 2.04. Reserved .
Section 2.05 Default Interest . In addition to the rights and remedies set forth in this Agreement and notwithstanding any Note: (i) if the Borrower fails to make any payment to Lender when due, then at Lender’s option in each instance, such obligation or payment shall bear interest from the date due to the date paid at the Default Rate; (ii) upon the occurrence and during the continuance of an Event of Default beyond any applicable cure period, if any, at Lender’s option in each instance, the unpaid balances of the Loans shall bear interest from the date of the Event of Default or such later date as Lender shall elect at the Default Rate; (iii) after the maturity of any Loan, whether by reason of acceleration or otherwise, the unpaid principal balance of the Loan (including without limitation, principal, interest, fees and expenses) shall automatically bear interest at the Default Rate. Interest payable at the Default Rate shall be payable from time to time on demand or, if not sooner demanded, on the last day of each calendar month.
Section 2.06. Late Charge . If any payment of principal or interest due under the Supplements or the Notes is not paid within ten (10) days of the due date thereof, the Borrower shall, in addition to such amount, pay a late charge equal to five percent (5%) of the amount of such payment.
Section 2.07. Prepayment of Loans . The Borrower may, at anytime and from time to time, upon 60 days advance written notice to the Lender, prepay the outstanding amount of the Loans in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, without penalty or premium but subject to Sections 2.13 and 7.04 of this Agreement. Any prepayment does not otherwise affect Borrower’s obligation to pay any fees due under this Agreement nor the amount of any installments due under the Loans.
Section 2.08. Changes in Law Rendering Certain LIBOR Rate Loans Unlawful . In the event that any change in any applicable law (including the adoption of any new applicable law) or any change in the interpretation of any applicable law by any judicial, governmental or other regulatory body charged with the interpretation, implementation or administration thereof, should make it (or in the good-faith judgment of the Lender should raise a substantial question as to whether it is) unlawful for the Lender to make, maintain or fund LIBOR Rate Loans, then: (a) the Lender shall promptly notify each of the other parties hereto; and (b) the obligation of the Lender to make LIBOR rate loans of such type shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness. During the period of any suspension, Lender shall make loans to Borrower that are deemed lawful and that as closely as possible reflect the terms of this Agreement.
Section 2.09. Payments and Computations .
(a) Method of Payment . Except as otherwise expressly provided herein, all payments of principal, interest, and other amounts to be made by the Borrower under the Loan Documents shall be made to the Lender in U.S. dollars and in immediately available funds, without set-off, deduction, or counterclaim, not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Borrower shall, at the time of making each such payment, specify to the Lender the sums payable under the Loan Documents to which such payment is to be applied and in the event that the Borrower fails to so specify or if an Event of Default exists, the Lender may apply such payment and any proceeds of any Collateral to the Loan Obligations in such order and manner as it may elect in its sole discretion.
(b) Application of Funds . Lender may apply all payments received by it to the Loan Obligations in such order and manner as Lender may elect in its sole discretion; provided that any payments received from any guarantor or from any disposition of any collateral provided by such guarantor shall only be applied against obligations guaranteed by such guarantor.
(c) Payments on a Non-Business Day . Whenever any payment under any Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest and fees, as the case may be.
(d) Proceeds of Collateral . Except to the extent otherwise expressly provided in the Second Supplement to the Master Loan Agreement of even date with this Agreement, all
proceeds received by the Lender from the sale or other liquidation of the Collateral when an Event of Default exists shall first be applied as payment of the accrued and unpaid fees and expenses of the Lender hereunder, including, without limitation, under Section 7.04 and then to all other unpaid or unreimbursed Loan Obligations (including reasonable attorneys’ fees and expenses) owing to the Lender and then any remaining amount of such proceeds shall be applied to the unpaid amounts of Loan Obligations, until all the Loan Obligations have been paid and satisfied in full or cash collateralized. After all the Loan Obligations (including without limitation, all contingent Loan Obligations) have been paid and satisfied in full, all Commitments terminated and all other obligations of the Lender to the Borrower otherwise satisfied, any remaining proceeds of Collateral shall be delivered to the Person entitled thereto as directed by the Borrower or as otherwise determined by applicable law or applicable court order.
(e) Computations . Except as expressly provided otherwise herein, all computations of interest and fees shall be made on the basis of actual number of days lapsed over a year of 365 days, as appropriate. Interest shall accrue from and include the date of borrowing, but exclude the date of payment.
Section 2.10. Maximum Amount Limitation . Anything in this Agreement, any Supplement, any Note, or the other Loan Documents to the contrary notwithstanding, Borrower shall not be required to pay unearned interest on any Note or any of the Loan Obligations, or ever be required to pay interest on any Note or any of the Loan Obligations at a rate in excess of the Maximum Rate, if any. If the effective rate of interest which would otherwise be payable under this Agreement, any Note or any of the other Loan Documents would exceed the Maximum Rate, if any, then the rate of interest which would otherwise be contracted for, charged, or received under this Agreement, any Note or any of the other Loan Documents shall be reduced to the Maximum Rate, if any. If any unearned interest or discount or property that is deemed to constitute interest (including, without limitation, to the extent that any of the fees payable by Borrower for the Loan Obligations to the Lender under this Agreement, any Supplement, any Note, or any of the other Loan Documents are deemed to constitute interest) is contracted for, charged, or received in excess of the Maximum Rate, if any, then such interest in excess of the Maximum Rate shall be deemed a mistake and canceled, shall not be collected or collectible, and if paid nonetheless, shall, at the option of the holder of such Note, be either refunded to the Borrower, or credited on the principal of such Note. It is further agreed that, without limitation of the foregoing and to the extent permitted by applicable law, all calculations of the rate of interest or discount contracted for, charged or received by the Lender under its Note, or under any of the Loan Documents, that are made for the purpose of determining whether such rate exceeds the Maximum Rate applicable to the Lender, if any, shall be made, to the extent permitted by applicable laws (now or hereafter enacted), by amortizing, prorating and spreading during the period of the full terms of the Advances evidenced by the Notes, and any renewals thereof all interest at any time contracted for, charged or received by Lender in connection therewith. This Section 2.10 shall control every other provision of all agreements among the parties to this Agreement pertaining to the transactions contemplated by or contained in the Loan Documents, and the terms of this Section 2.10 shall be deemed to be incorporated in every Loan Document and communication related thereto.
Section 2.11. Lender Records . All advances and all payments or prepayments made thereunder on account of principal or interest may be evidenced by the Lender in accordance with its usual practice in an account or accounts evidencing such advances and all payments or prepayments thereunder from time to time and the amounts of principal and interest payable and paid from time to time thereunder; in any legal action or proceeding in respect of the Notes, the entries made in such account or accounts shall be prima facie evidence of the existence and amounts of all advances and all payments or prepayments made thereunder on account of principal or interest. Lender shall provide monthly statements of such entries to Borrower for the purpose of confirming the accuracy of such entries.
Section 2.12. Loan Payments . During the continuance of an Event of Default, the Lender may deduct any obligations due or any other amounts due and payable by the Borrower under the Loan Documents from any Deposit Accounts controlled by Lender or from the Debt Service Reserve Account maintained with the Lender, at the Lender’s sole discretion.
Section 2.13. Compensation . Upon the request of the Lender, the Borrower shall pay to the Lender such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to compensate it for any loss, cost, or expense (excluding loss of anticipated profits incurred by it) as a result of: (i) any payment, prepayment, or conversion of a LIBOR Rate Loan for any reason on a date other than the last day of the Interest Period for such Loan; or (ii) any failure by the Borrower for any reason (including, without limitation, the failure of any condition precedent specified in Section 3.01 to be satisfied) to borrow, extend, or prepay a LIBOR Rate Loan on the date for such borrowing, extension, or prepayment specified in the relevant notice of borrowing, extension or prepayment under this Agreement.
Such indemnification may include any amount equal to the excess, if any, of: (a) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrower, convert or extend to the last day of the applicable Interest Period (or in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such loan as provided for herein; over (b) the amount of interest (as reasonably determined by the Lender) which would have accrued to the Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank LIBOR market. The covenants of the Borrower set forth in this Section 2.13 shall survive the repayment of the Loans and other obligations under the Loan Documents hereunder.
Section 2.14. Debt Service Reserve Account . Borrower shall fund and maintain a debt service reserve in the Debt Service Reserve Account, in an amount equal to twelve (12) monthly payments of principal and interest on the Term Loan as determined from time to time by the Lender (the “ Debt Service Reserve Amount ”). Beginning with the first fiscal year end after the Effective Date, and at each fiscal year end thereafter, until such time as the balance in the Debt Service Reserve Account is equal to or greater than the Debt Service Reserve Amount, one hundred percent (100%) of Excess Cash Flow shall be deposited in the Debt Service Reserve Account by Borrower
within 120 days of each fiscal year end. The balance held in the Debt Service Reserve Account shall earn interest at the rate determined by the Lender from time to time.
If at any time after the Debt Service Reserve Amount has been fully funded by the Borrower the balance in the Debt Service Reserve Account is less than sixty-seven percent (67.0%) of the applicable Debt Service Reserve Amount, the Borrower shall, within sixty (60) days after receipt of notice from the Lender as provided herein, deposit in the Debt Service Reserve Account an amount sufficient to restore the balance in the Debt Service Reserve Account to an amount not less than the Debt Service Reserve Amount; provided, however, Borrower shall not be required to make a deposit in the Debt Service Reserve Account to the extent that such a deposit would exceed one hundred percent (100%) of Excess Cash Flow, calculated based upon unaudited monthly financial statements required by Section 5.01(c)(ii) of this Agreement for the month ending immediately prior to receipt of notice from the Lender. In the event that Borrower is not required to fully restore the balance in the Debt Service Reserve Account pursuant to the foregoing sentence, Borrower shall at the earliest possible date thereafter, to the extent of Excess Cash Flow determined on unaudited monthly financial statements required by Section 5.01(c)(ii) of this Agreement or audited financial statements required by Section 5.01(c)(i) of this Agreement, as applicable, deposit in the Debt Service Reserve Account such additional amounts as will restore the balance in the Debt Service Reserve Account to an amount not less than the Debt Service Reserve Amount.
As and when any of the Loan Obligations are past due, after any applicable grace periods have expired, under any Loan Document, Lender, in its sole discretion, may withdraw from the Debt Service Reserve Account the amount of the then past due Loan Obligations and apply such amounts to the payment of the past due Loan Obligations. Notwithstanding the foregoing sentence, if an Event of Default has occurred and is continuing under the Loan Documents, the Lender may, after any applicable grace periods have expired, withdraw amounts in the Debt Service Reserve Account, in its sole discretion, and apply such amounts to the payment of the Loan Obligations in such order and manner as Lender shall determine in its sole discretion. Withdrawals by the Lender of any amounts from the Debt Service Reserve Account to pay any Loan Obligations as provided in this Section 2.14 may be made without the requirement of any consent by or notice to the Borrower, provided that Lender shall provide to Borrower notice that such withdrawal was made within a reasonable time thereafter.
Borrower recognizes and acknowledges that its obligation to pay the Loan Obligations are absolute and unconditional and it is not dependent upon sufficient deposits in the Debt Service Reserve Account being available to make payment on any Loan Obligations, and nothing herein shall be construed to negate or modify the Borrower’s absolute and unconditional obligation to pay the Loan Obligations in accordance with the terms and conditions of this Agreement and the Loan Documents. Borrower shall execute and deliver to the Lender any and all deposit account control agreements the Lender may reasonably request in accordance with the terms and conditions of the Loan Documents, and take all actions and deliver all documents the Lender may reasonably request or require to perfect the Lender’s security interest in the Debt Service Reserve Account, in accordance with the terms and conditions of the Loan Documents.
Section 2.15. Excess Cash Flow . In addition to all other payments of principal and interest required under this Agreement, the Supplements and the Notes, beginning with the first fiscal year end after the Effective Date, and each fiscal year end thereafter until the Maturity Date, and provided that the Borrower is in compliance with Section 5.01(d) of this Agreement, and further provided that the Debt Service Reserve Account is funded as required by Section 2.14 of this Agreement, the Borrower shall remit to Lender on or before 120 days after the end of each fiscal year end of the Borrower, an amount equal to 50% of the Borrower’s Excess Cash Flow, calculated based upon audited fiscal year-end financial statements required by Section 5.01(c)(i) of this Agreement, (the “ Excess Cash Flow Payment” ). The Excess Cash Flow Payment shall be applied by the Lender to the reduction of the outstanding principal balance of the Term Loan.
