UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2013
Commission File Number 001-32924
Green Plains Renewable Energy, Inc.
(Exact name of registrant as specified in its charter)
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Iowa |
84-1652107 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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450 Regency Parkway, Suite 400 , Omaha, NE 68114 |
(402) 884-8700 |
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(Address of principal executive offices, including zip code) |
(Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
S Yes £ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
S Yes £ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ Accelerated filer T Non-accelerated filer £ Smaller reporting company £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
£ Yes S No
The number of shares of common stock, par value $0.001 per share, outstanding as of April 30 , 2013 was 30,115,628 shares.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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2 |
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3 |
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5 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
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Item 3. |
35 |
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Item 4. |
37 |
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PART II – OTHER INFORMATION |
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Item 1. |
38 |
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Item 1A. |
38 |
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Item 2. |
38 |
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Item 3. |
38 |
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Item 4. |
38 |
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Item 5. |
38 |
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Item 6. |
39 |
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40 |
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1
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
(in thousands, except share amounts)
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March 31, |
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December 31, |
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2013 |
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2012 |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowances of $219 and $219, respectively |
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Inventories |
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Prepaid expenses and other |
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Deferred income taxes |
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Derivative financial instruments |
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Total current assets |
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Property and equipment, net of accumulated depreciation of |
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$177,175 and $164,445, respectively |
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Goodwill |
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Other assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
$ |
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$ |
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Accrued and other liabilities |
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Unearned revenue |
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Short-term notes payable and other borrowings |
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Current maturities of long-term debt |
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Total current liabilities |
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Long-term debt |
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Deferred income taxes |
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Other liabilities |
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Total liabilities |
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Stockholders' equity |
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Common stock, $0.001 par value; 75,000,000 shares authorized; |
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37,316,382 and 36,903,777 shares issued, and 30,116,382 |
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and 29,703,777 shares outstanding, respectively |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income (loss) |
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Treasury stock, 7,200,000 shares |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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See accompanying notes to the consolidated financial statements.
2
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
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Three Months Ended
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2013 |
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2012 |
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Revenues |
$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Operating income (loss) |
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Other income (expense) |
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Interest income |
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Interest expense |
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Other, net |
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Total other income (expense) |
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Income (loss) before income taxes |
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Income tax expense (benefit) |
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Net income (loss) |
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Net loss attributable to noncontrolling interests |
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- |
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Net income (loss) attributable to Green Plains |
$ |
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$ |
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Earnings per share: |
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Net income (loss) attributable to Green Plains - basic |
$ |
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$ |
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Net income (loss) attributable to Green Plains - diluted |
$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the consolidated financial statements.
3
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in thousands)
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Three Months Ended
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2013 |
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2012 |
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Net income (loss) |
$ |
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$ |
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Other comprehensive income (loss), net of tax : |
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Unrealized gains (losses) on derivatives arising during period, |
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net of tax expense (benefit) of $8,502 and $(25), respectively |
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Reclassification of realized losses on derivatives, net of tax |
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benefit of $4,509 and $1,491, respectively |
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Total other comprehensive income (loss), net of tax |
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Comprehensive loss |
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Comprehensive loss attributable to noncontrolling interests |
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- |
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Comprehensive loss attributable to Green Plains |
$ |
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$ |
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See accompanying notes to the consolidated financial statements.
4
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
5
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
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Continued from the previous page |
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Three Months Ended
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2013 |
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2012 |
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Supplemental disclosures of cash flow: |
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Cash paid for income taxes |
$ |
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$ |
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Cash paid for interest |
$ |
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$ |
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Supplemental noncash investing and financing activities: |
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Assets acquired in acquisitions and mergers |
$ |
- |
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$ |
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Less: liabilities assumed |
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- |
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Net assets acquired |
$ |
- |
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$ |
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Short-term note payable issued to repurchase common stock |
$ |
- |
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$ |
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See accompanying notes to the consolidated financial statements.
6
GREEN PLAINS RENEWABLE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
References to the Company
References to “Green Plains” or the “Company” in the consolidated financial statements and in these notes to the consolidated financial statements refer to Green Plains Renewable Energy, Inc., an Iowa corporation, and its subsidiaries.
Consolidated Financial Statements
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities which it controls. All significant intercompany balances and transactions have been eliminated on a consolidated basis for reporting purposes. Unconsolidated entities are included in the financial statements on an equity basis. Results for the interim periods presented are not necessarily indicative of results to be expected for the entire year.
The accompanying unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2012 .
The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The adjustments are of a normal recurring nature, except as otherwise noted.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Description of Business
Green Plains is North America’s fourth largest ethanol producer. The Company operates its business within four segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Additionally, the Company is a partner in a joint venture that was formed to commercialize advanced photo-bioreactor technologies for the growing and harvesting of algal biomass.
Revenue Recognition
The Company recognizes revenue when all of the following criteria are satisfied: persuasive evidence of an arrangement exists; risk of loss and title transfer to the customer; the price is fixed and determinable; and collectability is reasonably assured.
For sales of ethanol, distillers grains and other commodities by the Company’s marketing business, revenue is recognized when title to the product and risk of loss transfer to an external customer. Revenues related to marketing operations for third parties are recorded on a gross basis as the Company takes title to the product and assumes risk of loss. Unearned revenue is reflected on the consolidated balance sheets for goods in transit for which the Company has received payment and title has not been transferred to the customer. Revenues from the Company’s biofuel terminal operations, which include ethanol transload and splash blending services, are recognized as these services are rendered.
7
The Company routinely enters into fixed-price, physical-delivery ethanol sales agreements. In certain instances, the Company intends to settle the transaction by open market purchases of ethanol rather than by delivery from its own production. These transactions are reported net as a component of revenues. Revenues also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss).
Sales of agricultural commodities are recognized when title to the product and risk of loss transfer to the customer, which is dependent on the agreed upon sales terms with the customer. These sales terms provide for passage of title either at the time shipment is made or at the time the commodity has been delivered to its destination and final weights, grades and settlement prices have been agreed upon with the customer. Revenues related to grain merchandising are presented gross in the statements of operations with amounts billed for shipping and handling included in revenues and also as a component of cost of goods sold. Revenues from grain storage are recognized as services are rendered.
Cost of Goods Sold
Cost of goods sold includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of the Company’s ethanol plants. Grain purchasing and receiving costs, other than labor costs for grain buyers and scale operators, are also included in cost of goods sold. Direct materials consist of the costs of corn feedstock, denaturant, and process chemicals. Corn feedstock costs include unrealized gains and losses on related derivative financial instruments not designated as cash flow hedges, inbound freight charges, inspection costs and transfer costs. Corn feedstock costs also include realized gains and losses on related derivative financial instruments, ineffectiveness on cash flow hedges, and reclassifications of realized gains and losses on effective cash flow hedges from accumulated other comprehensive income (loss). Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Shipping costs incurred directly by the Company, including railcar lease costs, are also reflected in cost of goods sold.
The Company uses exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities on its agribusiness segment’s grain inventories and forward purchase and sales contracts. Exchange-traded futures and options contracts are valued at quoted market prices. Grain inventories held for sale, forward purchase contracts and forward sale contracts in the agribusiness segment are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the fair value of grain inventories held for sale, forward purchase and sale contracts, and exchange-traded futures and options contracts in the agribusiness segment, are recognized in earnings as a component of cost of goods sold. These contracts are predominantly settled in cash. The Company is exposed to loss in the event of non-performance by the counter-party to forward purchase and forward sales contracts.
Derivative Financial Instruments
To minimize the risk and the effects of the volatility of commodity price changes primarily related to corn, ethanol and natural gas, the Company uses various derivative financial instruments, including exchange-traded futures, and exchange-traded and over-the-counter options contracts. The Company monitors and manages this exposure as part of its overall risk management policy. As such, the Company seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. The Company may take hedging positions in these commodities as one way to mitigate risk. While the Company attempts to link its hedging activities to purchase and sales activities, there are situations in which these hedging activities can themselves result in losses.
By using derivatives to hedge exposures to changes in commodity prices, the Company has exposures on these derivatives to credit and market risk. The Company is exposed to credit risk that the counterparty might fail to fulfill its performance obligations under the terms of the derivative contract. The Company minimizes its credit risk by entering into transactions with high quality counterparties, limiting the amount of financial exposure it has with each counterparty and monitoring the financial condition of its counterparties. Market risk is the risk that the value of the financial instrument might be adversely affected by a change in commodity prices or interest rates. The Company manages market risk by incorporating monitoring parameters within its risk management strategy that limit the types of derivative instruments and derivative strategies the Company uses, and the degree of market risk that may be undertaken by the use of derivative instruments.
The Company evaluates its contracts that involve physical delivery to determine whether they may qualify for the normal purchases or normal sales exemption and are expected to be used or sold over a reasonable period in the normal course of business. Any contracts that do not meet the normal purchase or sales criteria are recorded at fair value with the change in fair value recorded in operating income unless the contracts qualify for, and the Company elects, hedge accounting treatment.
8
Certain qualifying derivatives within the ethanol production segment are designated as cash flow hedges. Prior to entering into cash flow hedges, the Company evaluates the derivative instrument to ascertain its effectiveness. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are reflected in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, the Company would discontinue cash flow hedge treatment, which would affect earnings. These derivative financial instruments are recognized in current assets or other current liabilities at fair value.
At times, the Company hedges its exposures to changes in the value of inventories and designates certain qualifying derivatives as fair value hedges. The carrying amount of the hedged inventory is adjusted through current period results for changes in the fair value arising from changes in underlying prices. Any ineffectiveness is recognized in current period results to the extent that the change in the fair value of the inventory is not offset by the change in the fair value of the derivative.
Recent Accounting Pronouncements
Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact the Company’s financial position or results of operations.
Effective January 1, 2013, the Company adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations. See Note 10, Stockholders’ Equity, for expanded disclosures.
2 . FAIR VALUE DISCLOSURES
The following methods, assumptions and valuation techniques were used in estimating the fair value of the Company’s financial instruments:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 unrealized gains and losses on commodity derivatives relate to exchange-traded open trade equity and option values in the Company’s brokerage accounts.
Level 2 – directly or indirectly observable inputs such as quoted prices for similar assets or liabilities in active markets other than quoted prices included within Level 1; quoted prices for identical or similar assets in markets that are not active; and other inputs that are observable or can be substantially corroborated by observable market data by correlation or other means. Grain inventories held for sale in the agribusiness segment are valued at nearby futures values, plus or minus nearby basis levels.
Level 3 – unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. The Company currently does not have any recurring Level 3 financial instruments.
There have been no changes in valuation techniques and inputs used in measuring fair value. Consistent with past practice, o n March 31, 2013, exchange-traded futures for corn were classified as Level 2 measurements to reflect the price limit set by the exchange for that day.
9
The following tables set forth the Company’s assets and liabilities by level that were accounted for the periods indicated (in thousands):
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Fair Value Measurements at March 31, 2013 |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Other Observable Inputs |
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Reclassification for Balance Sheet |
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(Level 1) |
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(Level 2) |
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Presentation |
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Total |
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Assets: |
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Cash and cash equivalents |
$ |
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$ |
- |
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$ |
- |
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$ |
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Restricted cash |
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- |
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- |
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Margin deposits |
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- |
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- |
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Inventories carried at market |
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- |
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- |
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Unrealized gains on derivatives |
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Total assets measured at fair value |
$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Unrealized losses on derivatives |
$ |
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$ |
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$ |
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$ |
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Other |
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- |
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- |
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Total liabilities measured at fair value |
$ |
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$ |
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$ |
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$ |
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Fair Value Measurements at December 31, 2012 |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Other Observable Inputs |
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Reclassification for Balance Sheet |
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(Level 1) |
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(Level 2) |
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Presentation |
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Total |
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Assets: |
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Cash and cash equivalents |
$ |
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$ |
- |
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$ |
- |
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$ |
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Restricted cash |
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- |
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- |
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Margin deposits |
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- |
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- |
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Inventories carried at market |
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- |
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- |
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Unrealized gains on derivatives |
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Total assets measured at fair value |
$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Unrealized losses on derivatives |
$ |
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$ |
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$ |
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$ |
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Other |
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- |
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- |
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Total liabilities measured at fair value |
$ |
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$ |
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$ |
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$ |
|
The Company believes the fair value s of its debt , accounts receivable and accounts payable approximate book value, which were $ 639.1 million , $ 78.9 million and $ 70.7 million, respectively, at March 31 , 201 3 and $ 663. 3 million , $ 80.5 million and $ 95.6 million, respectively, at December 31, 201 2 . The Company estimates the fair value of its outstanding debt using Level 2 inputs.
Although the Company currently does not have any recurring Level 3 financial measurements, the fair values of the tangible assets and goodwill acquired represent Level 3 measurements and were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued.
10
3. SEGMENT INFORMATION
Company management reviews financial and operating performance in the following four separate operating segments: (1) production of ethanol and distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities.
During the normal course of business, the Company enters into transactions between segments. Examples of these intersegment transactions include, but are not limited to, the ethanol production segment selling ethanol to the marketing and distribution segment and the agribusiness segment selling grain to the ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, revenues and corresponding costs are eliminated in consolidation and do not impact the Company’s consolidated results.
In December 2012, the Company sold twelve grain elevators located in northwestern Iowa and western Tennessee. The transaction involved approximately 32.6 million bushels, or 83%, of the Company’s reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations. The divested assets were reported within the Company’s agribusiness segment.
The following are certain financial data for the Company’s operating segments for the periods indicated (in thousands):
11
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||
|
|
|
2013 |
|
2012 |
||
|
Gross profit (loss): |
|
|
|
|
|
|
|
Ethanol production |
|
$ |
|
|
$ |
|
|
Corn oil production |
|
|
|
|
|
|
|
Agribusiness |
|
|
|
|
|
|
|
Marketing and distribution |
|
|
|
|
|
|
|
Intersegment eliminations |
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
Operating income (loss): |
|
|
|
|
|
|
|
Ethanol production |
|
$ |
|
|
$ |
|
|
Corn oil production |
|
|
|
|
|
|
|
Agribusiness |
|
|
|
|
|
|
|
Marketing and distribution |
|
|
|
|
|
|
|
Intersegment eliminations |
|
|
|
|
|
|
|
Corporate activities |
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
The following table sets forth revenues by product line for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||
|
|
|
2013 |
|
2012 |
||
|
Revenues: |
|
|
|
|
|
|
|
Ethanol |
|
$ |
|
|
$ |
|
|
Distillers grains |
|
|
|
|
|
|
|
Corn oil |
|
|
|
|
|
|
|
Grain |
|
|
|
|
|
|
|
Agronomy products |
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
The following are total assets for our operating segments for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
|
2013 |
|
2012 |
||
|
Total assets: |
|
|
|
|
|
|
|
Ethanol production |
|
$ |
|
|
$ |
|
|
Corn oil production |
|
|
|
|
|
|
|
Agribusiness |
|
|
|
|
|
|
|
Marketing and distribution |
|
|
|
|
|
|
|
Corporate assets |
|
|
|
|
|
|
|
Intersegment eliminations |
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
12
4. INVENTORIES
Inventories are carried at the lower of cost or market, except grain held for sale, which is valued at market value. The components of inventories are as follows (in thousands):
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
2013 |
|
2012 |
||
|
Finished goods |
$ |
|
|
$ |
|
|
Grain held for sale |
|
|
|
|
|
|
Raw materials |
|
|
|
|
|
|
Work-in-process |
|
|
|
|
|
|
Supplies and parts |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
5. GOODWILL
The Company did not have any changes in the total carrying amount of goodwill, which was $ 40.9 million , during the three months ended March 31 , 201 3 . Goodwill of $ 30.3 million is attributable to the ethanol production segment and $ 10.6 million is attributable to the marketing and distribution segment.
6. DERIVATIVE FINANCIAL INSTRUMENTS
At March 31, 2013, the Company’s consolidated balance sheet reflects unrealized losses , net of tax, of $2.4 million in accumulated other comprehensive loss . The Company expects that all of the unrealized losses at March 31, 2013 will be reclassified into operating income over the next 12 months as a result of hedged transactions that are forecasted to occur. The amount ultimately realized in operating income, however, will differ as commodity prices change.
Fair Values of Derivative Instruments
The following table provides information about the fair values of the Company’s derivative financial instruments and the line items o n the consolidated balance sheets in which the fair values are reflected (in thousands) :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives' |
|
Liability Derivatives' |
||||||||
|
|
Fair Value |
|
Fair Value |
||||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
|
December 31, |
||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
||||
|
Derivative financial instruments (1) |
$ |
|
|
$ |
|
|
$ |
- |
|
$ |
- |
|
Accrued and other liabilities |
|
- |
|
|
- |
|
|
|
|
|
|
|
Other liabilities |
|
- |
|
|
- |
|
|
- |
|
|
|
|
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(1) Derivative financial instruments as reflected on the consolidated balance sheets include margin deposit assets of $ 17.0 million and $ 12.8 million at March 31, 2013 and December 31, 2012, respectively .
(2) Balance at March 31, 2013 includes $ 6.4 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.
(3) Balance at December 31, 2012 includes $ 2.1 million of net unrealized gains on derivative financial instruments designated as cash flow hedging instruments.
Refer to Note 2 - Fair Value Disclosures , which also contains fair value information related to derivative financial instruments.
13
Effect of Derivative Instruments on Consolidated Statements of Operations and Consolidated Statements of Stockholders’ Equity and Comprehensive Income
The following tables provide information about the gain or loss recognized in income and other comprehensive income on the Company’s derivative financial instruments and the line items in the financial statements in which such gains and losses are reflected (in thousands) :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (Losses) on Derivative Instruments Not |
|
Three Months Ended
|
||||
|
Designated in a Hedging Relationship |
|
2013 |
|
2012 |
||
|
Revenue |
|
$ |
|
|
$ |
|
|
Cost of goods sold |
|
|
|
|
|
|
|
Net decrease recognized in earnings before tax |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Due to Ineffectiveness |
|
Three Months Ended
|
||||
|
of Cash Flow Hedges |
|
2013 |
|
2012 |
||
|
Revenue |
|
$ |
|
|
$ |
|
|
Cost of goods sold |
|
|
|
|
|
|
|
Net decrease recognized in earnings before tax |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Gains (Losses) Reclassified from Accumulated
|
|
Three Months Ended
|
||||
|
into Net Income (Loss) |
|
2013 |
|
2012 |
||
|
Revenue |
|
$ |
|
|
$ |
|
|
Cost of goods sold |
|
|
|
|
|
|
|
Net decrease recognized in earnings before tax |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Portion of Cash Flow
|
|
Three Months Ended
|
||||
|
Other Comprehensive Income (Loss) |
|
2013 |
|
2012 |
||
|
Commodity Contracts |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) from Fair Value |
|
Three Months Ended
|
||||
|
Hedges of Ethanol Inventory |
|
2013 |
|
2012 |
||
|
Revenue (effect of change in inventory value) |
|
$ |
|
|
$ |
|
|
Revenue (effect of fair value hedge) |
|
|
|
|
|
|
|
Ineffectiveness recognized in earnings before tax |
|
$ |
- |
|
$ |
- |
There were no gains or losses due to the discontinuance of cash flow hedge treatment or fair value hedge exposure during the three months ended March 31, 2013.
14
The following table summarizes the volumes of open commodity derivative positions as of March 31, 2013 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013 |
||||||||||
|
|
|
Exchange Traded |
|
Non-Exchange Traded |
|
|
|
|
||
|
Derivative Instruments |
|
Net Long & (Short) (1) |
|
Long (2) |
|
(Short) (2) |
|
Unit of Measure |
|
Commodity |
|
Futures |
|
|
|
|
|
|
|
Bushels |
|
Corn and Soybeans |
|
Futures |
|
|
(3) |
|
|
|
|
Bushels |
|
Corn |
|
Futures |
|
|
|
|
|
|
|
Gallons |
|
Ethanol |
|
Futures |
|
|
(3) |
|
|
|
|
Gallons |
|
Ethanol |
|
Futures |
|
|
|
|
|
|
|
Gallons |
|
Ethanol |
|
Options |
|
|
|
|
|
|
|
Bushels |
|
Corn, Soybeans and Wheat |
|
Options |
|
|
|
|
|
|
|
Gallons |
|
Ethanol |
|
Forwards |
|
|
|
|
|
|
|
Bushels |
|
Corn, Soybeans and Milo |
|
Forwards |
|
|
|
|
|
|
|
Gallons |
|
Ethanol |
|
Forwards |
|
|
|
|
|
|
|
Tons |
|
Distillers Grains |
|
Forwards |
|
|
|
|
|
|
|
Pounds |
|
Corn Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Exchange traded futures and options are presented on a net long and (short) position basis. Options are presented on a delta-adjusted basis. |
|
(2) |
Non-exchange traded forwards are presented on a gross long and (short) position basis including both fixed-price and basis contracts. |
|
(3) |
Futures used for cash flow hedges. |
|
(4) |
Futures used for fair value hedges. |
Energy trading contracts that do not involve physical delivery are presented net in revenues on the consolidated statements of operations. Revenues and cost of goods sold under such contracts are summarized in the table below for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||
|
|
2013 |
|
2012 |
||
|
Revenue |
$ |
|
|
$ |
|
|
Cost of goods sold |
|
|
|
|
|
15
7. DEBT
The principal balances of the components of long-term debt are as follows (in thousands):
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
||
|
|
2013 |
|
2012 |
||
|
Green Plains Bluffton: |
|
|
|
|
|
|
$70.0 million term loan |
$ |
|
|
$ |
|
|
$20.0 million revolving term loan |
|
|
|
|
|
|
$22.0 million revenue bond |
|
|
|
|
|
|
Green Plains Central City: |
|
|
|
|
|
|
$55.0 million term loan |
|
|
|
|
|
|
$30.5 million revolving term loan |
|
|
|
|
|
|
$11.0 million revolving line of credit |
|
|
|
|
|
|
Equipment financing loan |
|
|
|
|
|
|
Green Plains Holdings II: |
|
|
|
|
|
|
$26.4 million term loan |
|
|
|
|
|
|
$51.1 million revolving term loan |
|
|
|
|
|
|
Green Plains Obion: |
|
|
|
|
|
|
$60.0 million term loan |
|
|
|
|
|
|
$37.4 million revolving term loan |
|
|
|
|
|
|
Equipment financing loan |
|
|
|
|
|
|
Economic development grant |
|
|
|
|
|
|
Green Plains Ord: |
|
|
|
|
|
|
$25.0 million term loan |
|
|
|
|
|
|
$13.0 million revolving term loan |
|
|
|
|
|
|
$5.0 million revolving line of credit |
|
|
|
|
|
|
Green Plains Otter Tail: |
|
|
|
|
|
|
$30.3 million term loan |
|
|
|
|
|
|
$4.7 million revolver |
|
|
|
|
|
|
$19.2 million note payable |
|
|
|
|
|
|
Capital lease payable |
|
|
|
|
|
|
Green Plains Shenandoah: |
|
|
|
|
|
|
$17.0 million revolving term loan |
|
|
|
|
|
|
Green Plains Superior: |
|
|
|
|
|
|
$40.0 million term loan |
|
|
|
|
|
|
$10.0 million revolving term loan |
|
|
|
|
|
|
Equipment financing loan |
|
|
|
|
|
|
Corporate: |
|
|
|
|
|
|
$90.0 million convertible notes |
|
|
|
|
|
|
Notes Payable |
|
|
|
|
|
|
Capital Lease |
|
|
|
|
|
|
Other |
|
- |
|
|
|
|
Total long-term debt |
|
|
|
|
|
|
Less: current portion of long-term debt |
|
|
|
|
|
|
Long-term debt |
$ |
|
|
$ |
|
Short-term notes payable and other borrowings at March 31, 2013 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $ 110.5 million and $ 48. 0 million, respectively. Short-term notes payable and other borrowings at December 31, 2012 included working capital revolvers at Green Plains Grain and Green Plains Trade with outstanding balances of $ 105.0 million and $ 39.1 million, respectively, and a $ 27.2 million short-term note payable issued in conjunction with the March 2012 repurchase of common stock.
16
Ethanol Production Segment
|
· |
Term Loans |
|
o |
Scheduled principal payments are as follows: |
|
o |
Final maturity dates (at the latest) are as follows: |
|
· |
Revolving Term Loans – The revolving term loans are generally available for advances throughout the life of the commitment, subject, in certain cases, to borrowing base restrictions. Allowable advances under the Green Plains Shenandoah loan agreement are reduced by $ 1.0 million each six-month period commencing on June 1, 2013. Allowable advances under the Green Plains Superior loan agreement are reduced by $ 2.5 million each six-month period commencing on the first day of the month beginning six months after repayment of the term loan, but in no event later than January 1, 2016. Allowable advances under the Green Plains Obion loan agreement are reduced by $ 4.7 million on a semi-annual basis commencing on March 1, 2015. Allowable advances under the Green Plains Holdings II loan agreement are reduced by $ 2.7 million on a semi-annual basis commencing on April 1, 2012 and are reduced by $ 5.7 million on a semi-annual basis commencing on October 1, 2016. Interest-only payments are due each month on all revolving term loans until the final maturity date for the Green Plains Bluffton, Green Plains Central City, Green Plains Ord, Green Plains Otter Tail, Green Plains Shenandoah, and Green Plains Superior loan agreements. |
|
o |
Final maturity date s (at the latest) are as follows: |
Green Plains Bluffton also received $ 22.0 million in Subordinate Solid Waste Disposal Facility Revenue Bond funds from the City of Bluffton, Indiana. The revenue bond requires: (1) semi-annual principal and interest payments of approximately $ 1.5 million through March 1, 2019, and (2) a final principal and interest payment of $ 3.745 million on September 1, 2019. At March 31, 2013, Green Plains Bluffton had $ 2.5 million of cash that was restricted as to use for payment towards the current maturity and interest of the revenue bond. Such cash is presented as restricted cash on the consolidated balance sheet.
17
Green Plains Otter Tail also issued $ 19.2 million in senior notes under New Market Tax Credits financing . The notes bear interest at 4.75 % per annum, payable monthly , and require monthly principal payments of approximately $ 0.3 million beginning in October 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $ 4.7 million upon maturity.
Subsidiaries within the ethanol production segment were in compliance with their debt covenants as of March 31, 2013 .
Agribusiness Segment
Green Plains Grain has a $ 195.0 million senior secured revolving credit facility with various lenders. The revolving credit facility mature s on October 28, 2013 .
The revolving credit facility includes total revolving credit commitments of $ 195.0 million and an accordion feature whereby amounts available under the facility may be increased by up to $ 55.0 million of new lender commitments upon agent approval. As security for the revolving credit facility, the lender received a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. Advances are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period plus the applicable margin or a rate per annum equal to the base rate plus the applicable margin.
Subsidiaries within the agribusiness segment were in compliance with their debt covenants as of March 31, 2013 .
Marketing and Distribution Segment
Green Plains Trade has a senior secured asset-based revolving credit facility pursuant to which the lender will loan up to $ 13 0.0 million on eligible collateral. This credit facility was increased from $ 70.0 million in April 2013. The amount of eligible collateral is determine d by a calculated borrowing base value equal to the sum of percentages of eligible receivables and eligible inventories, less certain miscellaneous adjustments . The outstanding balance , if any, is subject to interest charges at the lender’s floating base rate plus 2.5% or LIBOR plus 3.5%. At March 31, 2013, Green Plains Trade had $ 1 1.6 million in cash that was restricted for repayment of the then outstanding loan balance . Such cash is presented in restricted cash on the consolidated balance sheets. The revolving credit facility expires on April 26 , 201 6 .
Green Plains Trade was in compliance with its debt covenants as of March 31, 2013 .
Corporate Activities
In November 2010, the Company issued $ 90.0 million of 5.75 % Convertible Senior Notes due 2015. The Notes represent senior, unsecured obligations of the Company, with interest payable on May 1 and November 1 of each year. The Notes may be converted into shares of the Company’s common stock and cash in lieu of fractional shares of the common stock based on a conversion rate initially equal to 69.7788 shares of the common stock per $ 1,000 principal amount of Notes, which is equal to an initial conversion price of $ 14.33 per share. The conversion rate is subject to adjustment upon the occurrence of specified events. The Company may redeem for cash all, but not less than all, of the Notes at any time on and after November 1, 2013, if the last reported sale price of the Company’s common stock equals or exceeds 140 % of the applicable conversion price for a specified time period, at a redemption price equal to 100 % of the principal amount of the Notes, plus accrued and unpaid interest.
A $27.2 million note payable to a subsidiary of NTR plc, which previously was the Company’s largest shareholder, was paid in full during the first quarter of 2013.
Capitalized Interest
The Company had no capitalized interest during the three months ended March 31, 2013 .
Restricted Net Assets
At March 31, 2013 , there were approximately $ 4 24.1 million of net assets at the Company’s subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.
18
In April 2013, the Green Plains Bluffton loan and the Green Plains Trade revolving credit facility were both amended. The discussion above has been updated to reflect these amendments.
8. STOCK-BASED COMPENSATION
The Company has equity incentive plans which reserve a combined total of 3.5 million shares of common stock for issuance pursuant to their terms. The plans provide for the granting of shares of stock, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock , and restricted and deferred stock unit awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity awards in its financial statements over the requisite service period on a straight-line basis. All of the Company’s existing share-based compensation awards have been determined to be equity awards.
A summary of stock option activity for the three months ended March 31, 2013 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
Weighted-Average Exercise Price |
|
Weighted-Average Remaining Contractual Term (in years) |
|
Aggregate Intrinsic Value (in thousands) |
||
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012 |
|
|
$ |
|
|
4.3 |
|
$ |
|
|
Granted |
- |
|
|
- |
|
|
|
|
|
|
Exercised |
|
|
|
|
|
|
|
|
|
|
Forfeited |
- |
|
|
- |
|
|
|
|
|
|
Expired |
- |
|
|
- |
|
|
|
|
|
|
Outstanding at March 31, 2013 |
|
|
$ |
|
|
4.3 |
|
$ |
|
|
Exercisable at March 31, 2013 (1) |
|
|
$ |
|
|
4.3 |
|
$ |
|
|
(1) |
Includes in-the-money options totaling 418 ,500 shares at a weighted-average exercise price of $ 7.63 . |
The Company’s option awards allow employees to exercise options through cash payment to the Company for the shares of common stock or through a simultaneous broker-assisted cashless exercise of a share option, through which the employee authorizes the exercise of an option and the immediate sale of the option shares in the open market. The Company uses newly-issued shares of common stock to satisfy its share-based payment obligations.
The following table summarizes non-vested stock award and deferred stock unit activity for the three months ended March 31, 2013:
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Non-Vested Shares and Deferred Stock Units |
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Weighted-Average Grant-Date Fair Value |
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Weighted-Average Remaining Vesting Term
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Nonvested at December 31, 2012 |
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$ |
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Granted |
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Forfeited |
- |
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- |
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Vested |
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|
Nonvested at March 31, 2013 |
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|
$ |
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|
2.2 |
Compensation costs expensed for share-based payment plans described above during the three months ended March 31, 2013 and 2012 were approximately $2.3 million and $2.2 million, respectively. At March 31, 2013, there were $6.4 million of unrecognized compensation costs from share-based compensation arrangements, which are related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 2.2 years. The potential tax benefit realizable for the anticipated tax deductions of the exercise of share-based payment arrangements generally would approximate 38% of these expense amounts.
19
9. EARNINGS PER SHARE
Basic earnings per common shares, or EPS, is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income on an as-if-converted basis available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of any outstanding dilutive securities. The reconciliations of net income to net income on an as-if-converted basis and basic and diluted earnings per share are as follows (in thousands):
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Three Months Ended |
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March 31, |
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2013 |
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2012 |
||
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Basic EPS: |
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|
|
Net income (loss) attributable to Green Plains |
$ |
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|
$ |
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|
Weighted average shares outstanding - basic |
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|
Net income (loss) attributable to Green Plains - basic |
$ |
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$ |
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Diluted EPS: |
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|
|
|
|
Net income (loss) attributable to Green Plains |
$ |
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|
$ |
|
|
Interest and amortization on convertible debt, net of tax effect |
|
- |
|
|
- |
|
Net income (loss) attributable to Green Plains on an as-if-converted basis |
$ |
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|
$ |
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|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
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|
|
|
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Effect of dilutive convertible debt |
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- |
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- |
|
Effect of dilutive stock-based compensation awards |
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- |
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Total potential shares outstanding |
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|
|
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|
|
|
|
|
Net income (loss) attributable to Green Plains - diluted |
$ |
|
|
$ |
|
Excluded from the computations of diluted EPS for the three months ended March 31 , 2013 and 2012 were stock-based compensation awards totaling 0 .4 million and 0.8 million shares , respectively, because the exercise prices or the grant-date fair value, as applicable, of the corresponding awards were greater than the average market price of the Company’s common stock during the respective periods. For the three months ended March 31 , 2013 and 2012 , 6.3 million and 6.6 million shares, respectively, related to stock-based compensation awards and the effect of the convertible debt were also excluded from the computation of diluted EPS as the inclusion of these shares would have been antidilutive. As consideration for the acquisition of the Lakota and Riga ethanol plants in October 2010, the Company issued warrants for 700,000 shares of its stock at a price of $14.00 per share exercisable for a period of three years from the closing date. The warrants are excluded from the computations of diluted EPS as the exercise price is greater than the average market price of the Company’s common stock for the three months ended March 31, 2013 and 2012 .
20
10. STOCKHOLDERS’ EQUITY
Components of stockholders’ equity are as follows (in thousands):
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Accum. |
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Other |
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Additional |
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Comp |
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Total |
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Common Stock |
Paid-in |
Retained |
Income |
Treasury Stock |
Stockholders' |
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Shares |
Amount |
Capital |
Earnings |
(Loss) |
Shares |
Amount |
Equity |
||||||
|
Balance, December 31, 2012 |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
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$ |
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|
Net income |
- |
|
- |
|
- |
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- |
- |
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- |
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Other comprehensive loss, |
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net of tax |
- |
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- |
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- |
|
- |
|
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- |
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- |
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|
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Stock-based compensation |
|
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- |
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|
|
- |
|
- |
- |
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- |
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Stock options exercised |
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- |
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|
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- |
|
- |
- |
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- |
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Balance, March 31, 2013 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
|
Changes in accumulated other comprehensive income during the three months ended March 31, 2013, net of tax, which related primarily to gains and losses on derivative financial instruments, are as follows (in thousands):
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Accumulated |
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Other Comp. |
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Income (Loss) |
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Balance, December 31, 2012 |
$ |
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||
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Other comprehensive income (loss) before reclassifications |
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Amounts reclassified from accumulated other |
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comprehensive income (loss) |
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Net current period other comprehensive income (loss) |
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||
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Balance, March 31, 2013 |
$ |
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Amounts reclassified from accumulated other comprehensive income are as follows (in thousands):
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Three Months Ended |
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March 31, |
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2013 |
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2012 |
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Statements of Operations Classification |
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Gains (losses) on cash flow hedges: |
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Ethanol commodity derivatives |
$ |
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$ |
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Revenues |
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Corn commodity derivatives |
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Cost of goods sold |
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Total |
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Income (loss) before income taxes |
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Income tax benefit |
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Income tax expense (benefit) |
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Amounts reclassified from accumulated other |
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comprehensive income (loss) |
$ |
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$ |
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11. INCOME TAXES
The Company records income tax expense or benefit during interim periods based on its best estimate of the annual effective tax rate. Certain items are given discrete period treatment and, as a result, the tax effects of such items are reported in full in the relevant interim period.
21
Income tax expense for the three months ended March 31, 2013 was $1.6 million compared to an income tax benefit of $8.0 million for the same period in 2012. The effective tax rate (calculated as the ratio of income tax expense to income before income taxes) was approximately 39% for both periods.
The Company’s u nrecognized tax benefits at March 31, 2013 and December 31, 201 2 were immaterial. There was no change in the Company’s liabilities related to unrecognized tax benefits during the first three months of 201 3 .
The 201 3 annual effective tax rate can be affected as a result of variances among the estimates and amounts of full-year sources of taxable income (among the various states), the realization of tax credits, adjustments that may arise from the resolution of tax matters under review, variances in the release of valuation allowances and the Company’s assessment of its liability for uncertain tax positions.
12. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain facilities and parcels of land under agreements that expire at various dates. For accounting purposes, rent expense is based on a straight-line amortization of the total payments required over the lease term. The Company incurred lease expenses of $5.0 million and $4.4 million during the three months ended March 31, 2013 and 2012, respectively. Aggregate minimum lease payments under these agreements for the remainder of 201 3 and in future fiscal years are as follows (in thousands):
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Year Ending December 31, |
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Amount |
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2013 |
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$ |
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2014 |
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2015 |
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2016 |
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2017 |
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Thereafter |
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Total |
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$ |
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Commodities
As of March 31, 2013 the Company had contracted for future purchases of grain, natural gas, ethanol and distillers grains valued at approximately $317.7 million, $4.6 million, $9.1 million and $5.9 million, respectively.
Legal
The Company is currently involved in litigation that has arisen in the ordinary course of business, but it does not believe that any other pending litigation will have a material adverse effect on its financial position, results of operations or cash flows.
13. RELATED PARTY TRANSACTIONS
Commercial Contracts
Two subsidiaries of the Company have executed separate financing agreements for equipment with AXIS Capital Inc. Gordon F. Glade, President and Chief Executive Officer of AXIS Capital, is a member of the Company’s Board of Directors. Totals of $ 0.2 million and $ 0.2 million were included in debt at March 31, 2013 and December 31, 201 2 , respectively, under these financing arrangements. Payments, including principal and interest, totaled $ 37 thousand and $ 0.2 million during the three months ended March 31, 2013 and 2012 , respectively , and the weighted average interest rate for all financing agreements with AXIS Capital was 6.1 %.
The Company has entered into ethanol purchase, sale and throughput agreements with Center Oil Company. Gary R. Parker, President and Chief Executive Officer of Center Oil, is a member of the Company’s Board of Directors. During the three months ended March 31, 2013 cash receipts from Center Oil totaled $0.6 million and cash payments to Center Oil totaled $1.0 million on these contracts. During the three months ended March 31, 2012, cash receipts from Center Oil totaled $2.2 million and cash payments to Center Oil totaled $1.0 million on these contracts. In October 2011, the Company also
22
entered into an operating lease agreement with Center Oil in which the Company will pay $ 42 thousand per month for the lease of 35 railcars. The agreement is effective through October 14 , 2013. The Company had $ 37 thousand and $14 thousand included in accounts receivable, net of any outstanding payables, from Center Oil at March 31, 2013 and December 31, 2012 , respectively.
Aircraft Lease
The Company has entered into an agreement with Hoovestol Inc. for the lease of an aircraft. Wayne B. Hoovestol, President of Hoovestol Inc., is Chairman of the Company’s Board of Directors. The Company has agreed to pay $ 6,667 per month for use of up to 100 hours per year of the aircraft. Any flight time in excess of 100 hours per year will incur additional hourly-based charges. During the three months ended March 31, 2013 and 2012, payments related to this lease totaled $3 5 thousand and $ 33 thousand , respectively . The Company had $4 thousand and $0 in accounts payable to Hoovestol Inc. at March 31, 2013 and December 31, 201 2, respectively .
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated financial condition and results of operations. This discussion should be read in conjunction with the consolidated financial statements included herewith and notes to the consolidated financial statements thereto and our annual report on Form 10-K for the year ended December 31, 201 2 including the consolidated financial statements, accompanying notes and the risk factors contained therein.
Cautionary Information Regarding Forward-Looking Statements
This report contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Forward-looking statements generally do not relate strictly to historical or current facts, but rather to plans and objectives for future operations based upon management’s reasonable estimates of future results or trends, and include statements preceded by, followed by, or that include words such as “anticipates,” “believes,” “continue,” “estimates,” “expects,” “intends,” “outlook,” “plans,” “predicts,” “may,” “could,” “should,” “will,” and words and phrases of similar impact, and include, but are not limited to, statements regarding future operating or financial performance, business strategy, business environment, key trends, and benefits of actual or planned acquisitions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that our expectations regarding future events are based on reasonable assumptions, a ny or all forward-looking statements in this report may turn out to be incorrect. They may be based on inaccurate assumptions or may not account for known or unknown risks and uncertainties. Consequently, no forward-looking statement is guaranteed, and actual future results may vary materially from the results expressed or implied in our forward-looking statements. The cautionary statements in this report expressly qualify all of our forward-looking statements. In addition, we are not obligated, and do not intend, to update any of our forward-looking statements at any time unless an update is required by applicable securities laws. Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A – Risk Factors of our annual report on Form 10-K for the year ended December 31, 201 2 and in Item 1A of Part II of this q uarterly r eport on Form 10-Q for the quarter ended March 31, 2013 . Specifically, we may experience significant fluctuations in future operating results due to a number of economic conditions, including, but not limited to, competition in the ethanol and other industries in which we compete, commodity market risks, financial market risks, counter-party risks, risks associated with changes to federal policy or regulation, risks related to closing and achieving anticipated results from acquisitions, and other risk factors detailed in our reports filed with the SEC. Actual results may differ from projected results due, but not limited, to unforeseen developments.
In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference in this report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
23
Overview
We are a leading, vertically-integrated producer, marketer and distributor of ethanol. We focus on generating stable operating margins through our diversified business segments and our risk management strategy. We believe that owning and operating assets throughout the ethanol value chain enables us to mitigate changes in commodity prices and differentiates us from companies focused only on ethanol production. Today, we have operations throughout the ethanol value chain, beginning upstream with our grain handling and storage operations, continuing through our ethanol, distillers grains and corn oil production operations and ending downstream with our ethanol marketing, distribution and blending facilities.
Management reviews our operations with in the following four separate operating segments:
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· |
Ethanol Production. We are North America’s fourth largest ethanol producer. We operate a total of nine ethanol plants in Indiana, Iowa, Michigan, Minnesota, Nebraska and Tennessee, with approximately 740 million gallons per year, or mmgy, of total ethanol production capacity. At capacity, these plants collectively consume approximately 262 million bushels of corn and produce approximately 2.1 million tons of distillers grains annually. |
|
· |
Corn Oil Production. We operate corn oil extraction systems at all nine of our ethanol plants, with the capacity to produce approximately 155 million pounds annually. The corn oil systems are designed to extract non-edible corn oil from the whole stillage process immediately prior to production of distillers grains. Industrial uses for corn oil include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives, inks, textiles, soaps and insecticides. |
|
· |
Agribusiness. Within our bulk grain business, we have three grain elevators with approximately 5.8 million bushels of total storage capacity. Our ethanol production segment has approximately 11.0 million bushels of additional storage capacity at our ethanol plants. We believe our bulk grain business provides synergies with our ethanol production segment as it supplies a portion of the feedstock for our ethanol plants. |
|
· |
Marketing and Distribution.
Our in-house marketing business is responsible for the sales, marketing and distribution of all ethanol, distillers grains and corn oil produced at our nine ethanol plants. We also market and provide logistical services for ethanol and other commodities for third-party producers. Additionally, our wholly-owned subsidiary, BlendStar LLC, operates eight blending or terminaling facilities with approximately 831 mmgy of total throughput capacity in seven south central U.S. states.
|
We intend to continue to take a disciplined approach in evaluating new opportunities related to potential acquisition of additional ethanol plants by considering whether the plants fit within the design, engineering and geographic criteria we have developed. In our marketing and distribution segment, our strategy is to expand our marketing efforts by entering into new or renewal contracts with other ethanol producers and realize additional profit margins by optimizing our commodity logistics . During 2013 and 2014 , we plan to add between five and ten million bushels per year of grain storage capacity around our ethanol plants to take advantage of our current grain handling infrastructure and processing demand . We also intend to pursue opportunities to develop or acquire additional grain elevators, specifically those located near our ethanol plants. We believe that owning additional grain handling and storage operations in close proximity to our ethanol plants enables us to strengthen relationships with local corn producers, allowing us to source corn more effectively and at a lower average cost. We also own approximately 52% of BioProcess Algae LLC, which was formed to commercialize advanced photo-bioreactor technologies for growing and harvesting algal biomass. We continue our support of the BioProcess Algae joint venture.
To optimize the value of our assets, we began utilizing a portion of our railcar fleet to transport crude oil for third parties. At March 31, 2013, we had 632 railcars deployed for crude oil transportation.
Industry Factors Affecting our Results of Operations
Variability of Commodity Prices. Our operations and our industry are highly dependent on commodity prices, especially prices for corn, ethanol, distillers grains and natural gas. Because the market prices of these commodities are not always correlated, at times ethanol production may be unprofitable. As commodity price volatility poses a significant threat to our margin structure, we have developed a risk management strategy focused on locking in favorable operating margins when available. We continually monitor market prices of corn, natural gas and other input costs relative to the prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using a combination of derivative instruments, fixed-price purchases and sales contracts, or a combination of strategies within strict limits. Our primary focus is not to manage general price movements of individual commodities, for example to minimize the cost of corn consumed, but rather to lock in favorable profit margins whenever possible. By using a variety of risk management tools and hedging
24
strategies, including our internally-developed real-time margin management system, we believe we are able to maintain a disciplined approach to price risks.
A combination of factors resulted in compressed ethanol margins in 2012. The ethanol industry increased production in the fourth quarter of 2011 to meet demand from ethanol blenders seeking to take advantage of the volumetric ethanol excise tax credit prior to its expiration on December 31, 2011. As a result, ethanol stocks at the end of 2011 exceeded normal market levels which caused ethanol margins to compress to near break-even levels in the first half of 2012. Additionally, corn prices traded to all-time highs during 2012 due to drought conditions in the midwestern region of the United States. According to the Energy Information Administration, or EIA, as an industry, ethanol producers have responded to these factors by reducing production by approximately 4.9% in 2012 compared to 2011. EIA data also show ethanol imports increased from 174 million gallons in 2011 to 533 million gallons in 2012. Under the Renewable Fuels Standard II, or RFS II, certain parties are obligated to blend, in the aggregate, 2.0 billion gallons of advanced biofuels in 2012. During 2012, sugarcane ethanol imported from Brazil, which totaled approximately 530 million gallons, has been one of the most economical means for obligated parties to meet this standard. We believe the Brazilian government will increase the required percentage of ethanol in vehicle fuel sold in Brazil to 25 percent (from 20 percent) as sugarcane production rises, which would likely limit ethanol exports from Brazil into the U.S .
U.S. ethanol production reached its lowest level since 2010 in the first quarter of 2013, averaging an annualized rate of 12.2 billion gallons compared with a 14.0 billion gallon annualized rate in the first quarter of 2012 and the 13.8 billion gallon RFS II mandate for 2013. As a result of the U.S. ethanol industry rationalizing production, inventory stocks reached a low of 734 million gallons at the end of March 2013, the lowest level since December 2011. Lower production and lower stocks has had a positive effect on ethanol margins in the first quarter of 2013, which are significantly better than during the first quarter of 2012 . We believe that U.S. ethanol production levels will continue to adjust to supply and demand factors for ethanol and corn.
There may be periods of time that, due to the variability of commodity prices and compressed margins, we reduce or cease ethanol production operations at certain of our ethanol plants. In 2012, we reduced production volumes at several of our ethanol plants in direct response to unfavorable operating margins, and have continued our production during the first quarter of 2013 at approximately 92 % of our total capacity.
Reduced Availability of Capital. Some ethanol producers have faced financial distress over the past few years, culminating with bankruptcy filings by several companies. This, in combination with continued volatility in the capital markets, has resulted in reduced availability of capital for the ethanol industry in general. In this market environment, we may experience limited access to incremental financing.
Legislation. Federal and state governments have enacted numerous policies, incentives and subsidies to encourage the usage of domestically-produced alternative fuel solutions. Passed in 2007 as part of the Energy Independence and Security Act, RFS II has been, and we expect will continue to be, a driving factor in the growth of ethanol usage. On April 10, 2013 the Renewable Fuel Standard Elimination Act was introduced as H.R. 1461. The bill is targeted to repeal the renewable fuel program of the Environmental Protection Agency. This bill was assigned to a congressional committee, which will consider it before possibly sending it on to the House or Senate as a whole.
Under the provisions of the Energy Independence and Security Act, the EPA has the authority to waive the mandated RFS II requirements in whole or in part. To grant the waiver, the EPA administrator must determine, in consultation with the Secretaries of Agriculture and Energy, that one of two conditions has been met: (1) there is inadequate domestic renewable fuel supply or (2) implementation of the requirement would severely harm the economy or environment of a state, region or the United States. In the third quarter of 2012, several waiver requests were filed with the EPA based on drought conditions, which were subsequently denied by the EPA.
To further drive the increased adoption of ethanol, Growth Energy, an ethanol industry trade association, and a number of ethanol producers requested a waiver from the EPA to increase the allowable amount of ethanol blended into gasoline from the current 10% level, or E10, to a 15% level, or E15. Through a series of decisions beginning in October 2010, the EPA has granted a waiver for the use of E15 in model year 2001 and newer passenger vehicles, including cars, SUVs, and light pickup trucks. In June 2012, the EPA gave final approval for the sale and use of E15 ethanol blends. The nation’s first retail E15 ethanol blends were sold in July 2012. According to the EPA, as of December 31, 2012, 79 fuel manufacturers were registered to sell E15. Approximately 72% of the passenger vehicles in service are eligible to use E15. The Domestic Alternative Fuels Act of 2012 was introduced on January 18, 2012 in the U.S. House of Representatives and was re-introduced March 15, 2013 as H.R. 1214 to provide liability protection for claims based on the sale or use of certain fuels and fuel additives . Passage of this bill would provide liability protection to consumers in the event they unintentionally put any
25
transportation fuel into their motor vehicle for which such fuel has not been approved.
Industry Fundamentals . The ethanol industry is supported by a number of market fundamentals that drive its long-term outlook and extend beyond the short-term margin environment. Following the EPA’s approval, the industry is working to broadly introduce E15 into the retail fuel market. The RFS II mandate increased to 13.8 billion gallons for 2013, 600 million gallons over the mandated volume in 2012, and continues to increase each year through 2015. The domestic gasoline market continues to evolve as refiners are producing more CBOB, a sub-grade (84 octane) gasoline, which requires ethanol or other octane sources to meet the minimum octane rating requirements for the U.S. gasoline market. The demand for ethanol is also affected by the overall demand for transportation fuel, which peaked in 2007 and has been declining steadily since then. Demand for transportation fuel is affected by the number of miles traveled by consumers and the fuel economy of vehicles. Market acceptance of E15 may partially offset the effects of this decrease. Consumer acceptance of E15 and E85 fuels is needed before ethanol can achieve any significant growth in market share. In addition, ethanol export markets, although affected by competition from other ethanol exporters, mainly from Brazil, are expected to remain active in 2013. Overall, the industry is operating at the mandated levels and ethanol prices have continued to remain at a large discount to gasoline, providing blenders and refiners with a strong economic incentive to blend.
BioProcess Algae Joint Venture
The BioProcess Algae joint venture is focused on developing technology to grow and harvest algae, which consume carbon dioxide, in commercially viable quantities. Construction of Phase II next to our Shenandoah ethanol plant was completed and the Grower Harvesters™ bioreactors were successfully started up in January 2011. Phase II allowed for verification of growth rates, energy balances and operating expenses, which are considered to be some of the key steps to commercialization. We increased our ownership of BioProcess Algae to approximately 52% during the first quarter of 2013. However, we do not possess the requisite control of this investment to consolidate it.
BioProcess Algae initiated Phase III and broke ground on a five-acre algae farm at the Shenandoah ethanol plant in the first quarter of 2012. Construction is complete on approximately three acres of the algae farm and the facilities were inoculated with algae in October 2012. Construction of Phase IV, involving the addition of 900-foot Grower Harvester reactors and a new processing facility , has begun with completion expected in early 2014 . BioProcess Algae announced on April 22, 2013, that it had been selected to receive a grant of up to $6.4 million from the U.S. Department of Energy as part of a pilot-scale biorefinery project related to production of hydrocarbon fuels meeting military specification. The project will use renewable carbon dioxide, lignocellulosic sugars and waste heat through BioProcess Algae’s Grower Harvester technology platform. The objective of the project is to demonstrate technologies to cost-effectively convert biomass into advanced drop-in biofuels . BioProcess Algae is required to contribute a minimum of 50% matching funds for the project.
If we and the other BioProcess Algae members determine that the venture can achieve the desired economic performance from Phases III and IV, a larger build-out, possibly as large as 200 to 400 acres, of Grower Harvester reactors at the Shenandoah ethanol plant will be considered. Such a build-out may be completed in stages and could take up to two years to complete. Funding for BioProcess Algae for such a project would come from a variety of sources including current partners, new equity investors, debt financing or a combination thereof.
Critical Accounting Policies and Estimates
This disclosure is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are proper and reasonable under the circumstances. We continually evaluate the appropriateness of estimates and assumptions used in the preparation of our consolidated financial statements. Actual results could differ materially from those estimates. Key accounting policies, including but not limited to those relating to revenue recognition, depreciation of property and equipment, impairment of long-lived assets and goodwill, derivative financial instruments, and accounting for income taxes, are impacted significantly by judgments, assumptions and estimates used in the preparation of the consolidated financial statements. See further discussion of our critical accounting policies and estimates, as well as significant accounting policies, in our annual report on Form 10-K for the year ended December 31, 2012 .
26
Recent Accounting Pronouncements
Effective January 1, 2013, we adopted the amended guidance in ASC Topic 210, Balance Sheet. The amended guidance addresses disclosure of offsetting financial assets and liabilities. It requires entities to add disclosures showing both gross and net information about instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. The updated disclosures have been implemented retrospectively and do not impact our financial position or results of operations.
Effective January 1, 2013, we adopted the amended guidance in ASC Topic 220, Comprehensive Income. The amended guidance requires entities to disclose additional information about reclassification adjustments, including (1) changes in accumulated other comprehensive income by component and (2) significant items reclassified out of accumulated other comprehensive income by presenting the amount reclassified and the individual income statement line items affected. The updated disclosures have been implemented prospectively and do not impact our financial position or results of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, results of operations or liquidity.
Components of Revenues and Expenses
Revenues . In our ethanol production segment, our revenues are derived primarily from the sale of ethanol and distillers grains, which is a co-product of the ethanol production process. In our corn oil production segment, our revenues are derived from the sale of corn oil, which is extracted from the whole stillage process immediately prior to the production of distillers grains. In our agribusiness segment, the sale of grain is our primary source of revenue. In our marketing and distribution segment, the sale of ethanol, distillers grains and corn oil that we market for our nine ethanol plants, the sale of ethanol we market for third-party ethanol plants and the sale of other commodities purchased in the open market represent our primary sources of revenue. Revenues also include net gains or losses from derivatives.
Cost of Goods Sold. Cost of goods sold in our ethanol production and corn oil production segments includes costs for direct labor, materials and certain plant overhead costs. Direct labor includes all compensation and related benefits of non-management personnel involved in the operation of our ethanol plants. Plant overhead costs primarily consist of plant utilities, plant depreciation and outbound freight charges. Our cost of goods sold in these segments is mainly affected by the cost of corn, natural gas, purchased distillers grains and transportation. Within our corn oil segment, we compensate the ethanol plants for the value of distillers grains displaced during the production process. In the ethanol production segment, corn is our most significant raw material cost. We purchase natural gas to power steam generation in our ethanol production process and to dry our distillers grains. Natural gas represents our second largest cost in this business segment. Cost of goods sold also includes net gains or losses from derivatives.
Grain acquisition costs represent the primary components of cost of goods sold in our agribusiness segment. Grain inventories held for sale , forward purchase contracts and forward sale contracts are valued at market prices, where available, or other market quotes adjusted for differences, primarily transportation, between the exchange-traded market and the local markets on which the terms of the contracts are based. Changes in the market value of grain inventories, forward purchase and sale contracts, and exchange-traded futures and options contracts are recognized in earnings as a component of cost of goods sold.
In our marketing and distribution segment, purchases of ethanol, distillers grains and corn oil represent the largest components of cost of goods sold. Transportation expense represents an additional major component of our cost of goods sold in this segment. Transportation expense includes rail car leases, freight and shipping of our ethanol and co-products, as well as costs incurred in storing ethanol at destination terminals.
Selling, General and Administrative Expenses. Selling, general and administrative expenses are recognized at the operating segment level, as well as at the corporate level. These expenses consist of employee salaries, incentives and benefits; office expenses; board fees; and professional fees for accounting, legal, consulting, and investor relations activities. Personnel costs, which include employee salaries, incentives and benefits, are the largest single category of expenditures in selling, general and administrative expenses. We refer to selling, general and administrative expenses that are not allocable to a segment as corporate activities.
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Other Income (Expense). Other income (expense) includes interest earned, interest expense and other non-operating items.
Results of Operations
Segment Results
Our operations fall within the following four segments: (1) production of ethanol and related distillers grains, collectively referred to as ethanol production, (2) corn oil production, (3) grain handling and storage, collectively referred to as agribusiness, and (4) marketing and logistics services for Company-produced and third-party ethanol, distillers grains, corn oil and other commodities, and the operation of blending and terminaling facilities, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities. When the Company’s management evaluates segment performance, they review the information provided below, as well as segment earnings before interest, income taxes, noncontrolling interest, depreciation and amortization.
During the normal course of business, our operating segments enter into transactions with one another. For example, our ethanol production and corn oil production segments sell ethanol, distillers grains and corn oil to our marketing and distribution segment and our agribusiness segment sells grain to our ethanol production segment. These intersegment activities are recorded by each segment at prices approximating market and treated as if they are third-party transactions. Consequently, these transactions impact segment performance. However, intersegment revenues and corresponding costs are eliminated in consolidation, and do not impact our consolidated results.
In December 2012, we sold 12 grain elevators located in northwestern Iowa and western Tennessee consisting of approximately 32.6 million bushels, or approximately 85%, of our grain storage capacity and all of our agronomy and retail petroleum operations, which will affect the comparability of our operating results. The table below reflects selected operating segment financial information for the periods indicated (in thousands):
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Three Months Ended
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Operating income (loss): |
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Ethanol production |
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Three Months Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012
Consolidated Results
Revenues decreased $9.9 million for the three months ended March 31, 2013 compared to the same period in 2012 as a result of lower grain and agronomy sales due to the sale of certain grain elevators during the fourth quarter of 2012 partially offset by higher average prices for ethanol and distillers grains. Gross profit increased $18.4 million for the three months ended March 31, 2013 compared to the same period in 2012 primarily as a result of improved margins for ethanol production and for marketing and distribution activities. Operating income (loss) increased by $23.8 million to $12.7 million for the three months ended March 31, 2013 compared to the same period in 2012 as a result of the factors discussed above. Selling, general and administrative expenses were $5.4 million lower for the three months ended March 31, 2013 compared to the same period in 2012 due most significantly to the sale of certain grain elevators during the fourth quarter of 2012. Interest expense decreased by $1.0 million for the first three months of 2013 compared to the same period in 2012 due to lower average debt balances. Income tax expense was $1.6 million for the three months ended March 31, 2013 compared to an income tax benefit of $8.0 million for the same period in 2012.
The following discussion of segment results provides greater detail on period - to - period results.
Ethanol Production Segment
The table below presents key operating data within our ethanol production segment for the periods indicated:
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Revenues in the ethanol production segment increased by $50.9 million for the three months ended March 31, 2013 compared to the same period in 2012. The increase in revenues was due to higher average ethanol and distillers grains prices. The ethanol production segment produced 170.4 million gallons of ethanol, which represents approximately 92% of production capacity, during the first three months of 2013.
Cost of goods sold in the ethanol production segment increased by $39.6 million for the three months ended March 31, 2013 compared to the same period in 2012. Consumption of corn decreased by 2.1 million bushels but the average cost per bushel increased by 14% during the three months ended March 31, 2013 compared to the same period in 2012. Average ethanol yield increased to 2.85 gallons per bushel for the three months ended March 31, 2013 compared to 2.84 gallons per bushel in the same period of 2012. Reduced production rates at certain of our plants, along with process improvements that we have implemented, have resulted in this yield improvement. Cost of goods sold also included a one-time charge related to the settlement of a legal claim in the first quarter of 2012. As a result of the factors identified above, gross profit for the ethanol production segment increased by $11.3 million for the three months ended March 31, 2013 compared to the same period in 2012.
Operating income in the ethanol production segment increased by $11.5 million for the three months ended March 31, 2013, compared to the same period in 2012, to a loss of $2.3 million, due in large part to the factors discussed above. Depreciation and amortization expense for the ethanol production segment was $11.1 million for the three months ended March 31, 2013 compared to $11.0 million during the same period in 2012.
Corn Oil Production Segment
Revenues in the corn oil production segment increased by $2.2 million for the three months ended March 31, 2013 compared to the same period in 2012. During the three months ended March 31, 2013, we sold 38.1 million pounds of corn oil compared to 33.5 million pounds in the same period of 2012. The average price for corn oil was 2% higher for the first three months of 2013 compared to the same period in 2012.
Gross profit and operating income in the corn oil production segment were comparable for the three months ended March 31, 2013 and 2012. The increases in revenues were offset by $2.2 million of additional expense related to higher input costs due to the increased prices for distillers grains during the three months ended March 31, 2013 compared to the same period in 2012.
Agribusiness Segment
Our agribusiness segment had decreases of $31.2 million in revenues, $5.0 million in gross profit, and $0.3 million in operating income for the three months ended March 31, 2013 compared to the same period in 2012. We sold 11.0 million bushels of grain and had no fertilizer sales during the three months ended March 31, 2013 compared to sales of 14.4 million bushels of grain and 2.4 thousand tons of fertilizer during the same period in 2012. Revenues, gross profit and operating income decreased primarily due to the sale of certain agribusiness assets in the fourth quarter of 2012.
Marketing and Distribution Segment
Revenues in our marketing and distribution segment increased by $43.5 million for the three months ended March 31, 2013 compared to the same period in 2012. The increase in revenues was primarily due to higher average prices of ethanol and distillers grains partially offset by lower ethanol volumes sold, as well as higher revenues from railcars used for crude oil transportation and expanding trading and logistics operations. Ethanol and distillers grains revenues increased by $17.7 million and $12.6 million, respectively. We sold 239.2 million and 251.4 million gallons of ethanol during the three months ended March 31, 2013 and 2012, respectively, within the marketing and distribution segment.
Gross profit and operating income for the marketing and distribution segment increased $12.9 million and $12.5 million, respectively, for the three months ended March 31, 2013 compared to the same period in 2012, primarily due to profits realized from commodity trading and logistics, the deployment of railcars for crude oil transportation and the Birmingham unit-train terminal.
Intersegment Eliminations
Intersegment eliminations of revenues increased $75.3 million for the three months ended March 31, 2013 compared to the same period in 2012 due to increases of $37.8 million and $15.1 million in ethanol and distillers grains, respectively, related to sales from our ethanol production segment to our marketing and distribution segment. In addition, corn sales from our agribusiness segment to our ethanol segment increased $19.8 million between the periods.
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Corporate Activities
Operating income was impacted by a decrease in operating expenses for corporate activities of $0.8 million for the three months ended March 31, 2013 compared to the same period in 2012 primarily due to a decrease in personnel, consulting and promotional costs.
Income Taxes
We record income tax expense or benefit during interim periods based on our best estimate of the annual effective tax rate. Certain items are given discrete period treatment and, as a result, the tax effects of such items are reported in full in the relevant interim period. We recorded income tax expense of $ 1.6 million for the three months ended March 31, 2013 compared to an income tax benefit of $ 8.0 million for the same period in 201 2 . The effective tax rate (calculated as the ratio of income tax expense to income before income taxes) was approximately 39% for both periods . The annual effective tax rate can be affected as a result of variances among the estimates and amounts of full-year sources of taxable income (among the various states), the realization of tax credits, adjustments that may arise from the resolution of tax matters under review, variances in the release of valuation allowances and an assessment of our liability for uncertain tax positions.
EBITDA
Management uses earnings before interest, income taxes, noncontrolling interests, depreciation and amortization, or EBITDA, to measure our financial performance and to internally manage our businesses. Management believes that EBITDA provides useful information to investors as a measure of comparison with peer and other companies. EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. EBITDA calculations may vary from company to company. Accordingly, our computation of EBITDA may not be comparable with a similarly titled measure of another company. The following sets forth the reconciliation of net income (loss) to EBITDA for the periods indicated (in thousands):
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Net income (loss) attributable to Green Plains |
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Liquidity and Capital Resources
On March 31, 2013 , we had $ 229.8 million in cash and equivalents, excluding restricted cash, comprised of $ 73.2 million held at our parent company and the remainder at our subsidiaries. We also had up to an additional $ 107 .0 million available under revolving credit agreements at our subsidiaries, some of which was subject to borrowing base restrictions or other specified lending conditions at March 31, 2013 . Funds held at our subsidiaries are generally required for their ongoing operational needs and distributions from our subsidiaries are restricted pursuant to these loan agreements. At March 31, 2013 , there were approximately $ 424.1 million of net assets at our subsidiaries that were not available to be transferred to the parent company in the form of dividends, loans or advances due to restrictions contained in the credit facilities of these subsidiaries.
We incurred capital expenditures of $ 1.9 million in the first three months of 201 3 for various projects. Capital spending for the remainder of 201 3 is expected to be approximately $ 18.1 million which includes expansion of the grain storage facilities at some of our ethanol plants . The remainder of our capital spending is expected to be financed with available borrowings under our credit facilities and cash provided by operating activities.
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Net cash used by operating activities was $ 11.1 million for the three months ended March 31, 2013 compared to $ 92.9 million for the same period in 201 2 . The largest operating c ash outlays for the three months ended March 31, 2013 related to payments for deferred grain contract payables , accrued expenses and derivative financial instruments . Cash used by operating activities for the three months ended March 31, 201 2 included significant cash outflows for deferred grain contract payables and inventory purchases . Additionally, during the three months ended March 31, 2012 , we incurred a net loss of $ 12.7 million. Net cash used by investing activities was $ 2.7 million for the three months ended March 31, 2013 , due primarily to $1.9 million in capital expenditures. Net cash use d by financing activities was $ 10.7 million for the three months ended March 31, 2013 due primarily to net payments of long-term debt totaling $11.4 million and payment of a short-term note payable of $27.2 million related to a 2012 common stock repurchase , offset partially by a $ 13.6 million net increase in short-term debt and inventory financing arrangements used to finance grain contract settlements and inventory purchases and a $14.0 million decrease in restricted cash related to a revolving credit agreement in the first three months of 201 3 . Green Plains Trade and Green Plains Grain utilize revolving credit facilities to finance working capital requirements. These facilities are frequently drawn upon and repaid resulting in significant cash movements that are reflected on a gross basis within financing activities as proceeds from and payments on short-term borrowings.
Our business is highly impacted by commodity prices, including prices for corn, ethanol, distillers grains and natural gas. We attempt to reduce the market risk associated with fluctuations in commodity prices through the use of derivative financial instruments. Sudden changes in commodity prices may require cash deposits with brokers, or margin calls. Depending on our open derivative positions, we may require significant liquidity with little advanced notice to meet margin calls. We continuously monitor our exposure to margin calls and believe that we will continue to maintain adequate liquidity to cover such margin calls from operating results and borrowings. I ncreases in grain prices and hedging activity have led to more frequent and larger margin calls.
We were in compliance with our debt covenants at March 31, 2013 . Based upon our forecasts and the current margin environment, we believe certain ethanol production subsidiaries may require capital injections from the parent company at times to maintain compliance with certain covenants during 2013 . We believe we will maintain compliance with our debt covenants at each of our subsidiaries for the upcoming twelve months, or if necessary have sufficient liquidity available at the parent company to resolve a subsidiary’s noncompliance; however, no obligation exists to provide such liquidity for a subsidiary’s compliance. No assurance can be provided that actual operating results will approximate our forecasts or that we will inject the necessary capital into a subsidiary to maintain compliance with its respective covenants. In the event actual results differ significantly from our forecasts and a subsidiary is unable to comply with its respective debt covenants, the subsidiary’s lenders may determine that an event of default has occurred. Upon the occurrence of an event of default, and following notice, the lenders may terminate any commitment and declare the entire unpaid balance due and payable.
We believe that we have sufficient working capital for our existing operations. However, we can provide no assurance that we will be able to secure additional funding for our future operations. A sustained period of unprofitable operations may strain our liquidity and make it difficult to maintain compliance with our financing arrangements. While we may seek additional sources of working capital in response, we can provide no assurance that we will be able to secure this funding if necessary. We may sell additional equity or borrow additional amounts to improve or preserve our liquidity; expand our existing businesses; or build additional or acquire existing businesses. We can provide no assurance that we will be able to secure the funding necessary for these additional projects or for additional working capital needs at reasonable terms, if at all.
Debt
For additional information related to our debt, see Note 7 – Debt included herein as part of the Notes to Consolidated Financial Statements and Note 10 – Debt included as part of the Notes to Consolidated Financial Statements included in our a nnual r eport on Form 10-K for the year ended December 31, 2012 . In April 2013, we amended the Green Plains Bluffton loan and the Green Plains Trade revolving credit facility. The discussion below has been updated to reflect these amendments .
Ethanol Production Segment
Each of our ethanol production segment subsidiaries have credit facilities with lender groups that provide for term and revolving term loans to finance construction and operation of the production facilities.
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The Green Plains Bluffton loan is comprised of a $70.0 million amortizing term loan and a $20.0 million revolving term loan. At March 31, 2013, $ 39.3 million related to the amortizing term loan was outstanding, along with the entire revolving term loan. The amortizing term loan requires monthly principal payments of approximately $0.6 million , reducing to approximately $0.3 million beginning in May 2013 . The loans mature on January 31, 2015 with expected outstanding balances upon maturity of $ 23.3 million and $20.0 million on the amortizing term loan and revolving term loan, respectively.
The Green Plains Central City loan is comprised of a $55.0 million amortizing term loan and a $30.5 million revolving term loan as well as a revolving line of credit of up to $11.0 million. At March 31, 2013, $ 37.3 million related to the amortizing term loan was outstanding, along with $28.6 million on the revolving term loan and $10.6 million on the revolving line of credit. The amortizing term loan requires monthly principal payments of $0.5 million. The amortizing term loan and the revolving term loan mature on July 1, 2016 with expected outstanding balances upon maturity of $17.9 million and $ 24.3 million, respectively, and the revolving line of credit matures on June 27, 2013. We expect to extend or refinance the revolving credit facility prior to its maturity date .
The Green Plains Holdings II loan is comprised of a $26.4 million amortizing term loan and a $51.1 million revolving term loan. At March 31, 2013, $ 20.4 million was outstanding on the amortizing term loan, along with $45.3 million on the revolving term loan. The amortizing term loan requires quarterly principal payments of $1.5 million. The revolving term loan requires semi-annual principal payments of approximately $2.7 million. The maturity dates of the amortizing term loan and revolving term loan are July 1, 2016 and October 1, 2018, respectively, with no outstanding balance expected upon maturity on the amortizing term loan and an expected outstanding balance upon maturity of $ 3.8 million on the revolving term loan.
The Green Plains Obion loan is comprised of a $60.0 million amortizing term loan and a revolving term loan of $37.4 million. At March 31, 2013, $ 11.1 million related to the amortizing term loan was outstanding along with the entire revolving term loan. The amortizing term loan requires quarterly principal payments of $2.4 million. The amortizing term loan matures on May 20, 2014 and the revolving term loan matures on June 1, 2018 with no expected outstanding balances upon maturity on the amortizing term loan or the revolving term loan.
The Green Plains Ord loan is comprised of a $25.0 million amortizing term loan and a $13.0 million revolving term loan as well as a revolving line of credit of up to $5.0 million. At March 31, 2013, $17. 1 million related to the amortizing term loan was outstanding, $12.2 million on the revolving term loan, along with $4.7 million on the revolving line of credit. The amortizing term loan requires monthly principal payments of approximately $0.2 million. The amortizing term loan and the revolving term loan mature on July 1, 2016 with expected outstanding balances upon maturity of $8.2 million and $12.2 million, respectively, and the revolving line of credit matures on June 27, 2013. We expect to extend or refinance the revolving credit facility prior to maturity.
The Green Plains Otter Tail loan is comprised of a $30.3 million amortizing term loan and a $4.7 million revolver. At March 31, 2013, $ 21.6 million related to the term loan and the entire revolver were outstanding. The amortizing term loan requires monthly principal payments of approximately $0.4 million. The amortizing term loan matures on September 1, 2018 with an expected outstanding balance of $4.8 million and the revolver matures on June 19, 2013. We expect to extend or refinance the revolver prior to maturity.
The Green Plains Shenandoah loan is comprised of a $17.0 million revolving term loan. At March 31, 2013, the entire $17.0 million on the revolving term loan was outstanding. The revolving term loan matures on March 1, 2018 with an expected outstanding balance upon maturity of $7.0 million.
The Green Plains Superior loan is comprised of a $40.0 million amortizing term loan and a $10.0 million revolving term loan. At March 31, 2013, $ 13.9 million related to the amortizing term loan was outstanding, along with the entire revolving term loan. The amortizing term loan requires quarterly principal payments of $1.4 million. The amortizing term loan matures on July 20, 2015 and the revolving term loan matures on July 1, 2017 with an expected outstanding balance upon maturity of $1.5 million on the amortizing term loan and no expected outstanding balance upon maturity on the revolving term loan.
Each term loan , except for the Green Plains Holdings II and Green Plains Otter Tail agreements, has a provision that requires us to make annual special payments equal to a percentage ranging from 65% to 75% of the available free cash flow from the related entity’s operations (as defined in the respective loan agreements), subject to certain limitations. With certain exceptions, the revolving term loans within this segment are generally available for advances throughout the life of the commitment with interest-only payments due each month until the final maturity date.
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The term loans and revolving term loans bear interest at LIBOR plus 3.00% to 4.50% or lender-established prime rates. Some have established a floor on the underlying LIBOR index. In some cases, the lender may allow us to elect to pay interest at a fixed interest rate to be determined. As security for the loans, the lenders received a first-position lien on all personal property and real estate owned by the respective entity borrowing the funds, including an assignment of all contracts and rights pertinent to construction and on-going operations of the plant. Additionally, debt facilities of Green Plains Central City and Green Plains Ord are cross-collateralized. These borrowing entities are also required to maintain certain combined financial and non-financial covenants during the terms of the loans.
Green Plains Bluffton also received $22.0 million in Subordinate Solid Waste Disposal Facility Revenue Bond funds from the city of Bluffton, Indiana, of which $ 16.7 million remained outstanding at March 31, 2013. The revenue bond requires: semi-annual principal and interest payments of approximately $1.5 million through March 1, 2019; and a final principal and interest payment of $3.745 million on September 1, 2019. The revenue bond bears interest at 7.50% per annum.
Green Plains Otter Tail also issued $19.2 million in senior notes under New Market Tax Credits financing of which $19.0 million remained outstanding at March 31, 2013. The notes bear interest at 4.75% per annum, payable monthly , and require monthly principal payments of approximately $0.3 million beginning in October 2014. The notes mature on September 1, 2018 with an expected outstanding balance of $4.7 million upon maturity.
Agribusiness Segment
Green Plains Grain loan has a $195.0 million senior secured revolving credit facility with various lenders to provide the agribusiness segment with working capital funding. The revolving credit facility matures on October 28, 2013. Advances of the revolving credit facility are subject to interest charges at a rate per annum equal to the LIBOR rate for the outstanding period, or the base rate, plus the respective applicable margin. At March 31, 2013, $ 110.5 million on the revolving credit facility was outstanding. As security for the revolving credit facility, the lender receives a first priority lien on certain cash, inventory, accounts receivable and other assets owned by subsidiaries of the agribusiness segment. We expect to extend or refinance the revolving credit facility prior to its maturity date.
Marketing and Distribution Segment
Green Plains Trade loan has a senior secured asset-based revolving credit facility of up to $ 13 0 .0 million, subject to a borrowing base value equal to the sum of percentages of eligible receivables and eligible inventories, less certain miscellaneous adjustments . At March 31, 2013, $ 48.0 million was outstanding on the revolving credit facility. The revolving credit facility expires on April 26, 2016 and bears interest at the lender’s commercial floating rate plus 2.5% or LIBOR plus 3.5%. As security for the loan, the lender received a first-position lien on accounts receivable, inventory and other collateral owned by Green Plains Trade.
Corporate Activities
We have $90.0 million of 5.75% Convertible Senior Notes due 2015. The Notes represent senior, unsecured obligations, with interest payable on May 1 and November 1 of each year. The Notes may be converted into shares of common stock and cash in lieu of fractional shares of the common stock based on a conversion rate initially equal to 69.7788 shares of the common stock per $1,000 principal amount of Notes, which is equal to an initial conversion price of $14.33 per share. The conversion rate is subject to adjustment upon the occurrence of specified events. We may redeem for cash all, but not less than all, of the Notes at any time on and after November 1, 2013, if the last reported sale price of our common stock equals or exceeds 140% of the applicable conversion price for a specified time period, at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest. Default with respect to any loan in excess of $10.0 million constitutes an event of default under the convertible senior notes, which could result in the convertible senior notes being declared due and payable.
A $27.2 million note payable to a subsidiary of NTR plc, which previously was our largest shareholder, was paid in full during the first quarter of 2013.
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Contractual Obligations
Our contractual obligations as of March 31, 2013 were as follows (in thousands):
Item 3 . Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to various market risks, including changes in commodity prices and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. In the ordinary course of business, we enter into various types of transactions involving financial instruments to manage and reduce the impact of changes in commodity prices and interest rates. At this time, we do not expect to have exposure to foreign currency risk as we expect to conduct all of our business in U.S. dollars.
Interest Rate Risk
We are exposed to market risk from changes in interest rates. Exposure to interest rate risk results primarily from holding term and revolving loans that bear variable inter est rates. Specifically, we had $ 639.1 million outstanding in debt as of March 31, 2013 , $ 513.5 million of which is variable-rate in nature. Interest rates on our variable-rate debt are determined based upon the market interest rate of either the lender’s prime rate or LIBOR, as applicable. A 10% change in interest rates would affect our interest cost on such debt by approximately $ 1.8 million per year in the aggregate. Other details of our outstanding debt are discussed in the notes to the consolidated financial statements included as a part of this report.
Commodity Price Risk
We produce ethanol, distillers grains and corn oil from corn and our business is sensitive to changes in the prices of each of these commodities. The price of corn is subject to fluctuations due to unpredictable factors such as weather; corn planted and harvested acreage; changes in national and global supply and demand; and government programs and policies. We use natural gas in the ethanol production process and, as a result, our business is also sensitive to changes in the price of natural gas. The price of natural gas is influenced by such weather factors as extreme heat or cold in the summer and winter, or other natural events like hurricanes in the spring, summer and fall. Other natural gas price factors include North American exploration and production, and the amount of natural gas in underground storage during both the injection and withdrawal seasons. Ethanol prices are sensitive to world crude-oil supply and demand; crude-oil refining capacity and utilization; government regulation; and consumer demand for alternative fuels. Distillers grains prices are sensitive to various demand factors such as numbers of livestock on feed, prices for feed alternatives, and supply factors, primarily production by ethanol plants and other sources.
35
We attempt to reduce the market risk associated with fluctuations in the price of corn, natural gas, ethanol, distillers grains and corn oil by employing a variety of risk management and economic hedging strategies. Strategies include the use of forward fixed-price physical contracts and derivative financial instruments, such as futures and options executed on the Chicago Board of Trade and the New York Mercantile Exchange.
We focus on locking in operating margins based on a model that continually monitors market prices of corn, natural gas and other input costs against prices for ethanol and distillers grains at each of our production facilities. We create offsetting positions by using a combination of forward fixed-price physical purchases and sales contracts and derivative financial instruments. As a result of this approach, we frequently have gains on derivative financial instruments that are conversely offset by losses on forward fixed-price physical contracts or inventories and vice versa. In our ethanol production segment, gains and losses on derivative financial instruments are recognized each period in operating results while corresponding gains and losses on physical contracts are generally designated as normal purchases or normal sales contracts and are not recognized until quantities are delivered or utilized in production. For cash flow hedges, any ineffectiveness is recognized in current period results, while other unrealized gains and losses are deferred in accumulated other comprehensive income until gains and losses from the underlying hedged transaction are realized. In the event that it becomes probable that a forecasted transaction will not occur, we would discontinue cash flow hedge treatment, which would affect earnings. During the three months ended March 31, 2013 , revenues included net loss es of $ 22.1 million and cost of goods sold included net gains of $ 10.2 million from derivative financial instruments. To the extent net gains or losses from settled derivative instruments are related to hedging current period production, they are generally offset by physical commodity purchases or sales resulting in the realization of the intended operating margins. However, our results of operations are impacted when there is a mismatch of gains or losses associated with the change in fair value of derivative instruments at the reporting period when the physical commodity purchase or sales has not yet occurred since they are designated as a normal purchase or normal sale.
In our agribusiness segment, inventory positions, physical purchase and sale contracts, and financial derivatives are marked to market with gains and losses included in results of operations . The market value of derivative financial instruments such as exchange-traded futures and options has a high, but not perfect, correlation to the underlying market value of grain inventories and related purchase and sale contracts.
Ethanol Production Segment
A sensitivity analysis has been prepared to estimate our ethanol production segment exposure to ethanol, corn, distillers grains and natural gas price risk. Market risk related to these factors is estimated as the potential change in net income resulting from hypothetical 10% changes in prices of our expected corn and natural gas requirements, and ethanol and distillers grains output for a one-year period from March 31, 2013 . This analysis includes the impact of risk management activities that result from our use of fixed-price purchase and sale contracts and derivatives. The results of this analysis, which may differ from actual results, are as follows (in thousands):
Corn Oil Production Segment
A sensitivity analysis has been prepared to estimate our corn oil production segment exposure to corn oil price risk. Market risk related to these factors is estimated as the potential change in net income resulting from hypothetical 10% changes in prices of our expected corn oil output for a one-year period from March 31, 2013 . This analysis includes the impact of risk management activities that result from our use of fixed-price sale contracts. Market risk at March 31, 2013 , based on the estimated net income effect resulting from a hypothetical 10% change in such prices, was approximately $ 1.6 million.
36
Agribusiness Segment
The availability and price of agricultural commodities are subject to wide fluctuations due to unpredictable factors such as weather, plantings, foreign and domestic government farm programs and policies, changes in global demand created by population changes and changes in standards of living, and global production of similar and competitive crops. To reduce price risk caused by market fluctuations in purchase and sale commitments for grain and grain held in inventory, we enter into exchange-traded futures and options contracts that function as economic hedges. The market value of exchange-traded futures and options used for economic hedging has a high, but not perfect correlation, to the underlying market value of grain inventories and related purchase and sale contracts. The less correlated portion of inventory and purchase and sale contract market value, known as basis, is much less volatile than the overall market value of exchange-traded futures and tends to follow historical patterns. We manage this less volatile risk by constantly monitoring our position relative to the price changes in the market. In addition, inventory values are affected by the month-to-month spread relationships in the regulated futures markets, as we carry inventories over time. These spread relationships are also less volatile than the overall market value and tend to follow historical patterns, but also represent a risk that cannot be directly mitigated . Our accounting policy for our futures and options, as well as the underlying inventory held for sale and purchase and sale contracts, is to mark them to the market and include gains and losses in the consolidated statement of operations in sales and merchandising revenues.
A sensitivity analysis has been prepared to estimate agribusiness segment exposure to market risk of our commodity position (exclusive of basis risk). Our daily net commodity position consists of inventories related to purchase and sale contracts and exchange-traded contracts. The fair value of our position, which is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures market pr ices, is approximately $0.7 million at March 31, 2013 . Market risk at that date, based on the estimated net income effect resulting from a hypothetical 10% change in such prices, was approximately $ 42 thousand .
Item 4 . Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, or Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. Based upon that evaluation, our management, including our Chief Executive Officer and the Chief Financial Officer, concluded that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. There were no material changes in our internal control over financial reporting that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
37
PART II – OTHER INFORMATION
We are currently involved in litigation that has arisen in the ordinary course of business; however, we do not believe that any of this litigation will have a material adverse effect on our financial position, results of operations or cash flows.
Our investors should consider the risks that could affect us and our business as set forth in Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 201 2 . Although we have attempted to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Investors should carefully consider the discussion of risks and the o ther information included in our a nnual r eport on Form 10-K for the year ended December 31, 2012 and in this q uarterly r eport on Form 10-Q, including Cautionary Information Regarding Forward-Looking Information, which is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds.
Employees surrender shares upon the vesting of restricted stock grants to satisfy payroll tax withholding obligations. The following table sets forth the shares that were surrendered by month during the first quarter of 2013.
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Month |
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Total Number of Shares Withheld |
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Average Price Paid per Share |
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January |
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$ 8.09 |
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February |
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March |
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Total |
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$ 9.46 |
Item 3 . Defaults Upon Senior Securities.
None.
Item 4 . Mine Safety Disclosures.
Not applicable.
None.
38
Exhibit Index
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Exhibit No. |
Description of Exhibit |
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10.1 |
Second Amended and Restated Master Loan Agreement dated as of April 22, 2013 by and among Green Plains Bluffton LLC and AgStar Financial Services, PCA |
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10.2 |
Second Amended and Restated Revolving Credit and Security Agreement dated April 26, 2013 by and among Green Plains Trade Group LLC and PNC Bank, National Association (as Lender and Agent) |
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10.2 (a) |
Second Amended and Restated Revolving Credit Note dated April 26, 2013 by and among Green Plains Trade Group LLC and PNC Bank, National Association |
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10.2 (b) |
Revolving Credit Note dated April 26, 2013 by and among Green Plains Trade Group LLC and Citibank, N.A. |
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10.2 (c) |
Revolving Credit Note dated April 26, 2013 by and among Green Plains Trade Group LLC and BMO Harris Bank N.A. |
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10.2 (d) |
Revolving Credit Note dated April 26, 2013 by and among Green Plains Trade Group LLC and Alostar Bank of Commerce |
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10.2 (e) |
Revolving Credit Note dated April 26, 2013 by and among Green Plains Trade Group LLC and Bank of America |
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31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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101 |
The following information from Green Plains Renewable Energy, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 , formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements |
39
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GREEN PLAINS RENEWABLE ENERGY, INC. (Registrant)
By: /s/ Todd A. Becker _
Todd A. Becker
(Principal Executive Officer)
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By: /s/ Jerry L. Peters _
Jerry L. Peters
(Principal Financial Officer)
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40
SECOND AMENDED AND RESTATED
MASTER LOAN AGREEMENT
by and among
GREEN PLAINS BLUFFTON LLC
f/k/a INDIANA BIO-ENERGY, LLC
and
AGSTAR FINANCIAL SERVICES, PCA
dated
as of
April 22 , 2013
TABLE OF CONTENTS
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Page |
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ARTICLE I. DEFINITIONS AND ACCOUNTING MATTERS |
2 |
||||
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Section 1.01. |
Certain Defined Terms |
2 |
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Section 1.02. |
Accounting Matters |
10 |
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Section 1.03. |
Construction |
10 |
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ARTICLE II AMOUNTS AND TERMS OF THE LOANS |
10 |
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Section 2.01. |
The Loans |
10 |
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Section 2.02. |
Term Loan |
10 |
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Section 2.03. |
Term Revolving Loan |
11 |
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Section 2.04. |
Intentionally Omitted |
13 |
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Section 2.05. |
Letter of Credit Procedures / Fees / Reimbursement |
13 |
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Section 2.06. |
[Intentionally Omitted.] |
14 |
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Section 2.07. |
Default Interest |
14 |
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Section 2.08. |
Late Charge |
15 |
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Section 2.09. |
Prepayment of Loans |
15 |
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Section 2.10. |
Changes in Law Rendering Certain LIBOR Rate Loans Unlawful |
15 |
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Section 2.11. |
Payments and Computations |
15 |
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Section 2.12. |
Maximum Amount Limitation |
16 |
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Section 2.13. |
Lender Records |
16 |
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Section 2.14. |
Loan Payments |
17 |
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Section 2.15. |
Purchase of Equity Interests in AgStar Financial Services, PCA |
17 |
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Section 2.16. |
Compensation |
17 |
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Section 2.17. |
Excess Cash Flow |
18 |
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ARTICLE III CONDITIONS PRECEDENT |
18 |
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Section 3.01. |
Conditions Precedent to Funding |
18 |
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES |
21 |
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Section 4.01 |
Representations and Warranties of the Borrower |
21 |
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ARTICLE V. COVENANTS OF THE BORROWER |
25 |
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Section 5.01. |
Affirmative Covenants |
25 |
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Section 5.02. |
Negative Covenants |
31 |
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ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES |
34 |
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Section 6.01. |
Events of Default |
35 |
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Section 6.02. |
Remedies |
38 |
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Section 6.03. |
Remedies Cumulative |
38 |
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ARTICLE VII. MISCELLANEOUS |
38 |
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Section 7.01. |
Amendments, etc |
39 |
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Section 7.02. |
Notices, etc |
39 |
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Section 7.03. |
No Waiver; Remedies |
39 |
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Section 7.04. |
Costs, Expenses and Taxes |
40 |
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Section 7.05. |
Right of Set-off |
40 |
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Section 7.06. |
Severability of Provisions |
41 |
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Section 7.07. |
Binding Effect; Successors and Assigns; Participations |
41 |
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Section 7.08. |
Consent to Jurisdiction |
41 |
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Section 7.09. |
Governing Law |
42 |
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Section 7.10. |
Execution in Counterparts |
42 |
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Section 7.11. |
Survival |
42 |
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Section 7.12. |
WAIVER OF JURY TRIAL |
42 |
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Section 7.13. |
Entire Agreement |
42 |
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LIST OF SCHEDULES AND EXHIBITS
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Schedule 1.01 |
ABL Documents |
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Schedule 3.01(d) |
Real Property |
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Schedule 4.01(a) |
Description of Certain Transactions Related to the Borrower’s Stock |
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Schedule 4.01(f) |
Description of Certain Threatened Actions, etc. |
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Schedule 4.01(k) |
Location of Inventory and Farm Products; Third Parties in Possession; Crops |
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Schedule 4.01(l) |
Office Locations; Fictitious Names; Etc. |
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Schedule 4.01(p) |
Intellectual Property |
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Schedule 4.01(t) |
Environmental Compliance |
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Schedule 5.01(o) |
Management |
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Schedule 5.02(a) |
Description of Certain Liens, Lease Obligations, etc. |
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Schedule 5.02(k) |
Transactions with Affiliates |
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Exhibit A |
Compliance Certificate |
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Rider 2.06 |
Adjustments to Interest Rate |
SECOND
AMENDED AND RESTATED
MASTER
LOAN AGREEMENT
This SECOND AMENDED AND RESTATED MASTER LOAN AGREEMENT dated as of April 22 , 2013 , is made and entered into by and between AGSTAR FINANCIAL SERVICES, PCA , a United States instrumentality ( the “ Lender ” ) and GREEN PLAINS BLUFFTON LLC , an Indiana limited liability company f/k/a INDIANA BIO-ENERGY, LLC , a n Indiana limited liability company (the “ Borrower ” ).
RECITALS
A. Borrower and Lender entered into a (i) Master Loan Agreement dated as of February 27, 2007, which was amended by the First Amendment to Master Loan Agreement dated October 15, 2008, the Second Amendment to Master Loan Agreement dated April 16, 2009, the Third Amendment to Master Loan Agreement dated June 30, 2009, the Fourth Amendment to Master Loan Agreement dated December 31, 2009, and the Fifth Amendment to Master Loan Agreement dated December 31, 2010 (together, as amended, the “ Original MLA ” ); (ii) a First Supplement to Master Loan Agreement dated as of February 27, 2007, which was amended by the First Amendment to First Supplement dated as of June 30, 2009 (together, as amended, the “ First Supplement ” ); and (iii) Second Supplement to Master Loan Agreement dated as of February 27, 2007, which was amended by the First Amendment to Second Supplement dated as of June 30, 2009 (together, as amended, the “ Second Supplement ” ) by which the Lender agreed to extend certain financial accommodations to the Borrower.
B. The Original MLA, the First Supplement and the Second Supplement and all supplements, amendments, and restatements thereof were amended, restated and replaced in there entirety by the Amended and Restated Master Loan Agreement dated September 20, 2011, between the Borrower and the Lender, which was subsequently amended by the First Amendment to Amended and Restated Master Loan Agreement dated February 16, 2012, and further amended by the Second Amendment to Amended and Restated Master Loan Agreement dated to be effective as of September 28, 2012 (as amended, the “ Amended & Restated MLA ”).
C . At the request of Borrower, Borrower and Lender have agreed to make certain modifications to the Amended & Restated MLA , all in accordance with the terms and conditions of this Agreement .
D . With the execution and delivery of this Agreement, this Agreement shall supersede and replace in its entirety the Amended & Restated MLA and the amendments there to , which shall hereafter be of no force or effect. A ll of the terms of the other Loan Documents shall remain in full force and eff ect. Nothing contained in this Agreement shall be deemed to constitute a waiver of any rights of the Lender, or to affect, modify, or impair any of the Lender ’ s rights under the Loan Documents.
AGREEMENT
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:
1
ARTICLE I.
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01. Certain Defined Terms ” As used in this Agreement, the following terms shall have the following meanings. Terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code, as amended from time to time. All references to dollar amounts shall mean amounts in lawful money of the United States of America.
“ ABL Documents ” means the agreements identified on Schedule 1.01 , and all other documents, instruments, agreements, and certificates of the Borrower arising therefrom or in connection therewith, as the same may be amended, restated, supplemented or otherwise modified from time to time, together with all exhibits and schedules attached to or made a part thereof.
“ ABL Transaction ” means each obligation, right, interest, or undertaking created, granted, or arising under or relating to one or more of the ABL Documents.
“ Advances ” means the Loans or Letters of Credit provided the Borrower pursuant to this Agreement 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 h eld by the Person in question.
“ Agreement ” means this Second Amended and Restated Master Loan Agreement, as it may be amended, modified or supplemented from time to time, together with all exhibits and schedules attached to or made a part of this Agreement from time to time.
“ 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%).
“ Borrower ” means Green Plains Bluffton LLC , an Indiana limited liability company.
“ 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 Lender is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England.
“ Capital Expenditures ” means, for any period, the sum of all amounts that would, in accordance with GAAP 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.
2
“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
“ Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of equity interests representing 50% or more of the aggregate ordinary voting power represented by the issued and outstanding equity interests of the Borrower or GPRE; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower or GPRE by Persons who were neither (i) nominated by the board of directors of the Borrower or GPRE, as the case may be, or in accordance with the Shareholders ’ Agreement as it relates to GPRE, nor (ii) appointed by directors so nominated; or (c) Borrower ceases to own, directly or indirectly, and Control any s ubsidiary.
“ Closing Date ” means September 30 , 2011.
“ Collateral ” means and includes, without limitation, all property and assets granted as collateral security for the Loans or other indebtedness, 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 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 GAAP 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.
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or
“ 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 GAAP, 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
3
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.
“ 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 two percent (2%) in excess of the then applicable rate of interest under any Note.
“ Distribution ” means any dividend, distribution, payment, or transfer of property by the Borrower to any member of the Borrower, including, without limitation, Tax Distributions, Reinvestment Distributions and Excess Distributions, but excluding payments permitted by Sections 5.02(k) and 5.02(l) .
“ EBITDA ” means for any period, the total of the following each calculated without duplication for the Borrower for such period: (i) net income; 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.
“ Environmental Laws ” shall have the meaning ascribed to such term in the Environmental Indemnity Agreement.
“ Equity Contributions ” means for any period, the sum of all amounts received by Borrower that would, in accordance with GAAP consistently applied, be Included as additions to Borrower’s owner equity.
“ 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; (ii) Maintenance Capital Expenditures; and (iii) Tax Distributions.
“ Excess Cash Flow Payment ” has the meaning specified in Section 2.17.
“ Excess Distributions ” shall have 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, determined in accordance with GAAP, consistently applied.
“ Fine Grind Equipment ” means the “Fine Grind System” installed by ICM on the Real Property per the Fine Grind System, Technical Proposal between ICM and Borrower dated ____________, ________.
“ Fine Grind Equipment Lien ” means the purchase money security interest granted to ICM in the Fine Grind Equipment.
4
“ Fixed Charge Coverage Ratio ” means, for the measurement period of 12 consecutive months the ratio of (a) EBITDA divided by (b) the sum of (i) scheduled principal payments for the Loans, (ii) scheduled principal payment s for Subordinated Debt, (iii) i nterest on the Loans, (iv) interest on Subord inated Debt, (v) Distributions, (vi) Maintenance Capital Expenditures, and (v) less Equity Contributions. Solely for purposes of the computation of the Fixed Charge Coverage Ratio, Equity Contributions shall be reduced by the amount that Capital Expenditures, other than Maintenance Capital Expenditures, exceed $1,000,000, if any.
“ Fixed Rate Loan ” means that portion of the Term Loan , if any, which accrue s interest at a fixed rate of interest.
“ 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, the principal amount due under any Term Revolving Note or any other line of credit used by Borrower for working capital purposes, all determined in accordance with GAAP, consistently applied for the period in question.
“ GAAP ” means generally accepted accounting principles , 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, municipal, city, or otherwise) whether now or hereafter in existence.
“ GPRE ” means Green Plains Renewable Energy, Inc.
“ ICM ” means ICM, Inc., a Kansas corporation.
“ 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.
“ 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 durat ion 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,
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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.
“ Letter of Credit Liabilities ” means, at any time, the aggregate maximum amount available to be drawn under all outstanding Letters of Credit (in each case, determined without regard to whether any conditions to drawing could then be met) and all unreimbursed drawings under Letters of Credit.
“ Letter of Credit ” means the letters of c redit issued by Lender pursuant to the terms of this Agreement.
“ 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 and Carrying Charges ” means all commitment fees to the Lender, brokerage fees, standby fees, interest charges, service fees, attorneys ’ fees, contractors ’ fees, developers ’ fees, funding fees, title insurance fees and charges, recording fees, registration taxes, real estate taxes, special assessments, insurance premiums, and utility charges incurred by the Borrower in the construction of the Project and issuance of the Notes, all costs incurred in acquisition of the Real Property (to the extent applicable) and any other costs incurred in the development of the Project.
“ Loan Documents ” means this Agreement, the Notes, Letters of Credit, the Security Agreement, the Mortgage, the Environmental Indemnity Agreement 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, including the Reimbursement Obligations, 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 Term Revolving Loan and any other financial accommodations extended to the Borrower by the Lender pursuant to the terms of this Agreement.
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“ 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 made in the ordinary course of business to maintain existing business operations of the Borrower in any fiscal year, determined in accordance with GAAP, consistently applied; provided however that for purposes of the Fixed Coverage Ratio if any such expenditure is separately funded by Borrower ’ s parent or an Affiliate of the Borrower, through an equity investment in Borrower or under approved subordinated indebtedness consistent with the terms of this Agreement, it shall not be included as a Maintenance Capital Expenditure.
“ Material Adverse Effect ” means any set of circumstances or events which: (i) has or could reasonably be expected to have any material adverse effect upon the validity or enforceability of any Loan Documents or any material term or condition contained therein; (ii) is or could reasonably be expected to be material and adverse to the condition (financial or otherwise), business assets, operations, or property of the Borrower or any of Borrower ’ s subsidiaries when considered as a whole; (iii) materially impairs or could reasonably be expected to materially impair the ability of the Borrower to perform the obligations under the Loan Documents; or (iv) is or could reasonably be expected to be material and adverse to the condition (financial or otherwise), business assets, operations, or property of any Operating Affiliate when considered as a whole and such condition impairs or could reasonably be expected to materially impair the ability of the Borrower to perform the obligations under the Loan Documents or such condition impairs or could reasonably be expected to materially impair the ability of any Operating Affiliate to perform the obligation under its agreements or contracts with Borrower.
“ Material Contract ” means (i) any contract or any other agreement, written or oral, or any of the Borrower or its Subsidiaries involving monetary liability of or to any such person in an amount in excess of $250,000.00 per annum; and (ii) any other contract or agreement, written or oral, of the Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect on the Borrower or its Subsidiaries; provided, however, that any contract or agreement which is terminable by a party other than the Borrower or its Subsidiaries without cause upon notice of 90 days or less shall not be considered a Material Contract.
“ Maturity Date ” means January 31 , 2015 .
“ 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.
“ Monthly Payment Date ” means the first (1st) day of each calendar month.
“ Mortgage ” means that certain Construction/Permanent Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing dated February 27, 2007 , pursuant to which a mortgage interest shall be given by the Borrower to the Lender in the Real Property to secure
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payment to the Lender of the Loan Obligations , as the same has been and may hereafter be amended or otherwise modified .
“ Net Income ” means net income as determined in accordance with GAAP.
“ Note/Notes ” means and includes the Term Note , Term Revolving Note and all other promissory notes executed and delivered to the Lender by the Borrower pursuant to the terms of this Agreement as the same may be amended, modified, supplemented, extended or restated from time to time.
“ Operating Affiliate ” means any Affiliate of the Borrower which is now or in the future becomes a party to any Material Contract, Long Term Marketing Agreement or similar contract or agreement with Borrower.
“ Ordinary Trade Payable Dispute ” means trade accounts payable, in an aggregate amount not in excess of $150,000.00 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.
“ Outstanding Credit ” means, at any time of determination, the aggregate amount of Advances then outstanding.
“ Outstanding Revolving Advance ” means the total Outstanding Credit under the Term Revolving Note.
“ Permitted Liens ” shall have the meaning as set forth in Section 5.02(a) hereof.
“ Person ” means any individual, corporation, business trust, association, company, partnership, joint venture, governmental authority, or other entity.
“ Personal Property ” means all buildings, structures, 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 accounts, instruments, chattel paper, other rights to payment, money, deposit accounts, insurance proceeds and general intangibles of the Borrower, whether now owned or hereafter acquired.
“ Project ” means any and all buildings, structures, fixtures, and other improvements made to the Real Property as part of the acquisition and construction of ethanol production facility in Bluffton, Indiana, for which the Loans to Borrower are being or were made hereunder.
“ Real Property ” means that real property located in the County of Wells, State of Indiana, owned by the Borrower, upon which the Project is to be constructed and which is described in Schedule 3.01(d).
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“ Reimbursement Obligation ” means the obligation of the Borrower to reimburse the Lender for any demand for payment or drawing under a Letter of Credit.
“ SARA ” means the Superfund Amendment and Reauthorizations Act of 1986, as amended.
“ Security Agreement ” means the Security Agreement dated February 27, 2007 as amended and restated by the Amended and Restated Security Agreement dated April 22 , 2013, pursuant to which a security interest shall be granted by Borrower to the Lender in the Personal Property to secure payment to the Lender to the Loan Obligations and includes any agreements executed by Borrower 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.
“ Shareholders ’ Agreement ” means that certain Shareholders ’ Agreement dated as of May 7, 2008, by and among GPRE, Bioverda International Holdings Limited, Bioverda US Holdings LLC, Wilon Holdings S.A. and Wayne Hoovestol.
“ Subordinated Debt ” means Debt held by the US Bank, National Association, as trustee and any Debt of the Borrower held by GPRE , any GPRE Affiliate , or Affiliate of the Borrower .
“ 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 GAAP 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) any write-up in the book value of any asset resulting from a revaluation thereof after the Closing Date; and (v) any items not included in clauses (i) through (v) above which are treated as intangibles in conformity with GAAP.
“ Tangible Owner ’ s Equity ” means the Tangible Net Worth divided by total assets, measured annually at the end of each fiscal year, and expressed as a percentage.
“ Term Note ” mea ns that certain Construction Note dated February 27, 2007, executed and delivered to the Lender by the Borrower , as the same has been and may hereafter be amended or otherwise modified .
“ 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.
“ Term Revolving Advance ” means an Advance under the Term Revolving Note.
“ Term Revolving Loan ” means that certain loan from the Lender to the Borrower in the amount of $20,000,000.00 pursuant to the terms and conditions provided for in this Agreement .
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“ Term Revolving Note ” means that certain Term Revolving Note dated February 27, 2007, executed and delivered to the Lender by the Borrower in the amount of $20,000,000.00, as the same has been and may hereafter be amended or otherwise modified.
“ Working Capital ” means the current assets of the Borrower plus, in the event the Term Loan and Term Revolving Loan are deemed to be current liabilities of the Borrower , the unused portion of the Term Revolving Loan less the current liabilities of the Borrower as determined in accordance with GAAP. For clarification purposes, in the event the Term Revolving Loan and Term Loan are deemed to be current liabilities strictly due to the accounting reclassification as a result of ( i ) Maturity Date for the Term Loan or the Term Revolving Loan being less than 12 months from the date of covenant measurement, or ( ii ) projections, forecasts or other forward looking statements concerning future business conditions provided to certified public accountants, the available portion of the unused Term Revolving Loan will not be made available as an element of the current assets for Working Capital purposes and the Term Loan and Term Revolving Loan shall be excluded from the current liabilities in the Working Capital covenant measurement. Notwithstanding the foregoing, r eclassification of the Term Loan and the Term Revolving Loan as a result of an Event of D e fault shall result in the i nclusion of such L oans in current liabilities.
Section 1.02. Accounting Matters . All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistently applied, 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.
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.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
Section 2.01. The Loans . 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 the following amounts, for the purposes as further described below:
(a) Term Loan . Lender agree d to lend to the Borrower and the Borrower agree d to borrow from the Lender a t erm l oan in the original amount of Ninety Million and No/100 Dollars ($ 90 ,000,000.00) pursuant to the terms and conditions set forth in Section 2.02 and the Term Note. Notwithstanding the foregoing, the outstanding principal balance of the Term Loan extended to Borrower under the Term Note shall be not greater than Thirty-one Million and No/100 Dollars ($31,000,000.00) on the date of this Agreement after receipt of the pre-payments described in Section 3.01(f) .
(b) Term Revolving Loan . Lende r agree to lend to the Borrower from time to time during the term of the Term Revolving Loan on a revolving basis, an amount not to exceed Twenty Million and No/100 Dollars ($20,000,000.00) , pursuant to the terms and conditions set forth in Section 2.03 and the Term Revolving Note.
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Section 2.0 2 . 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 extend the Term Loan to the Borrower .
(a) Purpose . The Term Loan may be used to fund the payment of Project Costs. The Borrower agrees that the proceeds of the Term Loan are to be used only for the purposes set forth in this Section 2.02(a).
(b) Term Loan Interest Rate . T he portion of the Term Loan that has not been converted to a Fixed Rate Loan shall bear interest at a rate equal to the Applicable Rate plus 325 basis points.
(c) Term Loan Payments . On the first (1st) day of each month during the term of the Term Loan, the Borrower shall pay all accrued interest plus equal payments of principal in the amount of $258,000.00 on the Term Loan. On the Maturity Date, the unpaid principal balance of the Term Loan, accrued and unpaid interest, and any and all other amounts due and owing hereunder or under any other Loan Document shall be due and payable in full. In addition to all other payments of principal and interest required under this Section and under this Agreement, the Borrower shall annually remit to Lender the Excess Cash Flow Payment pursuant to Section 2.17 .
(d) Term Loan Term . The Term Loan shall be due and payable in full on the Maturity Date.
Section 2.0 3 . Term Revolving Loan . Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties set forth in this Ag reement, the Lender has agreed to make one or more A dvances to the Borrower, during the during the term of this Agreement ending on the Business Day immediately preceding the Maturity Date (the “ Term Revolving Loan Termination Date ”) in an aggregate principal amount outstanding at any one time not to exceed $20,000,000.00 (the “ Term Revolving Loan Commitment ”). The Term Revolving Loan Commitment shall expire at 12:00 noon Central time on the Maturity Date. Under the Term Revolving Loan Commitment amounts borrowed and repaid or prepaid may be reborrowed at any time prior to and including the Term Revolving Loan Termination Date provided, however, that at no time shall the sum of the Outstanding Revolving Advances exceed $20,000,000.00.
(a) Purpose . Advances under the Term Revolving Loan may be used for cash, inventory management and general working capital purposes of the Borrower and its subsidiaries, including closing costs and fees associated with the Term Revolving Loan. The Borrower agrees that the proceeds of the Term Revolving Loan are to be used only for the purposes set forth in this Section 2.03(a).
(b) Interest Rate . Subject to the provisions of this Agreement, including without limitation Section 2.06, each Term Revolving Advance shall bear interest at a rate equal to the Applicable Rate plus 325 basis points.
(c) Repayment of the Term Revolving Loan . The Borrower shall pay interest on the Term Revolving Loan on the first (1st) day of each month until the Maturity Date. On the Maturity Date, the unpaid principal balance of the Term Revolving Loan, accrued and unpaid interest, and any and all other amounts due and owing hereunder or under any other Loan Document shall be due and payable
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in full. If any payment date is not a Business Day, then the principal installment then due shall be paid on the next Business Day and shall continue to accrue interest until paid .
(d) Availability . During the period commencing on the date on which all conditions precedent to the initial Advance under the Term Revolving Loan are satisfied (the “ Availability Date ”) and ending on the Term Revolving Loan Termination Date, Advances under the Term Revolving Loan will be made as provided in Section 2.03(e).
(e) Making the Advances .
(i) Term Revolving Advances . Each Term Revolving Advance shall be made, on notice from the Borrower (a “ Request for Advance ”) to the Lender delivered before 12:00 Noon (Minneapolis, Minnesota time) on a Business Day which is at least three (3) Business Days prior to the date of such Advance specifying the amount of such Advance, provided that, no Term Revolving Advance shall be made while an Event of Default exists. Any Request for Advance received after 12:00 Noon (Minneapolis, Minnesota time) shall be deemed to have been received and be effective on the next Business Day. The amount so requested from the Lender shall, subject to the terms and conditions of this Agreement, be made available to the Borrower by: (i) depositing the same, in same day funds, in an account of the Borrower; or (ii) wire transferring such funds to a Person or Persons designated by the Borrower in writing.
(ii) Requests for Advances Irrevocable . Each Request for Advance shall be irrevocable and binding on the Borrower and the Borrower shall indemnify the Lender against any loss or expense it may incur as a result of any failure to borrow any Advance after a Request for Advance is received by Lender (including any failure resulting from the failure to fulfill on or before the date specified for such Advance the applicable conditions set forth herein), including, without limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund such Advance when such Advance, as a result of such failure, is not made on such date.
(iii) Minimum Amounts . Each Term Revolving Advance shall be in a minimum amount equal to $50,000.00.
(iv) Unused Commitment Fee . In addition to all other cost, fees and expenses required to be paid under this Agreement, Borrower agrees to pay to the Lender an u nused c ommitment f ee on the average daily unused portion of the Term Revolving Loan Commitment during the term of this Agreement until the Maturity Date at the rate of 0.35% per annum, payable in arrears in quarterly installments payable on the first (1st) day of each January, April, July and October during the term of this Agreement .
(v) Conditions Precedent to All Advances . The Lender’s obligation to make each Advance under the Term Revolving Note shall be subject to the terms, conditions and covenants set forth in this Agreement, including, without limitation, the following further conditions precedent:
(i) Representations and Warranties . The representations and warranties set forth in this Agreement are true and correct in all material respects as of the date of the Request for Advance, except as disclosed in writing to the Lender, to the same extent and with the same effect as if made at and as of the date thereof except as disclosed in writing to the Lender;
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(ii) No Defaults . The Borrower is not in default under the terms of this Agreement, any other Loan Document or any Material Contract; and
(iii) Government Action . No license, permit, permission or authority necessary for the construction or operation of the Project has been revoked or challenged by or before any Governmental Authority.
(f) Letters of Credit . The Borrower may request an Advance on the Term Revolving Loan, and the Lender, subject to the terms and conditions of this Agreement including under Section 2.05 , may in its sole discretion, issue one or more letters of credit for any Borrower’s account (such letters of credit, being hereinafter referred to collectively as the “ Letters of Credit” ); provided, however, that:
(i) the aggregate amount of outstanding Letter of Credit Liabilities shall not at any time exceed the amount of $3,000,000.00.
(ii) the sum of the outstanding Letters of Credit plus the outstanding Term Revolving Advances shall not at any time exceed the Term Revolving Loan Commitment.
(iii) the expiration date for each Letter of Credit shall be no later than the Maturity Date.
Section 2.04. Intentionally Omitted .
Section 2.0 5 . Letter of Credit Procedures / Fees / Reimbursement . All Letters of Credit that are issued under this Agreement are subject to the following:
(a) Letter of Credit Request Procedure . The Borrower shall give the Lender irrevocable prior notice (effective upon receipt) on or before 3:00 P.M. (Minneapolis, Minnesota time) on the Business Day three Business Days prior to the date of the requested issuance of a Letter of Credit specifying the requested amount, expiry date and issuance date of each Letter of Credit to be issued and the nature of the transactions to be supported thereby. Any such notice received after 3:00 P.M. (Minneapolis, Minnesota time) on a Business Day shall be deemed to have been received and be effective on the next Business Day. Each Letter of Credit s hall be in a form reasonably acceptable to Lender , have an expiration date that occurs on or before the Maturity Date shall be payable in U.S. dollars, must be satisfactory in form and substance to the Lender, and shall be issued pursuant to such documentation as the Lender may require, including, without limitation, the Lender ’ s standard form letter of credit request and reimbursement agreement; provided that , in the event of any conflict between the terms of such agreement and the other Loan Documents, the terms of the other Loan Documents shall control.
(b) Letter of Credit Fees . The Borrower shall pay to the Lender (i) all fees, costs, and expenses of the Lender arising in connection with any Letter of Credit, including the Lender ’ s customary fees for amendments, transfers, and drawings on Letters of Credit and (ii) on the date of the issuance of the Letter of Credit, and at the anniversary date of issuance of such Letter of Credit, an issuance fee equal to two and one-half (2.5%) percent, on an annualized basis, of the maximum amount available to be drawn under the Letter of Credit.
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(c) Funding of Drawings . Upon receipt from the beneficiary of any Letter of Credit of any demand for payment or other drawing under such Letter of Credit, the Lender shall promptly notify the Borrower as to the amount to be paid as a result of such demand or drawing and the respective payment date. Any notice pursuant to the forgoing sentence shall specify the amount to be paid as a result of such demand or drawing and the respective payment date.
(e) Reimbursements . After receipt of the notice delivered pursuant to clause ( c) of this Section 2.05 with respect to a Letter of Credit, the Borrower shall be irrevocably and unconditionally obligated to reimburse the Lender for any amounts paid by the Lender upon any demand for payment or drawing under the applicable Letter of Credit, without presentment, demand, protest, or other formalities of any kind other than the notice required by clau se (c) of this Section 2.05 . Such reimbursement shall occur no later than 3:00 P.M. (Minneapolis, Minnesota time) on the date of payment under the applicable Letter of Credit if the notice under clause (c) of t his Section 2.05 is received by 2:00 P.M. (Minneapolis, Minnesota time) on such date or by 11:00 A.M. (Minneapolis, Minnesota time) on the next Business Day, if such notice is received after 2:00 P.M. (Minneapolis, Minnesota time). All payments on or of the Reimbursement Obligations (including any interest earned thereon) shall be made to the Lender for the account of the Lender in U.S. dollars and in immediately available funds, without set-off, deduction, or counterclaim.
(f) Reimbursement Obligations Absolute . The Reimbursement Obligations of the Borrower under this Agreement shall be absolute, unconditional, and irrevocable, and shall be performed strictly in accordance with the terms of the Loan Documents under all circumstances whatsoever and the Borrower hereby waives any defense to the payment of the Reimbursement Obligations based on any circumstance whatsoever, including, without limitation, in any case, the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit or any other Loan Document; (ii) any amendment or waiver of or any consent to departure from any Loan Document; (iii) the existence of any claim, set-off, counterclaim, defense, or other rights which any Borrower or any other Person may have at any time against any beneficiary of any Letter of Credit, the Lender or any other Person, whether in connection with any Loan Document or any unrelated transaction; (iv) any statement, draft, or other documentation presented under any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; or (v) payment by the Lender under any Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; provided that Reimbursement Obligations with respect to a Letter of Credit may be subject to avoidance by a Borrower if the Borrower proves in a final non-appealable judgment that it was damaged and that such damage arose directly from the Lender ’ s willful misconduct or gross negligence in determining whether the documentation presented under the Letter of Credit in question complied with the terms thereof.
(g) Issuer Responsibility . Borrower assumes all risks of the acts or omissions of any beneficiary of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Lender, nor any of its respective officers or directors shall have any responsibility or liability to the Borrower or any other Person for: (a) errors, omissions, interruptions, or delays in transmission or delivery of any messages; or (b ) the validity, sufficiency, or genuineness of any draft or other document, or any endorsement(s) thereon, even if any such draft, document or endorsement should in fact prove to be in any and all respects invalid, insufficient, fraudulent, or forged or any statement therein is untrue or inaccurate in any respect. The Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.
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Section 2.0 6 . See attached Rider 2.06, which is incorporated herein by reference .
Section 2.07. 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, subject to any applicable cure periods (including, without limitation, any purchase of equity of Lender as required by Section 2.15 of this Agreement ), then at Lender ’ s option in each instance, such obligation or payment shall bear interest from the date due (subject to any applicable cure periods) to the date paid at 2% per annum in excess of the rate of interest that would otherwise be applicable to such obligation or payment; (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 f rom the date of the Event of Default or such later date as Lender shall elect at 2% per annum in excess of the rate(s) of interest that would otherwise be in effect on the Loans under the terms of the applicable Note; (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 2% per annum in excess of the rate of interest that would otherwise be in effect on the Loan under the terms of the applicable Note. Interest payable at the Default Rate shall be payable from time to time on demand or, if not sooner demanded, on the first day of each calendar month.
Section 2. 08 . Late Charge . If any payment of principal or interest due hereunder or under any Note is not paid within ten (10) days of the due date thereof (other than following acceleration of the Maturity Date by Lender, or any required principal prepayments pursuant to this Agreement) , 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. 09 . Prepayment of Loan s . The Borrower may, by notice to the Lender, prepay the outstanding amount of the Loan s in whole or in part with accrued interest to the date of such prepayment on the amount prepaid, without penalty or premium, except as otherwise provided in this Agreement.
Section 2. 10 . 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 Borrower ; 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. 11 . 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 fail s 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 .
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(b) Application of Funds . Lender may a pply 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 . 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 ( excluding any contingent Loan Obligations for which no claim has been asserted ) 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. Interest shall accrue from and include the date of borrowing, but exclude the date of payment.
Section 2. 12 . Maximum Amount Limitation . Anything in this Agreement , 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 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 2.12 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, an d the terms of this Section 2.12 shall be deemed to be incorporated in every Loan Document and communication related thereto.
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Section 2. 13 . 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. 14 . Loan Payments . During the continuance of an Event of Default, t he Lender may deduct any obligations due or any other amounts due and payable by the Borrower under the Loan Documents from any accounts maintained with the Lender.
Section 2. 15 . Purchase of Equity Interests in AgStar Financial Services, PCA . In addition to (and not in lieu of) the other amounts payable b y Borrower under this Agreement , Borrower shall purchase $1,000.00 of equity interests in AgStar Financial Services, PCA. The purchase price for the equity interests shall be payable in full on or prior to the date hereof. Such purchase of equity interests shall comply with AgStar Financial Services, PCA ’ s by-laws and capital plans applicable to borrowers generally. Borrower hereby acknowledges receipt of the following information and materials pertaining to AgStar Financial Services, PCA prior to the execution of this Agreement: (i) copies of the by-laws of AgStar Financial Services, PCA; (ii) a written description of the terms and conditions under which the equity interests are issued; (iii) a copy of the most recent annual reports of AgStar Financial Services, PCA; and (iv) if more recent than the latest annual reports, the latest quarterly reports of AgStar Financial Services, PCA. AgStar Financial Services, PCA shall possess a statutory security interest in its equity interests.
Borrower acknowledges and agrees that: (a) only the portions of the Loans provided to Borrower by AgStar Financial Services, PCA are entitled to patronage distributions in accordance with the bylaws of AgStar Financial Services, PCA and its practices and procedures; and (b) any patronage or similar payments to which Borrower is entitled as a result of its ownership of the equity interests in AgStar Financial Services, PCA will not be based on any of the Loans not belonging to AgStar Financial Services, PCA or in which AgStar Financial Services, PCA has granted a participation interest at any time.
Section 2. 16 . 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 and as verified and computed in an accounting provided to Borrower ) 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 borrowe d , converted or extended, for the period from the date of such prepayment or of such failure to borrow , 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
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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 Borrowe r set forth in this Section 2.1 6 shall survive the repayment of the Loans and other obligations under the Loan Documents hereunder.
Section 2. 17 . Excess Cash Flow . In addition to all other payments of principal and interest required under this Agreement and the Notes, at the end of each fiscal year until the Maturity Date, the Borrower shall remit to Lender, an amount equal to 75% of the Borrower’ s Excess Cash Flow, calculated based upon that fiscal year’ s i nterim financial statements, on or before 120 days after the end of each fiscal year of the Borrower (the “ Excess Cash Flow Payment ” ), provided however, that the total Excess Cash Flow Payments required hereunder shall not exceed $4,000,000.00 in any fiscal year (the “ Maximum Excess Cash Flow Payment ”) and provided that i mmediately prior to the Excess Cash Flow Payment required by this Section 2.17, or a fter giving effect thereto, no d efault or Event of Def ault shall exist. For clarity, i f the Excess Cash Flow Payment would cause a default, then the Excess Cash Flow Payment shall be reduced by no more than the amount needed to maintain compliance with the requirements set forth in this Section 2.17 . Such payment shall be applied first to the reduction of the outstanding principal of any variable rate Term Loan and then to the reduction of the outstanding principal balance of the Term Revolving Loan. The Excess Cash Flow Payment shall be calculated annually based upon audited fiscal year-end financial statements required by Section 5.01 (c)( i ) of this Agreement. Borrower shall, within 30 days of Lender’s request remit to Lender any additional amounts due Lender under this Section i n an amount not to exceed the Maximum Excess Cash Flow Payment. Any Excess Cash Flow Payment shall not constitute a prepayment with respect to which a prepayment fee under this Agreement is required to be paid. Notwithstanding the foregoing, the Excess Cash Flow Payment shall not exceed an aggregate amount of $16,000,000.00 for the term of this Agreement. No Excess Cash Flow Payments shall be required during any fiscal year should the Tangible Owner’s Equity be greater than 70% at the end of the immediately preceding fiscal year of the Borrower .
ARTICLE III.
Section 3.01. Conditions Precedent to Funding . The effectiveness of this Agreement and the obligation of the Lender to make any Advance hereunder , are subject to the condition s precedent that the Lender shall have received the following to the extent not previously received by Lender , in form and substance reasonably satisfactory to the Lender:
(a) This Agreement, duly executed by the Borrower and the Lender;
(b) Allonge #3 to Borrower’s Term Note duly executed by Borrower and Lender ;
(c) Allonge #3 to Borrower’s Term Revolving Note duly executed by Borrower and Lender ;
( d ) the Limited Guaranty of Green Plains Renewable Energy, Inc. dated April 22 , 2013 ;
( e ) the Amended and Restated Security Agreement dated as of the date of this Agreement duly executed by the Borrower and in a form as provided by the Lender by which security agreement the Lender is granted a security interest by the Bo rrower in the Collateral;
(f ) prepayment of the Term Loan in the amount of $10,000,000.00 ;
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( g ) Copies of all Material Contracts between Borrower and third parties , including its Affiliates, used in the normal operations of Borrower, including but not limited to management agreements, marketing agreements, corn delivery agreements , and the ABL Documents ;
( h ) Assignments of the Material C ontracts and each ABL Document , requested by Lender, duly executed by the Borrower , pursuant to which the Borrower shall have assigned to the Lender all of the Borrower ’ s right, title and interest in and to each such contracts, and which assignment shall have been consented to and certified in writing by each other p arty thereto ;
( i ) Financing Statements in form and content satisfactory to the Lender and in proper form under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Lender, desirable to perfect the security interests cr eated by the Security Agreement;
( j ) Copies of UCC, tax and judgment lien search reports listing all financing statements and other encumbrances which name the Borrower (under its present name and any previous name) and which are filed in the jurisdictions in which the Borrower is located, organized or maintains collateral, together with copies of such financing statements (none of which shall cover the collateral purported to be cov ered by the Security Agreement);
( k ) Evidence that all other actions necessary or, in the reasonable opinion of the Lender, desirable to enable the Lender to perfect and protect the security interests created by the Sec urity Agreement have been taken;
( l ) An ALTA mortgagee title insurance policy issued by a title insurance company acceptable to Lender, with respect to the Real Property, assuring the Lender that the Mortgage creates a valid and enforceable encumbrance on the Real Property, free and clear of all defects and encumbrances except Permitted Liens and containing: (i) a comprehensive endorsement (ALTA form 9); (ii) a zoning endorseme nt (ALTA form 3.0 ) specifying an ethanol production facility as a permitted use for all of the parcels included in the Real Property; and (iii) a restrictions, encroachments, minerals-owners endorsement (ALTA Form 9.2) and (iv) such endorsements as the Lender shall reasonably require. All such title insurance policies shall be in form and substance reasonably satisfactory to the Lender and shall provide for affirmative insurance and such reinsurance as the Lender may reasonably request, all of the foregoing in form and substance reasonably satisfactory to the Lender ;
( m ) Maps or plats of the Real Property certified to the Lender and the title insurance company issuing the policy referred to in Sub section 3.01(m ) (the “ Title Insurance Company ” ) in a manner reasonably satisfactory to each of the Lender and the Title Insurance Company, dated a date reasonably satisfactory to each of the Lender and the Title Insurance Company by an independent professional licensed land surveyor, which maps or plats and the surveys on which they are based shall be sufficient to delete any standard printed survey exception contained in the applicable title policy and be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing, there shall be surveyed and shown on such maps, plats or surveys the following: (i) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (ii) the lines of streets abutting the sites and width thereof; (iii) all access and other easements appurtenant to the sites necessary to use the sites; (iv) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded, apparent from a physical inspection of the sites
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or otherwise known to the surveyor; (v) any encroachments on any adjoining property by the building structures and improvements on the sites; and (vi) if the site is described as being on a filed map, a legend relating the survey to said map ;
( n ) Evidence as to: (i) whether any portion of the Real Property is in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a “ Flood Hazard Property ” ); and (ii) if any portion of the Real Property is a Flood Hazard Property: (A) whether the community in which such Real Property is located is participating in the National Flood Insurance Program; (B) the Borrower ’ s written acknowledgment of receipt of written notification from the Lender (1 ) as to the fact that such Real Property is a Flood Hazard Property and (2 ) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program; and (C) copies of insurance policies or certificates of insurance of the Borrower evidencing flood insurance satisfactory to the Lender and naming the Lender as sole loss payee on behalf of the Lender ;
( o ) Evidence reasonably s atisfactory to the Lender that the Real Property and the contemplated use of the Real Property, are in compliance in all material respects with all applicable Laws including without limitation health and Environmental Laws, including, but not limited to all concentrated animal feedlot operations rules and regulations, erosion control ordinances, storm drainage control laws, doing business and/or licensing laws, zoning laws (the evidence submitted as to zoning should include the zoning designation made for the Real Property, the permitted uses of the Real Property under such zoning designation and zoning requirements as to parking, lot size, ingress, egress and building setbacks) and laws regarding access and facilities for disabled persons including, but not limited to, the Federal Architectural Barriers Act, the Fair Housing Amendments Act of 1988, the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990 ;
( p ) A certificate of an officer o f the Borrower together with true and correct copies of the following: (i) the organizational documents of the Borrower, including all amendments thereto, certified by the Office of the Secretary of State of the state of its formation and dated within 30 days prior to the date hereof; (ii) the Operating Agreement of the Borrower, including all amendments thereto; (iii) the resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this Agreement, the other Loan Documents, and all documentation executed and delivered in connection therewith to which the Borrower is a party; (iv) certificates of the appropriate government officials of the state of organization of the Borrower as to its existence , and certificates of the appropriate government officials in each state where each corporate Borrower does business and where failure to qualify as a foreign corporation would have a material adverse effect on the business and financial condition of the Borrower, as to its good standing and due qualification to do business in such state, each dated within 30 days prior to the date hereof; and (v) the names of the officers of the Borrower authorized to sign this Agreement and the other Loan Documents to be executed by each corporate Borrower, together with a sample of the true signature of each such officer;
( q ) Legal opinion of legal counsel for the Borrower , reasonably acceptable to Lender in form and substance ;
( r ) An intercreditor and subordination agreement between the Lender and any holder of Subordinated Debt, including without limitation the tax increment financing debt evidenced by that certain Indenture of Trust by and between the US Bank, National Association, as Trustee, and Borrower,
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as to the priority of the Lender ’ s security interests in the Collateral, rights to payment following an Event of Default, and as to such other matters as reasonably requested by the Lender;
( s ) Evidence that the costs and expenses (including, without limitat ion, attorney ’ s fees) referred t o in Section 7.04, to the extent incurred and invoiced, shall hav e been paid in full;
( t ) The results of the Lender ’ s inspection of the Collateral, and the Lender ’ s receipt of an appraisal of the Collateral acceptable t o Lender in its sole discretion;
( u ) Satisfactory review by the Lender of any pending litigation relating to the Borrower;
( v ) An environmental site assessment that complies with the standards set forth in the ASTM E1527-05 Phase I Environmental Site Assessment Process and such additional information as Lender shall require in order to establish that Lender has made “ all appropriate inquiries ” as provided under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and 40 C.F.R. Part 312;
( w ) A schedule , certified by Borrower as accurate and complete, setting forth the necessary licenses, permits and consents required by applicable federal, state, and local governmental entities required for the lawful construction and operation of the Project ;
( x ) A n account control agreement for each deposit account, commodity account, hedge account to which Borrower is a party, in a form and substance reasonably acceptable to Lender, duly executed by Borrower and each other party thereto;
( y ) Evidence that the insurance required by Sections 5.01(j) and 5.01(r)(xii) ha s been obtained by the Borrower; and
( z ) Borrower shall have established and shall maintain all its primary deposit a ccounts excluding payroll accounts with Home Federal Savings Bank as long as Home Federal Savings Bank is a partic ipant in the Loans with Lender.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of the Borrower . The Borrower represent s and warrant s as follows :
(a) Borrower . The Borrower is a limited liability company duly organized and validly existing under the laws of the State of Indiana and is qualified to do business in all jurisdictions in which the nature of its business make s such qualification necessary and where failure to so qualify would have a Material Adverse Effect on its respective financial condition or operations. The Borrower has the power and authority to own and operate its assets and to carry on its business and to execute, deliver, and perform its obligations under the Loan Documents to which it is or may become a party. There are no outstanding subscriptions, options, warrants, calls, or rights (including preemptive rights) to acquire, and no outstanding securities or instruments convertible into, membership interests (units) of the Borrower, except for those transaction s set forth on Schedule 4.01(a);
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(b) The Loan Documents . The execution, delivery and performance by the Borrower of the Loan Document s are within the Borrower ’ s powers, have been duly authorized by all necessary action, do not contravene: (i) the articles of orga nization or operating agreements of the Borrower ; or (ii) any law or any contractual restriction binding on or affecting the Borrower, and do not result in or require the creation of any lien, security interest or other charge or encumbrance (other than pursuant to the terms thereof) upon or with r espect to any of its respective properties;
(c) Governmental Approvals . N o consent, permission, authorization, order or license of any Governmental A uthority or of any party to any agreement to which the Borrower is a party or by which it or any of its respective property may be bound or affected, is ne cessary in connection with the construction of the P roject, acquisition or other activity being financed by this Agreement, the execution, delivery, performance or enforcement of the Loan Documents or the creation and perfection of the liens and security interest granted thereby, except as such have been obtained and are in full force and effect or which are required in connection with the exercise of remedies hereunder;
(d) Enforceability . This Agreement is, and each other Loan Document to which the Borrower is a party when delivered will be, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accorda nce with their respective terms , except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor ’ s rights generally and by general principles of equity ;
(e) Financial Condition and Operations . The balance sheet of the Borrower with respect to the period ended December 31, 2012 , the related statement of cash flow of the Borrower for the fiscal period then ended, copies of which have been furnished to the Lender, fairly present in all material respects the financial condition of the Borrower as at such date , and the results of the operations of the Borrower for the period ended on such dates and since December 31, 2012 , there has been no material adverse change in s uch condition or operations;
(f) Litigation . Except as described on Schedule 4.01(f), t here is no pending or threatened action or proceeding affecting the Borrower o r any of the transactions contemplated hereby before any court, governmental agency or arbitrator, which , if adversely determined, may result in a Material Adverse Effect . T here are no outstanding judgments against the Borrower;
(g) Use of Proceeds of Advances, etc . (i) No proceeds of the Loans will be used to acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities Exchange Act of 1934 (provided, however, that this provision shall not prohibit Borrower from investing in certain value added cooperatives for the purposes of carrying out their overall business operations); (ii) the Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System); and (iii) no proceeds of the Loans will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasi ng or carrying any margin stock;
(h) Liens . Except as created by the Loan Documents and as constitute Permitted Liens , t here is no lien, security interest or other charge or encumbrance, and no other type of preferential arrangement, upon or with respect to any of the properties or income of the Borrower, which secures Debt of any Person ;
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(i) Taxes . The Borrower has filed or caused to be filed all federal, state and local tax returns that are required to be filed and has paid all other taxes, assessments, and governmental charges or levies upon it and its property, income, profits and assets which are due and payable, except where the payment of such tax, assessment, government charge or levy is being contested in good faith and by appropriate proceedings and adequate reserves in compliance with GAAP have been set aside on the Borrower ’ s books therefore;
(j ) Solvency . As of and from and after the date of this Agreement, the Borrower: (i) owns and will own assets the fair saleable value of which are : (A) greater than the total amount of liabilities (including contingent liabilities); and (B) greater than the amount that will be required to pay the probable liabilities of its then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to it; (ii) has capital that is not unreasonably small in relation to its business as presently conducted or any contemplated or undertaken transaction; and (iii) does not intend to incur and does not believe that it will incur debts beyond its ability to pa y such debts as they become due;
(k ) Location of Inventory and Farm Products; Third Parties in Possession; Crops . The Borrower ’ s inventory and farm products pledged as collateral under the Security Agreement are located at the places (or, as applicable, jurisdictio ns) specified in Schedule 4.01(k ) for the Borrower, except to the extent any such inventory and farm products are in transit. Schedule 4.01(k ) correctly identifies, as of the date hereof, the landlords or mortgagees, if any, of each of its locatio ns identified in Schedule 4.01(k ) currently leased or owned by the Borrower. Except for the Persons identi fied on Schedule 4.01(k ), no Person other than the Borrower and the Lender has possession of any of the Collateral. Except as described in above, none of its Collateral has been located in any location within the past four months other than as set forth on Sc hedule 4.01(k) for the Borrower;
(l ) Office Locations; Fictitious Names; Predecessor Companies; Tax I.D. Number . The Borrower ’ s chief place of business, its chief executive office, and its jurisdiction of organization is located at the place identified for the Borrower on Schedule 4.01(l ). Within the last four months it has not had any other chief place of business, chief executive office, or jurisdiction of organization. Sc hedule 4.01 (l ) also sets forth all other places where the Borrower keeps its books and records and all other locations where the Borrower has a place of business. T he Borrower does not do business nor has the Borrower done business during the past five (5) years under any trade-name or fictitious business name except as disclo sed on Schedule 4.01(l). Schedule 4.01(l ) sets forth an accurate list of all names of all predecessor companies of the Borrower including the names of any entities it acquired (by stock purchase, asset purchase, merger or otherwise) and the chief place of business and chief executive office of each such predecessor company. For purposes of the foregoing, a “ predecessor company ” shall mean any Person whose assets or equity interests are acquired by the Borrower or who was merged with or into the Borrower within the last four months prior to the date hereof. The Borrower ’ s United States Federal Income Tax I.D. Number and state organizational identification number are identified on Schedule 4.01(l );
(m) Title to Properties . The Borrower has such title or leasehold interest in and to the Real Property owned or leased by it as is necessary or d esirable to the conduct of its business and valid and legal title or leaseho ld interest in and to all of its Personal Property , including those reflected on the financial statements of the Borrower previously delivered to Lender , except those which have been disposed of by the Borrower subsequent to the date of such delivered financial statements which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder;
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( n ) Disclosure . All factual information furnished by or on behalf of the Borrower or its subsidiaries in writing to the Lender (including, without limitation, all factual information contained in the Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents or any transaction contemplated herein or therein is, and all other such factual information hereafter furnished by or on behalf of the Borrower to the Lender, will be true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information not misleading in any material respect at such time in light of the circumstances under which such information was provi ded;
( o ) Operation of Business . The Borrower possess es all licenses, permits, franchises, patents, copyrights, trademarks, and tradenames, or rights thereto , necessary to conduct its business substantially as now conducted and will obtain all such licenses, permits, franchises, patents, copyrights, trademarks, and tradenames, or rights thereto necessary to conduct its business as presently proposed to be conducted except those that the failure to so possess could not reasonably be expected to have a Material Adverse Effect on its financial condition or operations, and the Borrower is not in violation of any valid rights of others with respect to any of the foregoing except violations that could not reasonably be expected to have such a Material Adverse Effect;
(p ) Intellectual Property . The Borrower owns, or otherwise has or will have the legal right to use, all patents, trademarks, tradenames, copyrights, technology, know-how and processes necessary for it to condu ct its business as currently conducted and will own or obtain the legal right to use all patents, trademarks, tradenames, copyrights, technology, know-how and processes necessary for it to conduct its business as currently conducted (collectively the “ Intellectual Property ” ) , except for those the failure to own or have such legal right to use could not reasonably be expected to have a Material Adverse Effect. S et forth in Schedule 4.01(p ) is a list of all Intellectual Property registered with the United States Copyright Office or the United States Patent and Trademark Office and ow n ed by the Borrower or that the Borrower has the right to use. Excep t as provided in Schedule 4.01(p ), no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Borrower know of any such claim, and, to the knowledge of the Borrower, the use of such Intellectual Property by the Borrower does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect;
(q ) Employee Benefit Plans . The Borrower is in compliance in all material respects with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder, the failure to comply with which could have a Material Adverse Effect on the Borrower;
(r) Investment Company Act . The Borrower is not required to be registered as an “ investment company ” within the meaning of the Investment Company Act of 1940, as amended;
(s) Compliance with Laws . The Borrower is in compliance in all material respects with all laws, rules, regulations, ordinances, codes, orders, and the like, the failure to comply with which could have a Material Adverse Effect on the Borrower;
(t) Environmental Compliance . Borrower, except as set forth in Schedule 4.01(t ), is in material compliance with all applicable Environmental Laws; and
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(u) Material Change . The Borrower has performed all of its material obligations, other than those obligations for which performance is not yet due, under all Material Contracts and, to the best knowledge of the Borrower, each other party thereto is in compliance with each such Material Contract. Each such Material Contract is in full force and effect in accordance with the terms thereof. The Borrower has made available a true and complete copy of each such Material Contract for inspection by Lender.
ARTICLE V .
Section 5.01. Affirmative Covenants . So long as any Loan Obligations (other than contingent claims for which no claim has been asserted) remain unpaid or the Lender shall have any commitment hereunder, the Borrower shall , unless the Lender shall otherwise consent in advance in writing:
(a) Compliance with Laws, etc . Comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, (i) all applicable zoning and land use laws; (ii) all employee benefit and Environmental Laws, and (iii) paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith;
(b) Visitation Rights; Field Examination . At any reasonable time and from time to time, permit the Lender or representatives, to (i) examine and make copies of and abstracts from the records and books of account of the Borrower (at Lender ’ s expense) , and (ii) enter onto the property of the Borrower to conduct unannounced field examinations and collateral inspections, provided if no Event of Default has occurred and is then continuing Lender shall limit its field examinations to one (1) per each twelve month period , and (iii) discuss the affairs, finances, and accounts of the Borrower with any of Borrower ’ s officers or directors. Borrower consent s to and authorize s Lender to enter onto the property of Borrower for purposes of conducting the examinations, inspections and discussions provided above. U pon and during the occurrence of an Event of Default or in the event that there are deemed by the Lender to be any material inconsistencies and/or material noncompliance with respect to any financial or other reporting on the part of the Borrower, any and all visits and inspections deemed necessary or desirable on account of such Event of Default, inconsistency and/or noncompliance shall be at the expense of the Borrower. In addition to the foregoing, at any reasonable time and from time to time, the Borrower also shall permit the Lender or representatives thereof, at the expense of the Lender, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower, and to discuss the affairs, finances and accounts of the Borrower with any of its respective o fficers or directors;
(c) Reporting Requirements . Furnish to the Lender:
(i) As soon as available, but in no event later than one hundred twenty (120) days after the end of each fiscal year of the Borrower, occurring during the term hereof, audited annual financial statements of GPRE as of the end of such fiscal year (including the income statement, balance sheet, shareholders’ equity, and statement of cash flows along with accompanying footnotes) each prepared on a consolidated and consolidating basis, audited by independent certified public accountants of nationally recognized standing reasonably acceptable to the Lender , prepared in accordance with GAAP
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consistently applied and certified by an authorized officer of the Borrower; and , reporting of eliminating entries shall be provided in aggregate as well as those attributable to the Borrower, which may be provided in separate documentation delivered with the financial statements required under this subsection , together with a Compliance Certificate which: (A) states that no Event of Default, and no event or condition that but for the passage of time, the giving of notice or both would constitute an Event of Default, has occurred or is in existence; and ( B ) shows in detail satisfactory to the Lender the calculation of, and Borrower ’s compliance with, each of the covenants contained in this Agreement ;
(ii) As soon as available, but in no event later than thirty (30) days after the end of each month (excluding any redundant reports or information in months when such reporting is made by Borrower under Section 5.01(c)(iii)) :
(A) unaudited monthly financial statements , including without limitation a statements of cash flows, of Borrower, prepared in accordance with GAAP (except for the omission of footnotes and for the effect of normal year-end audit adjustments). Each of such financial statements shall (i) be prepared in reasonable detail and in comparative form, including a comparison of actual performance to the budget for such month and year-to-date, delivered to Lender under Subsection 5.01(c)(vi) below, and (ii) include a balance sheet, a statement of income for such month and for the period year-to-date and information on intercompany accounts. Such monthly statements shall be certified by an authorized officer of Borrower;
(B) a Compliance Certificate which: (A) states that no Event of Default, and no event or condition that but for the passage of time, the giving of notice or both would constitute an Event of Default, has occurred or is in existence; and (B) shows in reasonable detail the calculation of, and Borrower’s compliance with, each of the covenants contained in this Section 5.01 ;
(C) Borrower’s Key Activity Report (“ KAR ”) for the immediately preceding calendar month setting forth corn inputs, ethanol output, distillers grain output, corn oil output, and natural gas usage, together with such additional production information as reasonably requested by the Lender; and
(D) an intercompany accounts receivable report for the immediately preceding month (a) setting forth all accounts receivable owed to or from Green Plains Trade Group, LLC, or Green Plains Commodities, LLC or any other Affiliate of the Borrower;
(iii) As soon as available but in no event later than 30 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower occurring during the term hereof, unaudited quarterly consolidated financial statements of the Borrower, in each case prep ared in accordance with GAAP consistently applied (except for the omission of footnotes and for the effect of normal year-end audit adjustments) and in a format that demonstrates any accounting or formatting change that may be required by various jurisdictions in which the business of the Borrower is conducted (to the extent not inconsistent with GAAP). Each of such financial statements shall (i) be prepared in reasonable detail and in comparative form, including a comparison of actual performance to the budget for such quarter and year-to-date, delivered to Lender under Subsection 5.01(c)(vi) below, and (ii) include a balance sheet, a statement of income for such quarter and for the period year-to-date, and such other quarterly statements as Lender may specifically request which quarterly statements shall include any and all supplements thereto. Such quarterly statements shall be certified by an authorized officer of the Borrower, and be accompanied by a Compliance Certificate which: (A) states that no Event of Default,
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and no event or condition that but for the passage of time, the giving of notice or both would constitute an Event of Default, has occurred or is in existence; and (B) shows in detail satisfactory to the Lender the calculation of, and the Borrower ’ compliance with, each of the covenants contained in Sections 5.01(d), 5.01(e), 5.01(f), and 5.01(g);
(iv) promptly upon the Lender ’ s request therefor, copies of all reports and notices which the Borrower or any of its subsidiaries files under ERISA with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which the Borrower receives from such Corporation;
(v) notwithstanding the foregoing Section 5.01(c)(iv), provide to Lender within 30 days after it becomes aware of the occurrence of any Reportable Event (as defined in Section 4043 of ER ISA) applicable to the Borrower , a statement describing such Reportable Event and the actions it proposes to take in re sponse to such Reportable Event;
(v i ) B y the end of December of each fiscal year of the Borrower, an annual (with quarterly breakout) operating and capital assets budget of the Borrower for the immediately succeeding fiscal year containing, among other things, pro forma financial statements and forecasts of all planned lines of business ;
(vi i ) Promptly , upon the occurrence of an Event of Default or an event or condition that but for the passage of time or the giving of notice or both would constitute an Event of Default, notice of such Event of Default or event;
( viii ) Promptly after the receipt thereof, a copy of any management letters or written reports submitted to the Borrower by its independent certified public accountants with respect to the business, financial condition or operation of the Borrower;
( i x) Promptly after the receipt thereof, a copy of any notice under any Long-Term Marketing Agreement , Material Contract, or ABL Document , including without limitation notices of default or Events of Default ;
( x ) furnish to the Lender, promptly but in no event later than 10 Business Days after transmittal or filing thereof by the Borrower or any of Borrower ’ s Affiliates, copies of all proxy statements, notices and reports as it shall send to its members and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission), and promptly after the receipt thereof by the Borrower or any of Borrower ’ s Affiliates, copies of all management letters or similar documents submitted to the Borrower or any of Borrower ’ s Affiliates by independent certified public accountants in connection with each annual and any interim audit of the accounts of the Borrower or any of Borrower ’ s Affiliates ;
( xi ) promptly after the commencement thereof, notice of the commencement of all actions, suits, or proceedings before any court, arbitrator, or government department, commission, board, bureau, agency, or instrumentality affecting the Borrower or any of its s ubsidiaries which, if determined adversely, could have a Material Adverse Effect on the Borrower ;
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( xii ) without limiting the provisions of Section 5.01(c)(xi) above, promptly after receipt thereof, notice of the receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a condition that may requ ire the Borrower to undertake or to contribute to a cleanup or other response under all laws relating to environmental protection, or which seek penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such laws, or which claim personal injury or property damage to any person as a result of environmental factors or conditions;
( xiii ) promptly after filing, receipt or becoming aware thereof, copies of any filings or communications sent to and notices or other communications received by the Borrower from any Governmental Authority, including, without limitation, the Securities and Exchange Commission, the FCC, the PUC, or any other state utility commission relating to any material noncompliance by the Borrower or any of its s ubsidiaries with any laws or with respect to any matter or proceeding the effect of which, if adversely determined, could have a Material Adverse Effect on the Borrowe r ;
( xiv ) promptly but in no event later than 5 Business Days after becoming aware thereof, notice of any matter which has had or could have a Material Adverse Effect on the Borrower or any of its subsidiaries or any of its Operating Affiliates ;
( xv ) copies of all plans and applications submitted to the Indiana Department of Environmental Management and the U.S. Army Corps of Engineers required by Section 5.01(t) of this Agreement ;
( xvi ) A written report on the status of the plans and applications required by Section 5.01(t) within ten (10) days after the end of each month until all such plans are approved and all such permits are obtained;
( xvii ) As soon as available but in no event later than 45 days after the end of each fiscal quarter (excluding any redundant reports or information in months when such reporting is made by Borrower under Section 5.01(c)(iii)) of each fiscal year of GPRE occurring during the term hereof, unaudited quarterly consolidated financial statements of GPRE, prepared in accordance with GAAP consistently applied (except for the omission of footnotes and for the effect of normal year-end audit adjustments) and in a format that demonstrates any accounting or formatting change that may be required by various jurisdictions in which the business of GPRE is conducted (to the extent not inconsistent with GAAP). Each of such financial statements shall (i) be prepared in reasonable detail and in comparative form, and (ii) include a balance sheet, a statement of income for such quarter and for the period year-to-date, and such other quarterly statements as Lender may specifically request which quarterly statements shall include any and all supplements thereto. Such quarterly statements shall be certified by an authorized officer of GPRE ;
( xviii ) as soon as available but in no event later than 30 Business Days after the execution thereof, copies of Material Contracts with Affiliates and all amendments thereto, if any, and any Material Contracts, including the Fine Grind Equipment ;
( xix ) as soon as available, but in no event later than one hundred twenty (120) days after the end of each fiscal year of the Borrower, a report stating the amount paid to any Affiliate of the Borrower per Section 5.02(k) of this Agreement.
(d) Working Capital . Achieve and maintain Working Capital of $ 5 ,000,000 , which shall be tested monthly based on monthly financial statements of the Borrower delivered in accordance with Section 5.01 and a Compliance Certificate of the Borrower delivered to the Lender within 5 Business Days of the end of each month ;
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(e) Tangible Net Worth . Achieve and maintain Tangible Net Worth of $82,500,000.00 , which shall be tested monthly based on monthly financial statements of the Borrower delivered in accordance with Section 5.01 and a Compliance Certificate of the Borrower delivered to the Lender within 5 Business Days of the end of each month ;
(f) Tangible Owner ’ s Equity . Achieve and m aintain Tangi ble Owner ’ s Equity of at least 50% measured annually at the end of each fiscal year;
(g) Fixed Charge Coverage Ratio . Achieve and maintain a Fixed Charge Coverage Ratio of not less than 1.15 to 1.00 on December 31, 2013 and continually thereafter. Fixed Charge Coverage Ratio shall be measured at the end of each fiscal year.
(h) Liens . There shall be no lien, security interest or other charge or encumbrance, and no other type of preferential arrangement, upon or with respect to any of the properties or income of the Borrower, which secures Debt of any Person, except for the security interests of the Security Agreement or except for the Permitted Liens as d escribed in Schedule 5. 02(a);
(i) Landlord and Mortgagee Waivers . Obtain and furnish to the Lender as soon as available, waivers, acknowledgments and consents, duly executed by each: (i) real property owner, landlord and mortgagee having an interest in any of the premises owned or leased by the Borrower or in which any Collateral of the Borrower is located or to be located (and if no Collateral of Borrower is located at a parcel of property not owned or leased by a Borrower, no such waivers, acknowledgments or consents will be required); and (ii) each third party holding any Collateral, all in form and substance acceptable to the Lender, except as ot herwise agreed to by the Lender;
(j) Insurance . Maintain insurance with financially sound and reputable insurance companies in such amounts and covering such risks as are usually carried by entities engaged in similar businesses and owning similar properties in the same general areas in which the Borrower operate s , and make such in creases in the type of amount or coverage as Lender may reasonably request, provided that in any event the Borrower will maintain workers ’ compensation insurance, property insurance and comprehensive general liability insurance reasonably satisfactory to the Lender. The Borrower shall maintain, at a minimum, directors and officers liability insurance, commercial liability insurance, business interruption insurance, builder ’ s risk insurance, and general commercial property insurance. All such policies insuring any collateral for the Borrower ’ s obligations to Lender shall have lender or mortgagee loss payable clauses or endorsements in form and substance acceptable to Lender . Each insurance policy covering Collateral shall be in compliance with the requireme nts of the Security Agreement and the Mortgage ;
(k) Property and Insurance Maintenance . Maintain and preserve all of its property and each and every part and parcel thereof that is necessary to or useful in the proper conduct of its business in good repair, working order, and condition, ordinary wear and tear excepted, and in substantial compliance with all applicable laws, and make all alterations, replacements, and improvements thereto as may from time to time be necessary in order to ensure that its properties remain in good working order and condition and compliance. The Borrower agrees that upon the occurrence and continuing existence of an Event of Default, at Lender ’ s request, which request may not be made more than once a year, the Borrower will furnish to Lender a report on the condition of the Borrowe r ’ s property prepared by a professional engineer satisfactory to Lender;
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( l ) Keeping Books and Records . The Borrower shall keep proper books of record and account with complete, true and accurate entries in conformity with GAAP and all requirements of law shall be made of all financial transactions and matters involving the assets and business of the Borrower, and shall maintain such books of record and account in material conformity with applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower. The Borrower shall keep books and records separate from the books and records of any other Person (including any Affiliates of the Borrower) that accurately reflect all of its business affairs, transactions and the documents and other instruments that underlie or authorize all of its limited liability company actions ;
( m ) Food Security Act Compliance . If the Borrower acquire s any Collateral which may have constituted farm products in the possession of the seller or supplier thereof, such Borrower shall, at its own expense, use its commercially reasonable efforts to take such steps to insure that all Liens (except the liens granted pursuant hereto) in such acquired Collateral are terminated or released, including, without limitation, in the case of such farm products produced in a state which has established a Central Filing System (as defined in the Food Security Act), registering with the Secretary of State of such state (or such other party or office designated by such state) and otherwise take such reasonable actions necessary, as prescribed by the Food Security Act, to purchase farm products free of liens (except the liens granted pursuant hereto); provided, however, that such Borrower may contest and need not obtain the release or termination of any lien asserted by any creditor of any seller of such farm products, so long as it shall be contesting the same by proper proceedings and maintain appropriate accruals and reserves therefor in accordance with the GAAP . Upon the Lender ’ s request made, the Borrower agree s to forward to the Lender promptly after receipt copies of all notices of liens and master lists of Effective Financing Statements delivered to the Borrower pursuant to the Food Security Act, which notices and/or lists pertain to any of the Collateral. Upon the Lender ’ s request, the Borrower agree s to provide the Lender with the names of Persons who supply the Borrower with such farm products and such other information as the Lender may reasonably reque st with respect to such Persons;
( n ) Warehouse Receipts . If any warehouse receipt or receipts in the nature of a warehouse receipt is issued in respect of any portion of the Collateral, then the Borrower: (i) will not permit such warehouse receipt or receipts in the nature thereof to be “ negotiable ” as such term is used in Article 7 of the Uniform Commercial Code; and (ii) will deliver all such receipts to the Lender (or a Person designated by the Lender) within five (5) days of the Lender ’ s request and from time to time thereafter. If no Event of Default exists, the Lender agrees to deliver to such Borrower any receipt so held by the Lender upon such Borrower ’ s request in connection with such sale or other disposition of the underlying inventory, if such disposition is in ordinary cou rse of such Borrower ’ s business ;
( o ) Management of Borrower . Management of the Borrower shall be maintained as set forth on Schedule 5.01(o ) hereto , unless prior written notice is provided to the Lender of any change ;
( p ) Compliance with Other Agreements . Borrower will perform in all material respects all obligations and abide in all material respects by all covenants and agreements contained in the following agreements: (i ) any and all Long T erm Marketing Agreements; and (ii ) any other Material Contracts;
( q ) Additional Assurances . Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, financing statements, control agreements, instruments, documents and other agreements as Lender or its counsel may reasonably request to evidence and secure the Loans and to perfect all Security Interest s ;
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(r) Release of Restrictive Covenant s . Borrower shall use its commercially reasonable ef forts to obtain release of the Restrictive C ovenants Southwest Bluffton Industrial Park dated June 15, 2004 and recorded with the Wells County Recorder on June 17, 2004, as Document Number 139039;
(s) Collateral Assignments . If not sooner delivered, within thirty (30) days of the date of this Agreement, deliver to the Lender, Collateral Assignments of all Material Contracts and all ABL Documents, duly executed by the Borrower and pursuant to which the Borrower shall have assigned to the Lender, as collateral security, all of the Borrower’s right, title and interest in and to each of such contracts, and which assignment shall have been consented to and certified in writing by the other party(ies) to each such contract;
( t ) Mitigation Plan . Borrower shall have submitted a mitigation plan for the encroachments of the wetlands and streams located on the Property and an application for a permit pursuant to Section 401 Application for Authorization to Discharge Dredged or Fill Material to Isolated Wetlands and / or Waters of the State from the Indiana Department of Environmental Management and a permit from the U.S. Army Corps of Engineers pursuant to Section 404 of the Clean Water Act, and such other permits as may be required by the Indiana Department of Environmental Management and any other governmental agencies having jurisdiction.
Section 5.02. Negative Covenants . So long as any of the Loan Obligations remain unpaid (other than contingent obligations for which no claim has been asserted) or the Lender shall have any commitment hereunder, the Borrower will not, without the prior written consent of the Lender :
(a) Liens, etc . Create or suffer to exist, or permit any of its subsidiaries to create or suffer to exist, any lien, security interest or other charge or encumbrance, or any other type of preferential arrangement, upon or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its subsidiaries to assign, any right to receive income, in each case to secure any Debt (as defined below) of any Person, other than (collectively referred to as “ Permitted Liens ” ) :
(i) Those described on Schedule 5.02(a) hereto and renewals and extensions on the same or substantially the same terms and conditions and at no increase in the debt or obligation; or
(ii) liens or security interests which are subject to an intercreditor and subordination agreement in form and substance reasonably acceptable to Lender in Lender ’ s sole but reasonable discretion; or
(iii) the liens or security interests of the Security Agreement and Mortgage ; or
( i v) liens (other than liens relating to environmental liabilities or ERISA) for taxes, assessments, or other governmental charges that are not more than 30 days overdue or, if the execution thereof is stayed, which are being contested in good faith by appropriate proceedings diligently pursued and for which adequate reserves have been established; or
(v) liens of warehousemen, carriers, landlords, mechanics, materialmen, or other similar statutory or common law liens securing obligations that are not yet due and are incurred in the ordinary course of business or, if the execution thereof is stayed, which are being contested in good
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faith by appropriate proceedings diligently pursued and for which adequate reserves have been established in accordance with GAAP ; or
(vi) liens resulting from good faith deposits to secure payments of workmen ’ s compensation unemployment insurance, or other social security programs or to secure the performance of tenders, leases, statutory obligations, surety, customs and appeal bonds, bids or contracts (other than for payment of Debt); or
(vii) any attachment or judgment lien not constituting an Event of Default; or
( viii ) liens arising from filing UCC financing statements regarding leases not prohibited by this Agreement; or
( i x) customary offset rights of brokers and deposit banks arising under the terms of securities account agreem ents and deposit agreements; or
(x) any real estate easements and easements, covenants and encumbrances that customarily do not affect the marketable title to real esta te or materially impair its use; or
(xi) the Fine Grind Equipment Lien, which lien may not without the prior express written consent of the Lender be assigned or otherwise conveyed to any other Person other than the Lender ; or
(xii) liens arising from the ABL Documents.
(b) Distributions , etc . Declare or pay any Distribution; provided, however, that the Borrower may: (i) declare and pay Distributions payable in membership interests or units or other Equity Interests (including options or warrants) and (ii) purchase or otherwise acquire shares of the membership interests (units) of the Borrower with the proceeds received from the issuance of new membership interests (units); (iii) pay or make the provision for Distributions in an amount not to exceed, in the aggregate, 35% of the Borrower's immediately preceding fiscal year's Net Income Before Tax; provided that any provision for income taxes payable, whether accrued or paid, through intercompany payables shall be deducted therefrom (“ Tax Distributions ”); provided that all loan covenants are met on a pre- and post-distribution basis, including but not limited to compliance with the Working Capital covenant; (iv) pay Distributions which are immediately reinvested in the Borrower (“ Reinvestment Distributions ”); and (v) complete the transactions reflected on Schedule 4.01(a) and (vi) after payment of the Excess Cash Flow Payment required by Section 2.17, if any, and after all loan covenants are met on a post-dividend basis, pay additional distributions in an amount up to 15% of the Borrower’s immediately preceding fiscal year’s Net Income (“ Excess Distributions ”), provided, however, that immediately prior to the proposed payment of any dividends or distributions permitted by this Section 5.02(b), or after giving effect thereto, no Default or Event of Default shall exist, and provided, however, that aggregate distributions will not exceed 50% of the Borrower’s immediately preceding fiscal year’s Net Income; ; or
(c) Capital Expenditures . Make any investment in fixed assets in excess of Two Million and No/100 Dollars ($2,000,000.00), in the aggregate, during any fiscal year of the Borrower during the term of this Agreement ; provided that , the costs associated with the acquisition and installation of the Fine Grind Equipment , and any other investment in fixed assets funded through subordinate
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financing provided to Borrower by GPRE , from time to time during the term of this Agreement , shall be excluded f rom the $2,000,000 annual limit stated above .
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(d) |
Consolidation, Merger, Dissolution, Etc. D irectly or indirectly, merge or consolidate with any other Person or permit any other Person to merge into or with o r consolidate with the Borrower or any of its subsidiaries if Borrower is not the surviving entity to such merger ; or |
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(e) |
Indebtedness, etc . Create, incur, assume or suffer to exist any Debt or other indebtedness, liabilities or obligations, whether matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, in an aggregate principal amount not to exceed $500,000.00, without the prior written consent of the Lender, except: (i) the liabilities of the Borrower to the Lender hereunder; (ii) trade accounts payable and accrued liabilities (other than Debt) arising in the ordinary course of Borrower’s business; (iii) payments owed under Material Contracts or the ABL Documents ; (iv) payments owed under contracts or agreements other than Material Contracts arising in the ordinary course of Borrower’s business; (v) Subordinate Debt; and (vi) liabilities owed to ICM associated with the Fine Grind Equipment. |
(f) Organization; Name; Chief Executive Office . Change its state of organization, name or the location of its chief executive office without the prior written consent of the Lender , except that the principal office shall be moved to the plant site when construction of the administration office is substantially complete ; or
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(g) |
Loans, Guaranties, etc . Make any loans or advances to (whether in cash, in-kind, or otherwise) any Person, or directly or indirectly guaranty or otherwise assure a creditor against loss in respect of any indebtedness, obligations or liabilities (contingent or otherwise) of any Person ; or |
(h) Subsidiaries; Affiliates . Form or otherwise acquire any subsidiary or affiliated business, or acquire the assets of or acquire any equity or ownership interest in any Person, unless such subsidiary, affiliate or Person executes and delivers to the Lender: (i) a guaranty of all of the Loan Obligations, in form and substance acceptable to the Lender in its sole but reasonable discretion; (ii) security agreements in form substantially similar to the Security Agreement; and (iii) such other documents and amendments to this Agreement and the other Loan Docume nts as the Lender shall reasonably require; or
(i) Transfer of Assets . Sell, lease, assign, transfer, or otherwise voluntarily dispose of any of its assets, or permit any of Borrower ’ s subsidiaries or any Operating Affiliate to sell, lease, assign, transfer, or otherwise voluntarily dispose of all or substantially all of its assets except: (i) dispositions of inventory in the ordinary course of business; (ii) dispositions of: (A) obsolete or worn out equipment; (B) equipment or real property not necessary for the operation of its business; or (C) equipment or real property which is replaced with property of equivalent or greater value as the property which is disposed ; or (iii) dispositions arising out of the initiation of the ABL Transactions ;
(j) Lines of Business . Engage in any line or lines of business activity other than the product ion of ethanol and related by products ;
(k) Transactions with Affiliates . Directly or indirectly enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate or with any governor, director, manager, officer, employee, consultant, agent,
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or member of Borrower or any Affiliate, except (i) transactions listed on Schedule 5.02(k), (ii) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of Borrower and upon fair and reasonable terms which are fully disclosed to the Lender and are no less favorable to Borrower or such subsidiary than would be obtained in a comparable arm’s length transaction with a person or entity that is not an Affiliate , including without limitation the transactions contemplated in the ABL Documents , and (iii) payment of compensation to members, governors, directors, managers, officers, employees, consultants and agents in the ordinary course of business for services actually rendered in their capacities as members, governors, directors, managers, officers, employees, consultants and agents, provided such compensation is reasonable and comparable with compensation paid by companies of like nature and similarly situated. Notwithstanding the foregoing, upon the election of the Lender , no payments may be made with respect to any items set forth in clauses (i) and (ii) of the preceding sentence upon the occurrence and during the continuation of a Default or an Event of Default. .
(l) Management Fees and Compensation . Directly or indirectly pay any management, consulting or other similar fees to any Person except as provided in Section 5.02(k)(iv) and except for legal or consulting fees paid to Persons listed on Schedule 5.02(l), for services actually rendered and in amounts typically paid by entities engaged in the Borrower’s business ;
(m) Material Control or Management . Permit a Change in Control to occur ;
(o) Amendments to Organizational Documents . Amend, or permit GPRE to amend its operating agreement, management agreement or any other organizational documents in any respect without the prior written consent of the Lender;
(p) Flood Insurance . Borrower shall not build, construct, place or otherwise located any Building at any location on the Property for which flood insurance is required under 12 C.F.R. Part 339 or other applicable U.S. or state law or regulation without the prior written consent of the Lender and without first obtaining flood insurance on such Building acceptable to Lender and providing evidence thereof to the Lender in a form acceptable to Lender. For purposes of this Section, “ Building ” has the meaning provided in 12 C.F.R. 339.2(c) ;
(q) Long Term Marketing Agreement, Etc . Change, alter or amend any of its Long Term Marketing Agreements, ABL Documents, or other similar agreement with Green Plains Trade Group LLC, Green Plains Commodities LLC, Green Plains Grain Company LLC or any other Affiliate of the Borrower. No accounts receivable under any Long Term Marketing Agreement or other similar agreement with Green Plains Trade Group, LLC, Green Plains Commodities LLC or any other Affiliate of the Borrower shall at any time remain unpaid (i) for more than five (5) days after the invoice date for ethanol, (ii) more than 25 days after the invoice date for distillers grain, and (iii) more than 25 days after the invoice date for corn oil.
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default . Each of the following events shall be an “ Event of Default ” :
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(a) The Borrower shall fail to pay any installments of principal or interest, fees, expenses, charges or other amounts payable hereunder or under the other Loan Documents or to make any deposit of funds required under this Agreement within ten (10) days of when due ; or
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(b) |
Any representation or warranty made by the B orrower, or any of its officers, members or managers or directors under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made; or |
(c) Borrower shall fail to perform or observe any term, covenant or agreement contained in Sections 5.01(d), (e), (f) or (g), or take any action as prohibited by Section 5.02; provided, however, that and notwithstanding anything to the contrary contained in this Section 6.01, in the event that Borrower fails to comply with Sections 5.01(d), (e), (f) or (g) hereof, Borrower shall have the right (“Cure Right”) at any time until the date that is five (5) days after the date the Compliance Certificate is required to be delivered pursuant to Section 5.01(c) of this Agreement to issue equity interests or otherwise receive Equity Contributions, consistent with past practices disclosed to the Lender , and in such amounts as to permit Borrower’s compliance with such financial covenants (“Cure Amount”), and thereupon Borrower’s compliance with Sections 5.01(d), (e), (f) and (g) shall be recalculated giving effect to the Cure Amount as if the cure had occurred during the fiscal period covered by the Compliance Certificate. If, after giving effect to the foregoing recalculations, the requirements of Sections 5.01(d), (e), (f) or (g) shall be satisfied, then such requirements shall be deemed satisfied for the relevant fiscal period with the same effect as though there had been no failure to comply therewith for such period, and the applicable breach or default shall be deemed cured for the purposes of this Agreement; or
(d) The Borrower shall fail to deliver the financial statements or Compliance Certificate under Section 5.01(c) within ten (10) days of the date due; or
(e) The Borrower shall fail to perform or observe any term, covenant or agreement contained in any Loan Document (other than those listed in clauses (a) through (d) of this Section 6.01) on its part to be performed or observed (other than the covenants to pay the Loan Obligations) and any such failure shall remain unremedied for thirty (3 0) days after written notice thereof shall have been given to the Borrower by the Lender, provided, however, that no Event of Default shall be dee med to exist if, within said thirty (3 0) day period, Borrower have commenced appropriate action to remedy such failure and shall diligently and continuously pursue such action until such cure is completed, unless such cure is or cannot be completed within sixty (6 0) days after written notice shall have been given; or
(f) The Borrower shall fail to pay any indebtedn ess in an amount in excess of $ 100 ,000.00 (either in any individual case or in the aggregate) excluding indebtedness evidenced by the Notes and excluding Ordinary Trade Payable Disputes, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness; or any other default under any agreement or instrument relating to any such indebtedness, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to cause a Material Adverse Effect or accelerate, or to permit the acceleration of, the maturity of such indebtedness (excluding Ordinary Trade Payable Disputes); or any such indebtedness in excess of $150 ,000.00 shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof (excluding Ordinary Trade Payable Disputes); or
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(g) The Borrower shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property, and, in the case of any such proceeding instituted against it (but not instituted by it) either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur; or the Borrower shall take any corporate action to authorize any of the actions set forth above in this subsection; or
(h) Any one or more judgment(s) or order(s) for the pa yment of money in excess of $150 ,000.00 in the aggregate shall be rendered against the Borrower and either: (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(i) Without cause by Lender, a ny provision of any Loan Document shall for any reason cease to be valid and binding on the Borrower or the Borrower shall so state in writing; or
(j) The Mortgage or the Security Agreement shall for any reason, except to the extent permitted by the terms thereof, cease to create a valid lien, encumbrance or security interest in any of the property purported to be covered thereby; or
(k) The termination of any Long Term Marketing Agreement or ABL Document prior to its stated expiration date, unless such Long Term Marketing Agreement or ABL Document is replaced by another Long Term Marketing Agreement or ABL Document, as applicable, acceptable to the Lender, within thirty (30) days of the termination of such a greement; or
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(l) |
The Borrower, any of Borrower ’ s subsidiaries, or any Operating Affiliate dissolves, suspends, or discontinues doing business ; or |
(m ) Any event, change or condition not referred to elsewhere in this Section 6.01 should occur which results in a Material Adverse Effect ; or
(n ) a Change in Control, without the prior written consent of the Lender shall occur ; or
(o ) The loss, suspension or revocation of, or failure to renew, any franchise, license, certificate, permit, authorization, approval or the like now held or hereafter acquired by the Borrower or any of its s ubsidiaries, if such loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect on the Borrower and the Project; or (ii) any regulatory or Governmental Authority replaces the management of the Borrower or any of its s ubsidiaries or assumes control over the Bo rrower or such s ubsidiary; or
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(p ) The Borrower should breach or be in default under a Material Contract , Long Term Marketing Agreement or ABL Document in any material respect, including any material breach or default, or any termination shall have occurred, or any other event which would permit any party other than the Borrower to cause a termination, or any agreement shall have ceased for any reason to be in full force and effect prior to its sta ted or optional expiration date;
(q ) The Borrowe r terminates, changes, amends or restates, without the Lender ’ s prior consent any Material Contract , Long Term Marketing Agreement or ABL Document ;
(r ) The Borrower fails to (a) maintain the stream mitigation site as required by the U.S. Army Corps of Engineers and the Indiana Department of Environmental Management, (b) provide and maintain such financial assurances as may be required by the U.S. Army Corps of Engineers and the Indiana Department of Environmental Management in conjunction with the issuance of permits pursuant to Borrower ’ s Secti on 401 / 404 Permit Application , as amended, modified and resubmitted from time to time, or (c) comply with all of the requirements of the permits issued by the U.S. Army Corps of Engineers and Indiana Departme nt of Environmental Management;
(s ) Any enforcement action is commenced by the Indiana Department of Environmental Management or the U.S. Army Corps of Engineers as a result of any encroachments of the wetlands and streams located on the Property;
(t ) There shall have been entered or docketed any order or ruling by either the Indiana Department of Environmental Management or the U.S. Army Corps of Engineers in connection with the plans and applications required by Section 5.01(t) of this Agreement which, in the reasonable opinion of the Lender, may adversely impact the construction or operation of the Project and on or before five (5 ) B usiness Days following the entry of such order or ruling, the Borrower shall have failed to deliver to the Lender an irrevocable standby letter of credit in the amount of $1,000,000.00 issued by a financial institution reasonably acceptable to the Lender with an expiration date of not less than twelve months after the date of issuance and automatically renewable for additional periods of at least twelve months which may be drawn upon by the Lender in the event Borrower shall fail to make any payments required by this Agreement or any of the Loan Documents. Such irrevocable standby letter of credit shall be surrendere d by Lender on or before five (5 ) Business Days following Lender ’ s receipt of a copy of final order releasing, dismissing or reversal of such adverse ruling or order ;
(u) Any guaranty, suretyship, subordination agreement, maintenance agreement, or other agreement furnished in connection with the Borrower’s obligations hereunder and under any Note shall, at any time, cease to be in full force and effect, or shall be revoked or declared null and void, or the validity or enforceability thereof shall be contested by the guarantor, surety or other maker thereof, or the guarantor shall deny any further liability or obligations thereunder, or shall fail to perform its obligations thereunder, or any representation or warranty set forth therein shall be breached, or the guarantor shall breach or be in Default under the terms of any other agreement with the Lender (including any loan agreement or security agreement);
(v) Any Affiliate of the Borrower or any party to any ABL Document , other than the Borrower , should breach or be in default thereunder in any material respect.
Section 6.02. Remedies . Upon the occurrence of an Event of Default and at any time while such Event of Default is continuing , the Lender to the extent permitted by applicable law :
(a) may accelerate the due date of the unpaid principal balance of the Notes, all accrued but unpaid interest thereon and all other amounts payable under this Agreement making such
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amounts immediately due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith immediately due and payable, without presentment, notice of intent to accelerate or notice of acceleration, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however , that in the event of an actual or deemed entry of an order for relief with respect to any of the Borrower under the Federal Bankruptcy Code, the Notes, all such interest and all such amounts shall automatically become due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby e xpressly waived by the Borrower;
(b) m ay, by notice to the Borrower, obtain the appointment of a receiver to take possession of all Collateral of the Borrower, including, but not limited to all personal property, including all fixtures and equipment leased, occupied or used by any of the Borrower. To the extent permitted by applicable law, Borrower hereby irrevocably consent s to the appointment of such receiver and agree s to cooperate and assist any such receiver as reasonably requested to facilitate the transfer of possession of the Collateral to such receiver and to provide such receiver access to all books, records, information and document s as requested by such receiver;
( c ) may, by notice to the Borrower, require the Borrower to pledge to the Lender as security for the Loan Obligations an amount in immediately available funds equal to the then outstanding Letter of Credit Liabilities, such funds to be held in an interest bearing cash collateral account at the Lender without any right of withdrawal by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower or any of its subsidiaries under the Federal Bankruptcy Code, the Borrower shall, without notice, pledge to the Lender as security for the Loan Obligations an amount in immediately available funds equal to the then outstanding Letter of Credit Liabilities, such funds to be held in such an interest bearing cash collateral account at the Lender; and
( d ) may exercise all other rights and remedies afforded to the Lender under the Loan Documents or by applicable law or equity.
Section 6.03. Remedies Cumulative . Each and every power or remedy herein specifically given shall be in addition to every other power or remedy, existing or implied, given now or hereafter existing at law or in equity, and each and every power and remedy herein specifically given or otherwise so existing may be exercised from time to time and as often and in such order as may be deemed expedient by Lender, and the exercise or the beginning of the exercise of one power or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any other power or remedy. No delay or omission of Lender in the exercise of any right or power accruing hereunder shall impair any such right or power or be construed to be a waiver of any default or acquiescence therein.
Section 7.01. Amendments, etc . No amendment or waiver of any provision of any Loan Document to which the Borrower is a party, nor any consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be agreed or consented to by the Lender and the Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 7.02. Notices, etc . All notices and other communications provided for under any Loan Document shall be in writing and mailed, faxed, or delivered at the addresses set forth below, or at such other address as such party may specify by written noti ce to the other parties hereto:
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If to the Borrower: |
Green Plains Bluffton LLC |
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450 Regency Parkway, |
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Suite 400 |
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Omaha, NE 68114 |
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Telephone: (402) 315-1603 |
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Fax: (402) 315-1603 |
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Attention: CFO |
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With a copy (which shall |
Green Plains Renewable Energy, Inc. |
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not constitute notice) to: |
450 Regency Parkway, |
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Suite 400 |
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Omaha, NE 68114 |
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Telephone: (402) 315-1629 |
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Fax: (402) 315-1629 |
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Attention: Michelle Mapes, Corp. Sec. |
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If to the Lender: |
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3555 9th Street NW Suite 400 |
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Rochester MN 55903 |
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Telephone: 952-997-4082 |
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Facsimile: (507) 344-5088 |
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Attention: Ron Monson |
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With copies (which shall not |
Gray Plant Mooty |
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constitute notice) to: |
1010 West St. Germain, Suite 600 |
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St. Cloud, MN 56301 |
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Facsimile: (320) 252-4482 |
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Attention: Phillip L. Kunkel |
All such notices and communications shall have been duly given and shall be effective: (a) when delivered; (b) when transmitted via facsimile to the number set forth above; (c) the Business Day following the day on which the same has been delivered prepaid (or pursuant to an invoice arrangement) to a reputable national overnight air courier service ; or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid. Any confirmation sent by the Lender to the Borrower of any borrowing under this Agreement shall, in the absence of manifest error, be conclusive and binding for all purposes .
Section 7.03. No Waiver; Remedies . No failure on the part of the Lender to exercise, and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law .
Section 7.04. Costs, Expenses and Taxes .
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(a) The Borrower agrees to pay on demand all reasonable and necessary costs and expenses in connection with the preparation, execution, delivery, filing, recording and administration of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Lender (who may be in-house counsel), and local counsel who may be retained by said counsel, with respect thereto and with respect to advising the Lender as to its respective rights and responsibilities under the Loan Documents, and all costs and expenses (including reasonable counsel fees and expenses) for the Lender in connection with the filing of the Financing Statements and the enforcement of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, in the context of any bankruptcy proceedings. In addition, the Borrower agrees to pay on demand the expenses described in Section 5.01(b). In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of the Loan Documents and the other documents to be delivered under the Loan Documents, and agrees to save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
(b) If, due to payments made by the Borrower pursuant to Section 2. 09 or due to acceleration of the maturity of the Advances pursuant to Section 6.01 or due to any other reason (other than payments made pursuant to Section 2.17 of this Agreement), the Lender receives payments of principal of any Loan other than on the last day of an Interest Period relating thereto, the Borrower shall pay to the Lender on demand any amounts required to compensate the Lender for any additional losses, costs or expenses which it may incur as a result of such payment, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund or maintain such Loan.
(c) Upon the request of Borrower, Lender shall provide copies of all invoices for costs and expenses to be reimbursed by Borrower under this Agreement or under any of the Loan Documents.
Section 7.05. Right of Set-off . The Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law following the occurrence and only during the continuation of an Event of Default , to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the Loan Obligations, irrespective of whether or not the Lender shall have made any demand under such Loan Document and although deposits, indebtedness or such obligations may be unmatured or contingent. The Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have.
Section 7.06. Severability of Provisions . Any provision of this Agreement or of any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 7.07. Binding Effect; Successors and Assigns; Participations .
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(a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign or otherwise transfer its rights hereunder or any interest herein without the prior written consent of the Lenders .
(b) Provided Lender provides notice of such transfer or participation to Borrower, Borrower agrees and consents to Lender ’ s sale or transfer, whether now or later, of one or more participation interests in the Loans to one or more purchasers, whether r elated or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loans, and Borrower hereby waives any rights to privacy it may have with respect to such matters; provided, however, that any information received by any such purchaser or potential purchaser under this provision which concerns the personal, financial or other affairs of the Borrower shall be received and kept by the purchaser or potential purchaser in full confidence and will not be revealed to any other persons, firms or organizations nor used for any purpose whatsoever other than for determining whether or not to participate in the Loans and in accord with the rights of Lender if a participation interest is acquired. Provided Borrower has been provided notice by Lender of Lender ’ s sale of a participation interest to such party or parties, Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loans and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest arising out of or by virtue of the participation and unconditionally agrees that either Lender or such purchaser may enforce Borrower ’ s obligation under the Loans irrespective of the failure or insolvency of any holder of any interests in the Loans. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
Section 7.08. Consent to Jurisdiction .
(a) The Borrower hereby irrevocably submits to the jurisdiction of any Minnesota state court or federal court over any action or proceeding arising out of or relating to this Agreement, the Note and any instrument, agreement or document related hereto or thereto, and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Minnesota state court or federal court. The Borrower hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower irrevocably consents to the service of copies of the summons and complaint and any other process which may be served in any such action or proceeding by the mailing of copies of such process to Borrower at its address specified in Section 7.02. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section 7.08 shall affect the right of the Lender to serve legal process in any other manner permitted by law or affect the right of the Lender to bring any action or proceeding against the Borrower or its property in the courts of other jurisdictions.
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Section 7.09. Governing Law . THIS AGREEMENT, THE SUPPLEMENTS AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MINNESOTA.
Section 7.10. Execution in Counterparts . This Agreement may be executed in any number of counterparts and on telecopy counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same agreement.
Section 7.11. Survival . All covenants, agreements, representations and warranties made by the Borrower in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Advances and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Lender may have had notice or knowledge of any Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as any Loan Obligations are outstanding and unpaid (other than contingent claims for which no claim has been asserted) and so long as the Lender has any unexpired commitments under this Agreement or the Loan Documents. The expense reimbursement, additional cost, capital adequacy and indemnification provisions of this Agreement shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loan Obligations or the termination of this Agreement or any provision hereof.
Section 7.12. WAIVER OF JURY TRIAL . THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 7.13. Entire Agreement . THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers and duly authorized, as of the date first above written.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT , AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF THE DATE FIRST ABOVE STATED.
[SIGNATURE PAGE ON FOLLOWING PAGE]
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SIGNATURE PAGE TO:
SECOND AMENDED AND RESTATED
MASTER LOAN AGREEMENT
by and among
GREEN PLAINS BLUFFTON LLC
and
AGSTAR FINANCIAL SERVICES, PCA
D ate d : April 22 , 2013
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BORROWER: |
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LENDER: |
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GREEN PLAINS BLUFFTON LLC, |
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AGSTAR FINANCIAL SERVICES, PCA , a |
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an Indiana limited liability company, |
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United States instrumentality |
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/s/ Jerry L. Peters |
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/s/ Ron Monson |
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By: Jerry L. Peters |
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By Ron Monson |
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Its: Chief Financial Officer |
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Its Vice President |
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STATE OF _Nebraska___________ |
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) SS: |
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COUNTY OF _ Douglas __________ |
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Before me the undersigned, a Notary Public in and for said County and State personally appeared Jerry L. Peters, Chief Financial Officer of GREEN PLAINS BLUFFTON LLC , an Indiana limited liability company, who executed the foregoing instrument on behalf of such entity.
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Witness my hand and Notarial Seal this _ 22 _ day of _ April __, 2013. |
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My Commission Expires: _ 10/28/2014 ___ |
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/s/ Sharon Mize |
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Notary Public |
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My county of Residence: _ Douglas ______ |
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CUSIP # 39322FAA3
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SECOND AMENDED AND RESTATED REVOLVING CREDIT |
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AND |
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SECURITY AGREEMENT |
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PNC BANK, NATIONAL ASSOCIATION |
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(AS AGENT) |
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PNC BANK, NATIONAL ASSOCIATION |
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AND THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO |
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(AS LENDERS) |
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WITH |
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GREEN PLAINS TRADE GROUP LLC |
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AND |
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the other Persons joined as borrowers from time to time |
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(BORROWERS) |
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Arranged by: |
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PNC CAPITAL MARKETS LLC |
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AND |
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MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED |
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(AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS) |
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BANK OF AMERICA, N.A. |
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(AS SYNDICATION AGENT) |
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26-Apr-13 |
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TABLE OF CONTENTS
Page
I. DEFINITIONS. ............................................................................................................................................................................. 1
1.1. Accounting Terms ........................................................................................................................................................................ 1
1.2. General Terms ............................................................................................................................................................................... 1
1.3. Uniform Commercial Code Terms .................................................................................................................................. 27
1.4. Certain Matters of Construction ...................................................................................................................................... 27
1.5. Existing Indebtedness .......................................................................................................................................................... 28
II. ADVANCES, PAYMENTS. .................................................................................................................................................. 28
2.1. Revolving Advances. .......................................................................................................................................................... 28
2.2. Procedure for Revolving Advances Borrowing. ....................................................................................................... 30
2.3. Disbursement of Advance Proceeds ............................................................................................................................ 32
2.4. Swing Loans. ............................................................................................................................................................................ 32
2.5. Maximum Advances ............................................................................................................................................................. 33
2.6. Repayment of Advances. ................................................................................................................................................. 33
2.7. Repayment of Excess Advances .................................................................................................................................. 34
2.8. Statement of Account .......................................................................................................................................................... 34
2.9. Letters of Credit ..................................................................................................................................................................... 34
2.10. Issuance of Letters of Credit. ......................................................................................................................................... 35
2.11. Requirements For Issuance of Letters of Credit. .................................................................................................. 37
2.12. Disbursements, Reimbursement. ................................................................................................................................... 37
2.13. Repayment of Participation Advances. ...................................................................................................................... 39
2.14. Documentation ........................................................................................................................................................................ 39
2.15. Determination to Honor Drawing Request .................................................................................................................. 39
2.16. Nature of Participation and Reimbursement Obligations ..................................................................................... 40
2.17. Indemnity ................................................................................................................................................................................... 41
2.18. Liability for Acts and Omissions ..................................................................................................................................... 41
2.19. Additional Payments ............................................................................................................................................................. 43
2.20. Manner of Borrowing and Payment. .............................................................................................................................. 43
2.21. Mandatory Prepayments. ................................................................................................................................................... 45
2.22. Use of Proceeds. ................................................................................................................................................................... 46
2.23. Defaulting Lender. ................................................................................................................................................................. 47
2.24. Increase of the Maximum Loan Amount by Borrowers. ....................................................................................... 49
III. INTEREST AND FEES. ....................................................................................................................................................... 51
3.1. Interest ........................................................................................................................................................................................ 51
3.2. Letter of Credit Fees. .......................................................................................................................................................... 51
3.3. Facility Fee and Fee Letter. ............................................................................................................................................. 52
3.4. Reserved. .................................................................................................................................................................................. 52
3.5. Computation of Interest and Fees ................................................................................................................................. 52
3.6. Maximum Charges ................................................................................................................................................................. 52
3.7. Increased Costs ..................................................................................................................................................................... 53
3.8. Basis For Determining Interest Rate Inadequate or Unfair ................................................................................ 53
3.9. Capital Adequacy. .................................................................................................................................................................. 54
3.10. Gross Up for Taxes ............................................................................................................................................................... 55
3.11. Withholding Tax Exemption. .............................................................................................................................................. 55
IV. COLLATERAL: GENERAL TERMS .............................................................................................................................. 56
4.1. Security Interest in the Collateral ................................................................................................................................... 56
4.2. Perfection of Security Interest ........................................................................................................................................ 56
4.3. Disposition of Collateral ...................................................................................................................................................... 57
4.4. Preservation of Collateral .................................................................................................................................................. 57
4.5. Ownership of Collateral. ...................................................................................................................................................... 57
4.6. Defense of Agent’s and Lenders’ Interests ............................................................................................................... 58
4.7. Books and Records ............................................................................................................................................................... 58
4.8. Financial Disclosure .............................................................................................................................................................. 58
4.9. Compliance with Laws .......................................................................................................................................................... 59
4.10. Inspection of Premises ....................................................................................................................................................... 59
4.11. Insurance. .................................................................................................................................................................................. 59
4.12. Failure to Pay Insurance .................................................................................................................................................... 60
4.13. Payment of Taxes ................................................................................................................................................................. 60
4.14. Payment of Leasehold Obligations ................................................................................................................................ 61
4.15. Receivables. ............................................................................................................................................................................ 61
4.16. Inventory ................................................................................................................................................................................... 63
4.17. Maintenance of Equipment ................................................................................................................................................ 63
4.18. Exculpation of Liability ........................................................................................................................................................ 63
4.19. Environmental Matters. ....................................................................................................................................................... 64
4.20. Financing Statements .......................................................................................................................................................... 66
4.21. Real Estate ............................................................................................................................................................................... 66
4.22. Appraisals. ................................................................................................................................................................................. 66
V. REPRESENTATIONS AND WARRANTIES. .............................................................................................................. 66
5.1. Authority ..................................................................................................................................................................................... 66
5.2. Formation and Qualification. ............................................................................................................................................. 67
5.3. Survival of Representations and Warranties ............................................................................................................ 67
5.4. Tax Returns ............................................................................................................................................................................... 67
5.5. Financial Statements. .......................................................................................................................................................... 68
5.6. Entity Names ........................................................................................................................................................................... 69
5.7. O.S.H.A. and Environmental Compliance. ................................................................................................................. 69
5.8. Solvency; No Litigation, Violation, Indebtedness or Default; ERISA Compliance. ................................ 69
5.9. Patents, Trademarks, Copyrights and Licenses ..................................................................................................... 71
5.10. Licenses and Permits ........................................................................................................................................................... 71
5.11. Default of Indebtedness ..................................................................................................................................................... 71
5.12. No Default ................................................................................................................................................................................. 71
5.13. No Burdensome Restrictions ............................................................................................................................................ 72
5.14. No Labor Disputes ................................................................................................................................................................. 72
5.15. Margin Regulations ................................................................................................................................................................ 72
5.16. Investment Company Act ................................................................................................................................................. 72
5.17. Disclosure .................................................................................................................................................................................. 72
5.18. Reserved. .................................................................................................................................................................................. 72
5.19. Swaps .......................................................................................................................................................................................... 72
5.20. Conflicting Agreements ....................................................................................................................................................... 72
5.21. Application of Certain Laws and Regulations ............................................................................................................ 73
5.22. Business and Property of Borrowers ............................................................................................................................ 73
5.23. Ineligible Securities ................................................................................................................................................................ 73
5.24. Federal Securities Laws ...................................................................................................................................................... 73
5.25. Equity Interests. ..................................................................................................................................................................... 73
VI. AFFIRMATIVE COVENANTS. .......................................................................................................................................... 73
6.1. Payment of Fees ................................................................................................................................................................... 73
6.2. Conduct of Business and Maintenance of Existence and Assets .................................................................. 74
6.3. Violations .................................................................................................................................................................................... 74
6.4. Government Receivables .................................................................................................................................................. 74
6.5. Fixed Charge Coverage Ratio ......................................................................................................................................... 74
6.6. Execution of Supplemental Instruments ..................................................................................................................... 74
6.7. Payment of Indebtedness ................................................................................................................................................. 74
6.8. Standards of Financial Statements ............................................................................................................................... 74
6.9. Federal Securities Laws ...................................................................................................................................................... 75
6.10. Change in Management ....................................................................................................................................................... 75
6.11. Post Closing. ............................................................................................................................................................................ 75
VII. NEGATIVE COVENANTS. .................................................................................................................................................. 75
7.1. Merger, Consolidation, Acquisition and Sale of Assets. ...................................................................................... 75
7.2. Creation of Liens .................................................................................................................................................................... 75
7.3. Guarantees ................................................................................................................................................................................ 75
7.4. Investments ............................................................................................................................................................................. 75
7.5. Loans ........................................................................................................................................................................................... 76
7.6. Capital Expenditures ............................................................................................................................................................. 76
7.7. Distributions .............................................................................................................................................................................. 76
7.8. Indebtedness ............................................................................................................................................................................ 77
7.9. Nature of Business ............................................................................................................................................................... 77
7.10. Transactions with Affiliates ............................................................................................................................................... 77
7.11. Leases ......................................................................................................................................................................................... 77
7.12. Subsidiaries. ............................................................................................................................................................................. 77
7.13. Fiscal Year and Accounting Changes ........................................................................................................................... 78
7.14. Pledge of Credit ...................................................................................................................................................................... 78
7.15. Amendment of Certificate of Formation, Operating Agreement ...................................................................... 78
7.16. Compliance with ERISA ...................................................................................................................................................... 78
7.17. Prepayment of Indebtedness ........................................................................................................................................... 78
7.18. Reserved. .................................................................................................................................................................................. 78
7.19. Membership/Partnership Interests .................................................................................................................................. 79
7.20. Trading with the Enemy Act .............................................................................................................................................. 79
7.21. Affiliate Contracts ................................................................................................................................................................. 79
7.22. Subordinated Debt ................................................................................................................................................................. 79
7.23. Other Agreements .................................................................................................................................................................. 79
7.24. Unhedged Inventory ............................................................................................................................................................. 79
VIII. CONDITIONS PRECEDENT. ........................................................................................................................................... 79
8.1. Conditions to Initial Advances ......................................................................................................................................... 79
8.2. Conditions to Each Advance ............................................................................................................................................ 82
IX. INFORMATION AS TO BORROWERS. ....................................................................................................................... 83
9.1. Disclosure of Material Matters ......................................................................................................................................... 83
9.2. Schedules .................................................................................................................................................................................. 83
9.3. Environmental Reports ........................................................................................................................................................ 84
9.4. Litigation ..................................................................................................................................................................................... 84
9.5. Material Occurrences ............................................................................................................................................................ 84
9.6. Government Receivables .................................................................................................................................................. 85
9.7. Annual Financial Statements ............................................................................................................................................ 85
9.8. Quarterly Financial Statements ....................................................................................................................................... 85
9.9. Monthly Financial Statements .......................................................................................................................................... 85
9.10. Other Reports .......................................................................................................................................................................... 86
9.11. Additional Information .......................................................................................................................................................... 86
9.12. Projected Operating Budget ............................................................................................................................................... 86
9.13. Variances From Operating Budget .................................................................................................................................. 86
9.14. Notice of Suits, Adverse Events ................................................................................................................................... 86
9.15. ERISA Notices and Requests .......................................................................................................................................... 86
9.16. Additional Documents .......................................................................................................................................................... 87
X. EVENTS OF DEFAULT. ....................................................................................................................................................... 87
10.1. Nonpayment ............................................................................................................................................................................. 87
10.2. Breach of Representation .................................................................................................................................................. 87
10.3. Financial Information ............................................................................................................................................................ 88
10.4. Judicial Actions ....................................................................................................................................................................... 88
10.5. Noncompliance ........................................................................................................................................................................ 88
10.6. Judgments ................................................................................................................................................................................. 88
10.7. Bankruptcy ................................................................................................................................................................................ 88
10.8. Inability to Pay ........................................................................................................................................................................ 88
10.9. Subsidiary Bankruptcy ........................................................................................................................................................ 88
10.10. Material Adverse Effect. The occurrence of any Material Adverse Effect; .............................................. 89
10.11. Lien Priority ............................................................................................................................................................................... 89
10.12. Guarantor Cross Default .................................................................................................................................................... 89
10.13. Cross Default .......................................................................................................................................................................... 89
10.14. Breach of Guaranty, Guarantor Security Agreement or Pledge Agreement ............................................... 89
10.15. Change of Ownership ........................................................................................................................................................... 89
10.16. Invalidity .................................................................................................................................................................................... 89
10.17. Licenses ..................................................................................................................................................................................... 89
10.18. Seizures ...................................................................................................................................................................................... 89
10.19. Operations ................................................................................................................................................................................. 90
10.20. Pension Plans .......................................................................................................................................................................... 90
10.21. Subordinated Loan Default ................................................................................................................................................ 90
10.22. Reportable Compliance Event ......................................................................................................................................... 90
10.23. Equity Cure Right .................................................................................................................................................................. 90
XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT. ................................................................................. 91
11.1. Rights and Remedies. ......................................................................................................................................................... 91
11.2. Agent’s Discretion .................................................................................................................................................................. 93
11.3. Setoff .......................................................................................................................................................................................... 93
11.4. Rights and Remedies not Exclusive ............................................................................................................................. 93
11.5. Allocation of Payments After Event of Default ...................................................................................................... 93
XII. WAIVERS AND JUDICIAL PROCEEDINGS. .......................................................................................................... 94
12.1. Waiver of Notice .................................................................................................................................................................... 94
12.2. Delay ........................................................................................................................................................................................... 94
12.3. Jury Waiver .............................................................................................................................................................................. 94
XIII. EFFECTIVE DATE AND TERMINATION. .................................................................................................................... 95
13.1. Term .............................................................................................................................................................................................. 95
13.2. Termination ................................................................................................................................................................................ 95
XIV. REGARDING AGENT. ......................................................................................................................................................... 95
14.1. Appointment .............................................................................................................................................................................. 95
14.2. Nature of Duties ..................................................................................................................................................................... 96
14.3. Lack of Reliance on Agent and Resignation ............................................................................................................. 96
14.4. Certain Rights of Agent ...................................................................................................................................................... 97
14.5. Reliance ...................................................................................................................................................................................... 97
14.6. Notice of Default ................................................................................................................................................................... 97
14.7. Indemnification ........................................................................................................................................................................ 98
14.8. Agent in its Individual Capacity ...................................................................................................................................... 98
14.9. Delivery of Documents ...................................................................................................................................................... 98
14.10. Borrowers’ Undertaking to Agent ..................................................................................................................................... 98
14.11. No Reliance on Agent’s Customer Identification Program ................................................................................. 98
14.12. Other Agreements .................................................................................................................................................................. 99
XV. BORROWING AGENCY. ................................................................................................................................................... 99
15.1. Borrowing Agency Provisions. ......................................................................................................................................... 99
15.2. Waiver of Subrogation ...................................................................................................................................................... 100
XVI. MISCELLANEOUS. ............................................................................................................................................................. 100
16.1. Governing Law ...................................................................................................................................................................... 100
16.2. Entire Understanding. ........................................................................................................................................................ 101
16.3. Successors and Assigns; Participations; New Lenders. ................................................................................... 104
16.4. Application of Payments .................................................................................................................................................. 106
16.5. Indemnity ................................................................................................................................................................................ 106
16.6. Notice ........................................................................................................................................................................................ 107
16.7. Survival .................................................................................................................................................................................... 109
16.8. Severability ............................................................................................................................................................................ 109
16.9. Expenses ................................................................................................................................................................................. 109
16.10. Injunctive Relief ................................................................................................................................................................... 110
16.11. Consequential Damages ................................................................................................................................................... 110
16.12. Captions ................................................................................................................................................................................... 110
16.13. Counterparts; Facsimile Signatures ............................................................................................................................ 110
16.14. Construction ........................................................................................................................................................................... 110
16.15. Confidentiality; Sharing Information ........................................................................................................................... 110
16.16. Publicity .................................................................................................................................................................................... 111
16.17. Certifications From Banks and Participants; USA PATRIOT Act. .................................................................. 111
16.18. Anti-Money Laundering/International Trade Law Compliance ........................................................................... 111
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit 1.2 Borrowing Base Certificate
Exhibit 1.3 Compliance Certificate
Exhibit 1.4 Form of Subordination Agreement
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.4(a) Swing Loan Note
Exhibit 2.4(b) Swing Loan Request
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(k) Financial Condition Certificate
Exhibit 16.3 Commitment Transfer Supplement
Schedules
Schedule 1.2 Permitted Encumbrances
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(h) Deposit and Investment Accounts
Schedule 4.19 Real Property
Schedule 5.1 Consents
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 5.2 5 Equity Interests
Schedule 7.10 Transaction with Affiliates
SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND
SECURITY AGREEMENT
Second Amended and Restated Revolving Credit and Security Agreement dated as of April 26 , 20 1 3 among GREEN PLAINS TRADE GROUP LLC , a limited liability company formed under the laws of the State of Delaware ( “ GPTG ” ) , and each Person joined as a Borrower from time to time ( each a “ Borrower ” , and collectively “ Borrowers ” ), the financial institutions which are now or which hereafter become a party hereto (collectively, the “ Lenders ” and each individually a “ Lender ” ) and PNC BANK, NATIONAL ASSOCIATION ( “ PNC ” ), as agent for Lenders (PNC, in such capacity, the “ Agent ” ).
Borrowers, Agent and PNC, as lender, are parties to that Amended and Restated Revolving Credit and Security Agreement dated as of January 21 , 20 11 (as amended or modified from time to time, the “Existing Agreement”) and certain instruments, documents and agreements executed in connection therewith (together with the Existing Agreement, the “Existing Loan Documents”). Borrowers, Agent and Lenders desire to amend and restate the Existing Agreement in its entirety pursuant to the terms and conditions hereof.
IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders and Agent hereby agree as follows:
|
1.2. |
General Terms . For purposes of this Agreement the following terms shall have the following meanings: |
“ Accountants ” shall have the meaning set forth in Section 9.7 hereof.
“ Advance Rates ” shall have the meaning set forth in Section 2.1(a)(y)(i i i) hereof.
“ Advances ” shall mean and include the Revolving Advances, Letters of Credit and the Swing Loans, and any portion(s) thereof.
“ Affiliate ” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.
“ Affiliate Contracts ” shall mean those certain e thanol m arketing a greements and dist i ller s g rain m arketing a greements by and among each A ffiliate Plant and Borrowers , or any of them, and each agreement individually referred to as an “ Affiliate Contract ” .
“ Affiliate Plants ” shall mean, collectively, Green Plains Bluffton LLC, Green Plains Obion L LC, Green Plains Shenandoah LLC, Green Plains Superior LLC, Green Plains Ord LLC , Green Plains Central City LLC , Green Plains Holding s II LLC , Green Plains Otter Tail LLC and Green Plains Holdings LLC and each individually referred to as an “ Affiliate Plant ” .
“ Agent ” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.
“ Agreement ” shall mean this Second Amended and Restated Revolving Credit and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Alternate Base Rate ” shall mean, for any day, a ra te per annum equal to the highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on suc h day plus one half of one-percent ( 1/2 of 1% ) , and (iii) the sum of the Daily LI BOR Rate in effect on such day plu s one percent (1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not unlawful .
“ Anti-Terrorism Laws ” shall mean Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, all as amended, supplemented or replaced from time to time.
“ Applicable Law ” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document s or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.
“ Argos Receivable ” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising from the sale of ethanol to a Customer in tank transfer, wi th invoice shipping terms as in tan k transfer or “ITT.”
“ Authority ” shall have the meaning set forth in Section 4.19(d).
“ Availability Reserve ” shall mean $0 as of the Closing Date and through and including the date immediately prior to the first Adjustment Date (as defined below), the applicable dollar amount specified below. Effective as of the first day following receipt by Agent of the quarterly
2
financial statements of Borrowers on a Consolidated Basis and related Compliance Certificate for the f iscal quarter ending March 31 , 2013 and any fiscal quarter end thereafter required under 9.8 hereof (such date an “ Adjustment Date ”), the Availability Reserve shall be adjusted, if necessary, to the applicable dollar amount set forth in the table below corresponding to the Fixed Charge Coverage Ratio for the trailing four quarter period ending on the last day of the most recently completed fiscal quarter prior to the applicable Adjustment Date:
|
FIXED CHARGE COVERAGE RATIO |
Availability Reserve |
|
Less than 1.5 to 1.00 |
$5,000,000 |
|
Greater than or equal to 1.5 to 1.00 |
$0 |
If the Borrowers shall fail to deliver the financial statements, certificates and/or other information required under Section 9.8 by the date required pursuant to such section, the Availability Reserve shall be conclusively presumed to equal $5,000,000 until the date of delivery of such financial statements, certificates and/or other information, at which time the Availability Reserve will be adjusted based upon the Fixed Charge Coverage Ratio reflected in such statements. Notwithstanding anything to the contrary contained herein, no downward adjustment from $5,000,000 to $0 shall be made on any Adjustment Date on which any Event of Default shall have occurred and be continuing.
“ Base Rate ” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.
“ Blendstar ” shall mean BlendStar, LLC, a Texas limited liability company.
“ Blocked Accounts ” shall have the meaning set forth in Section 4.15(h).
“ Blocked Account Bank ” shall have the meaning set forth in Section 4.15(h).
“ Blocked Person ” shall have the meaning set forth in Section 5.24(b) hereof.
“ Borrower ” or “ Borrowers ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all permitted successors and assigns of such Persons.
“ Borrower Revolver Increase ” shall have the meaning set forth in Section 2.24 hereof.
“ Borrowers on a Consolidated Basis ” shall mean the consolidation in accordance with GAAP of the accounts or other items of the Borrowers and their respective Subsidiaries.
“ Borrowers ’ Account ” shall have the meaning set forth in Section 2.8.
3
“ Borrowing Agent ” shall mean GPTG .
“ Borrowing Base Certificate ” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by the President, Chief Financial Officer , Treasurer or Controller of the Borrowing Agent and delivered to the Agent, appropriately completed, by which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.
“ Business Day ” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.
“ Capital Expenditures ” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures.
“ Capitalized Lease Obligation ” shall mean any Indebtedness of any Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
“ Cash Advance Rate ” shall have the meaning set forth in Section 2.1(a)(y)(ii i ) hereof.
“ Cash Management Liabilities ” shall mean any indebtedness, obligations and liabilities of any Borrower under any agreements or arrangements under which Agent or any Lender or any Affiliate of Agent or a Lender provides any of the following products or services to any of the Borrowers: (a) credit cards; (b) credit card processing services; (c) debit cards and stored value cards; (d) purchase cards; (e) ACH transactions; (f) cash management and treasury management services and products, including controlled disbursement accounts or services, lockboxes, automated clearinghouse transactions, overdrafts, interstate depository network services; or (g) foreign currency exchange and foreign currency swaps and hedges. The Cash Management Liabilities shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security Agreement, and otherwise treated as Obligations for purposes of each of the Other Documents (other than any Lender-Provided Interest Rate Hedge). The Liens securing Cash Management Liabilities shall be pa ri passu with the Liens securing all other Obligations under this Agreement and the Other Documents, subject to the express provisions of Section 11.5.
“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
“ Change in Law ” shall mean the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any Applicable Law; (b) any change in any Applicable Law or in the administration, implementation, interpretation or application thereof by any Governmental Body; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that
4
notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Applicable Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.
“ Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of any Borrower to a Person who is not an Original Owner ; (b) any person or group of persons (within the meaning of Section 13(d) or 14(a) of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange A ct) of 30 % or more of the voting Equity Interests of Holdings; or (c ) any merger or consolidation of or with any Borrower or sale of all or substantially all of the property or assets of any Borrower. For purposes of this definition, “ control of Borrower ” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of any Borrower or (y) to direct or cause the direction of the management and policies of any Bor rower by contract or otherwise.
“ Change of Ownership ” shall mean (a) 100% of the Equity Interests of any Borrower is no longer owned or controlled by (including for the purposes of the calculation of percentage ownership, any Equity Interests into which any Equity Interests of any Borrower held by any of the Original Owners are convertible or for which any such Equity Interests of any Borrower or of any other Person may be exchanged and any Equity Interests issuable to such Original Owners upon exercise of any warrants, options or similar rights which may at the time of calculation be held by such Original Owners) a Person who is an Original Owner or (b) any merger, consolidation or sale of substantially all of the property or assets of any Borrower .
“ Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates.
“ Closing Date ” shall mean April 26 , 20 1 3 or such other date as may be agreed to by the parties hereto.
“ Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
5
“ Collateral ” shall mean and include:
|
(a) |
all Receivables; |
|
(b) |
all Equipment; |
|
(c) |
all General Intangibles; |
|
(d) |
all Inventory; |
|
(e) |
all Investment Property; |
|
(f) |
all Subsidiary Stock; |
|
(g) |
all of each Borrower ’ s right, title and interest in and to, whether now owned or hereafter acquired and wherever located; (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each Borrower ’ s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of each Borrower ’ s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by any Borrower, all real and personal property of third parties in which such Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which any Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and any Borrower; |
|
(h) |
all of each Borrower ’ s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f) or (g) of this paragraph; and |
|
(i) |
all proceeds and products of (a), (b), (c), (d), (e), (f), (g), and (h) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds. |
“ Commitment Transfer Supplement ” shall mean a document in the form of Exhibit 16.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which
6
the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.
“ Compliance Authority ” shall mean each and all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security, (e) the U.S. Internal Revenue Service, (f) the U.S. Justice Department, and (g) the U.S. Securities and Exchange Commission.
“ Compliance Certificate ” shall mean a compliance certificate , in the form of Exhibit 1.3 attached hereto, to be signed by the Chief Financial Officer , Treasurer or Controller of Borrowing Agent, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrowers ’ compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6 , 7.7, 7.8 , 7.11 and 7.24 .
“ Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Borrower ’ s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement , the Other Documents or the Subordinated Loan Documentation , including any Consents required under all applicable federal, state or other Applicable Law.
“ Consigned Inventory ” shall mean Inventory of any Borrower that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.
“ Contract Rate ” shall have the meaning set forth in Section 3.1 hereof.
“ Controlled Group ” shall mean, at any time, each Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower, are treated as a single employer under Section 414 of the Code.
“ Covered Entity ” shall mean each Borrower, each Borrower’s Affiliates and Subsidiaries, all Guarantors, pledgors of Collateral, all owners of the foregoing, and all brokers or other agents of any Borrower acting in any capacity in connection with the Obligations.
“ Custome r ” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property or perform any services.
“ Customs ” shall have the meaning set forth in Section 2.11(b) hereof.
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“ Daily LIBOR Rate ” shall mean, for any day, the rate per annum determined by the Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the Reserve Percentage.
“ Debt Payments ” shall mean and include (a) all cash actually expended by any Borrower to make interest payments on any Advances hereunder, plus (b) accrued but unpaid interest on account of Eurodollar Rate Loans, plus (c) all cash actually expended by any Borrower to make payments for all fees, commissions and charges set forth herein and with respect to any Advances, plus (d ) all cash actually expended by any Borrower to make payments on C ap italized L ease Obligations , plus (e ) all cash actually expended by any Borrower to make payments with respect to any other Indebtedness for borrowed money.
“ Default ” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.
“ Default Rate ” shall have the meaning set forth in Section 3.1 hereof.
“ Defaulting Lender ” shall mean any Lender that: (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Revolving Commitment Percentage of Advances, (ii) if applicable, fund any portion of its Participation Commitment in Letters of Credit or (iii) pay over to the Agent, the Issuer, or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including a particular Default or Event of Default, if any) has not been satisfied; (b) has notified the Borrowers or the Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including a particular Default or Event of Default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit; (c) has failed, within two Business Days after request by the Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Advances and, if applicable, participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Agent’s receipt of such certification in form and substance satisfactory to the Agent; (d) has become the subject of an Insolvency Event; or (e) has failed at any time to comply with the provisions of Section 2.20(d) with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Lenders.
“ Depository Accounts ” shall have the meaning set forth in Section 4.15(h) hereof.
“ Documents ” shall have the meaning set forth in Section 8.1(c) hereof.
“ Dollar ” and the sign “ $ ” shall mean lawful money of the United States of America.
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“ Domestic Rate Loan ” shall mean any Advance that bears interest based upon the Alternate Base Rate.
“ Drawing Date ” shall have the meaning set forth in Section 2.12(b) hereof.
“ Earnings Before Interest and Taxes ” shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for such period (excluding extraordinary gains and losses ) , plus (ii) all interest expense of Borrowers on a Consolidated Basis for such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for such period for federal, state and local taxes.
“ EBITDA ” shall mean for any period the sum of (i) Earnings Before Interest and Taxes for such period plus (ii) depreciation expenses of Borrowers on a Consolidated Basis for such period, plus (iii) amortization expenses of Borrowers on a Consolidated Basis for such period.
“ EBITDA Shortfall Amount ” shall have the meaning set forth in Section 10.23 hereof.
“ Eligible In-Tank Inventory ” shall mean finished goods Inventory that would be Eligible Inventory but for the fact that it is situated at a location not owned by a Borrower, but only if ( a ) such Inventory has passed through the “inlet flange” at the Affiliate Plant into a storage tank located at the Affiliate Plant, ( b ) Agent shall have received executed amended Affiliate Contracts which shall have been modified to reflect that title to the ethanol passes to GPTG at the inlet flange (meaning at the point where finished good ethanol flows into the storage tanks) and ( c ) Agent has received Lien Waiver/Inventory Acknowledgments from the applicable Affiliate Plant and any lender to the applicable Affiliate Plant . For the avoidance of doubt, Eligible In-Tank Inventory shall not include any Inventory located in a Blendstar or any third party storage tank whether or not Agent has a Lien Waiver/Inventory Acknowledgements for such location.
“ Eligible In-Transit Inventory ” shall mean finished goods Inventory (other than Off-load Inventory) that would be Eligible Inventory but for the fact that it is in-transit Inventory, but only if: (a) such i n- t ransit Inventor y is the subject of documentation acceptable to Agent including a non-negotiable bill of lading that designates a Borrower or Agent as the consignee; (b) Agent is satisfied that title remains with Borrower s throughout the shipping process ; and ( c ) such i n- t ransit Inventory is fully insured by appropriate insurance , in such amounts, with such insurance companies and subject to such deductibles as are satisfactory to Agent and in respect of which Agent has been named as len der loss payee. For the avoidance of doubt, Eligible In-T ransit Inventory shall no longer be Eligible In-Transit Inventory once any such Inventory destined for Blendstar or any third party storage facility is loaded into Blendstar’s or any such third party storage facilit y’s storage tanks.
“ Eligible Inventory ” shall mean and include Inventory consisting of finished goods ethanol , with respect to each Borrower, valued on a mark-to-market basis (based on a market source acceptable to Agent) , which Agent, in its Permitted Discretion, shall not deem ineligible Inventory, based on such considerations as Agent may from time to time deem appropriate including whether the Inventory is subject to a perfected, first priority security interest in favor of Agent and no other Lien (other than a Permitted Encumbrance). In addition, Inventory shall not be Eligible Inventory if it: ( a ) does not conform to all applicable standards imposed by any
9
Governmental Body which has regulatory authority over such goods or the use or sale thereof; ( b ) is in transit; ( c ) is located outside the continental United States or Canada or at a location that is not otherwise in compliance with this Agreement; ( d ) constitutes Consigned Inventory; ( e ) is the subject of an Intellectual Property Claim which is reasonably likely to prohibit such Borrower from selling such Inventory in the Ordinary Course of Business or Agent from selling such Inventory in the exercise of its remedies hereunder; ( f ) is subject to a License Agreement or other agreement that limits, conditions or restricts such Borrower’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement or Agent has established reserves in an amount determined necessary by Agent in its Permitted Discretion and Agent is otherwise satisfied that it may sell or otherwise dispose of such Inventory without ( i ) infringing the rights of such Licensor, ( ii ) violating any contract with such Licensor, or ( iii ) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current License Agreement or such other License Agreements as are approved by the Agent in its Permitted Discretion; ( g ) is situated at a location not owned by a Borrower; or ( h ) if the sale of such Inventory would result in an ineligible Receivable .
“ Eligible Off-load Receivables ” shall mean and include with respect to each Borrower, each Off-load Receivable that would be an Eligible Receivable but for the fact that the goods giving rise to such Off-load Receivable have not been delivered to and accepted by the Customer .
“ Eligible On-Track Inventory ” shall mean finished goods Inventory that would be Eligible Inventory but for the fact that it is situated at a location not owned by a Borrower which has been loaded into rail cars ready for shipment (but which have not yet been picked up by a common carrier for transport) at (i) an Affiliate Plant, but only if Agent has received Lien Waiver/Inventory Acknowledgments from the applicable Affiliate Plant and any lender to the applicable Affiliate Plant or (ii) a third party plant which GPTG has a third party marketing agreement with which is in form and substance substantially similar to the Affiliate Contracts, but only if Agent has received Lien Waiver/Inventory Acknowledgments from the applicable third party plant owner.
“ Eligible Receivables ” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its Permitted Discretion , shall deem to be an Eligible Receivable. A Receivable shall not be deemed eligible unless such Receivable is subject to Agent ’ s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent. In addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than ten (10) days after the original due date or thirty five ( 35 ) days after the original invoice date;
(c ) fifty percent ( 50 %) or more of the Receivables from such Customer are
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not deemed Eligible Receivables hereunder;
(d ) any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached;
(e ) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;
(f ) the sale is to a Customer outside the continental United States of America or Canada (other than Quebec) , unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its sole discretion;
(g ) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper , an instrument or a judgment ;
(h ) Agent believes, in its Permitted Discretion , that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer ’ s financial inability to pay;
(i ) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U .S.C. Sub-Section 15 et seq.) and has otherwise complied with other applicable statutes or ordinances;
(j ) the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the applicable Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;
(k ) the Receivables of the Customer exceed a credit limit determined by Agent, in its Permitted Discretion , to the extent such Receivable exceeds such limit;
(l ) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim against any obligation of any Borrower or any Affiliate Plant (but such Receivable shall only be ineligible to the extent of such offset, deduction, defense or counterclaim) , the Customer is also a creditor or supplier of a Borrower or any Affiliate Plant or the Receivable is contingent in any respect or for any reason;
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(m ) the applicable Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto;
(n ) any return, rejection or repossession of the merchandise has occurred or the rendition of services has been disputed;
(o ) such Receivable is not payable to a Borrower;
(p ) such Receivables is an Argos Receivable;
(q ) such Receivable is not unconditionally payable in U.S. Dollars or Canadian Dollars;
(r ) twenty-five percent ( 25 %) or more of the Eligible Receivables are owing from such Customer ; or
(s ) such Receivable is not otherwise satisfactory to Agent in its Permitted Discretion .
“ Environmental Complaint ” shall have the meaning set forth in Section 4.19(d) hereof.
“ Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.
“ Equipment ” shall mean and include as to each Borrower all of such Borrower ’ s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.
“ E quity Cure ” shall have the meaning set forth in Section 10.23 hereof.
“ Equity Interests ” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “ equity security ” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.
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“ Eurodollar Rate ” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto, the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers ’ Association as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “ Alternate Source ” ), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the following formula:
|
|
Average of London interbank offered rates quoted by Bloomberg or appropriate s uccessor as shown on Bloomberg Page BBAM1 |
|
Eurodollar Rate = |
1.00 - Reserve Percentage |
The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
“ Eurodollar Rate Loan ” shall mean an Advance at any time that bears interest based on the Eurodollar Rate.
“ Event of Default ” shall have the meaning set forth in Article X hereof.
“ Exchange Act ” shall have the mean the Securities Exchange Act of 1934, as amended.
“ Executive Order No. 13224 ” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“ Federal Funds Effective Rate ” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “ Federal Funds Effective Rate ” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “ Federal Funds Effective Rate ” for such day shall be the
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Federal Funds Effective Rate for the last day on which such rate was announced.
“ Federal Funds Open Rate ” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “ OPEN ” (or on such other substitute Bloombe r g Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by PNC (an “ Alternate Source ” ) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “ open ” rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrowers, effective on the date of any such change.
“ Fee Letter ” shall mean the fee letter dated as of even date herewith among Borrowers and PNC.
“ Financial Covenant Default ” shall have the meaning set forth in Section 10.23 hereof.
“ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA , minus Unfunded Capital Expenditures made during such period , minus distributions (including tax distributions ) and dividends permitted pursuant to Section 7.7 made during such period , minus cas h taxes paid during such period to (b) all Debt Pay ments made during such period .
“ Flood Laws ” shall mean all Applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other Applicable Laws related thereto.
“ Foreign Subsidiary ” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.
“ Formula Amount ” shall have the meaning set forth in Section 2.1(a) hereof .
“ Fuel Taxes ” shall mean all taxes, assessment s and other Charges lawfully levied or assessed upon any Borrower with respect to the sale, marketing, distribution and/or any other action taken with respect to ethanol by such Borrower.
“ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.
“ General Intangibles ” shall mean and include as to each Borrower all of such Borrower ’ s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs,
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patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
“ Governmental Acts ” shall have the meaning set forth in Section 2.17 hereof .
“ Governmental Body ” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.
“ GPCM ” shall mean Green Plains Commodity Management, LLC, an Iowa limited liability company.
“ Guarantor ” shall mean Holdings, GPCM and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “ Guarantors ” means collectively all such Persons.
“ Guarantor Security Agreement ” shall mean any security agreement executed by any Guarantor in favor of Agent securing the Obligations or the Guaranty of such Guarantor, in form and substance satisfactory to Agent.
“ Guaranty ” shall mean any guaranty , in form and substance satisfactory to Agent, of the obligations of Borrowers executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders.
“ Hazardous Discharge ” shall have the meaning set forth in Section 4.19(d) hereof.
“ Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable Environmental Law and in the regulations adopted pursuant thereto.
“ Hazardous Wastes ” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.
“ Hedge Liabilities ” shall have the meaning provided in the definition of “ Lender-Provided Interest Rate Hedge ” .
“ Holdings ” shall mean Green P lains Renewable Energy, Inc., an Iowa corporation .
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“ Increased Tax Burden ” shall mean the additional federal, state or local taxes assumed to be payable by a member of any Borrower as a result of such Borrower ’ s status as a limited liability company as evidenced and substantiated by the tax returns filed by such Borrower as a limited liability company, with such taxes being calculated for all members at the highest marginal rate applicable to any member.
“ Indebtedness ” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred.
“ Ineligible Security ” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
“ Insolvency Event ” shall mean, with respect to any Person, including without limitation any Lender, such Person or such Person’s direct or indirect parent company (a) becomes the subject of a bankruptcy or insolvency proceeding (including any proceeding under Title 11 of the United States Code), or regulatory restrictions, (b) has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (d) with respect to a Lender, such Lender is unable to perform hereunder due to the application of Applicable Law, or (e) in the good faith determination of the Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment of a type described in clause (a) or (b), provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“ Intellectual Property ” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.
“ Intellectual Property Claim ” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower ’ s ownership,
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use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other property or asset is violative of any ownership of or right to use any Intellectual Property of such Person.
“ Interest Period ” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).
“ Interest Rate Hedge ” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
“ Inventory ” shall mean and include as to each Borrower all of such Borrower ’ s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower ’ s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
“ Inventory Advanc e Rate ” shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.
“ Investment Property ” shall mean and include as to each Borrower, all of such Borrower ’ s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
“ Issuer ” shall mean any Person who issues a Letter of Credit and/or accepts a draft pursuant to the terms hereof.
“ Law(s) ” shall mean any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond judgment authorization or approval, lien or award of or any settlement arrangement with any Governmental Body, foreign or domestic.
“ Lender ” and “ Lenders ” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.
“ Lender-Provided Interest Rate Hedge ” shall mean an Interest Rate Hedge which is provided by any Lender or any of its Affiliates and with respect to which the Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider ’ s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “ Hedge Liabilities ” ) shall be “ Obligations ” hereunder , guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security Agreement, and otherwise treated as Obligations for
17
purposes of each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agr eement and the Other Documents.
“ Letter of Credit Fees ” shall have the me aning set forth in Section 3.2.
“ Letter of Credit Borrowing ” shall have the meaning set forth in Section 2.12(d).
“ Letter of Credit Sublimit ” shall mean $1 0 ,000,000 .
“ Letters of Credit ” shall have the meaning set forth in Section 2.9.
“ Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.
“ Lien Waiver/Inventory A cknowledgments ” shall mean , individually and collectively , as the context may require (i) an acknowledgmen t letter executed by an Affiliate Plant i n favor of Agent confirming that title has passed to Borrowers and that any product located in the storage tank located on such Affiliate Plant’s premises is being held for the benefit of Borrowers , (ii) an agreement which is executed in favor of Agent by a Person (including an Affiliate Plant) who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Inventory and (iii) an acknowledgment letter executed by any lender providing financing to the Affiliate Plant in favor of Agent confirming that title has passed from such Affiliate Plant to Borrowers and Agent’s interest in any Inventory located in such tank is free and clear of any claims or interests of such lender of the Affiliate Plant, in each case in form and substance satisfactory to Agent.
“ Material Adverse Effect ” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business, properties or prospects of any Borrower or any Guarantor , (b) any Borrower ’ s ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent ’ s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent ’ s and each Lender ’ s rights and remedies under this Agreement and the Other Documents.
“ Maximum Face Amount ” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
“ Maximum Loan Amount ” shall mean $ 13 0,000,000, as such amount may be increased from time to time as a result of any Borrower Revolver Increase .
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“ Maximum Swing Loan Advance Amount ” shall mean Fifteen Million Dollars ($ 15 , 0 00,000).
“ Maximum Undrawn Amount ” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
“ Modified Commitment Transfer Supplement ” shall have the meaning set forth in Section 16.3(d).
“ Multiemployer Plan ” shall mean a “ multiemployer plan ” as defined in Sections 3(37) and 4001( a)(3) of ERISA to which contributions are required by any Borrower or any member of the Controlled Group.
“ Multiple Employer Plan ” shall mean a Plan which has two or more contributing sponsors (including any Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“ Non-Defaulting Lender ” shall mean, at any time, any Revolving Lender that is not a Defaulting Lender at such time.
“ Note s ” shall mean , collectively, the Revolving Credit Note and the Swing Loan Note .
“ Obligations ” shall mean and include any and all loans (including without limitation, all Advances , Cash Management Liabilities and Hedge Liabilities ) , advances, debts, liabilities, obligations, covenants and duties owing by any Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon , and any costs and expenses of any Person payable by any Borrower and any indemnification obligations payable by any Borrower arising or payable after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowable or allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent ’ s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Borrower ’ s Indebtedness and/or
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liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys ’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform acts or refrain from taking any action.
“ Off-load Inventory ” shall mean the Inventory of a Borrower that has been shipped but not yet delivered to a Customer that results in the creation of an Off-load Receivable.
“ Off-load Receivable ” shall mean a Receivable of a Borrower that has been invoiced to a Customer for Inventory that has been shipped but not yet delivered to such Customer in accordance with the terms of the contract between such Borrower and Customer.
“ Ordinary Course of Business ” shall mean with respect to any Borrower, the ordinary course of such Borrower ’ s business as conducted on the Closing Date.
“ Original Owners ” shall mean Holdings .
“ Other Documents ” shall mean, the Note s , the Perfection Certificates , any Guaranty, any Guarantor Security Agreement, any Pledge Agreement , any Lender-Provided Interest Rate Hedge , the Fee Letter and any and all other agreements, instruments and documents, including intercreditor agreements, guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.
“ Out-of-Formula Loans ” shall have the meaning set forth in Section 16.2(b).
“ Parent ” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person.
“ Participant ” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.
“ Participation Advance ” shall have the meaning set forth in Section 2.12(d).
“ Participation Commitment ” shall mean each Lender ’ s obligation to buy a participation of the Letters of Credit issued hereunder.
“ Payment Office ” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent and to each Lender to be the Payment Office.
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“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
“ Perfection Certificates ” shall mean collectively, the Perfection Certificates and the responses thereto provided by each Borrower and each Guarantor and delivered to Agent.
“ Pension Benefit Plan ” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained or to which contributions are required by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained or to which contributions have been required by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.
“ Permitted Discretion ” shall mean, with respect to Agent, the exercise in good faith of its reasonable business judgment from the perspective of an asset based lender under comparable circumstances .
“ Permitted Encumbrances ” shall mean : (a) Liens in favor of Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested; (c) Reserved ; (d) deposits or pledges to secure obligations under worker ’ s compensation, social security or similar laws, or under unemployment insurance; (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance against any Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien ( x ) is in existence for less than 20 consecutive days after it first arises or is being Properly Contested and ( y ) is at all times junior in priority to any Liens in favor of Agent; (g) mechanics ’ , workers ’ , materialmen ’ s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested ; (h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of any Borrower and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6; (i) other Liens incidental to the conduct of any Borrower ’ s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit so long as such Lien is junior in priority to any Liens in favor of Agent , and which do not in the aggregate materially detract from Agent ’ s or Lenders ’ rights in and to the Collateral or the value of any Borrower ’ s property or assets and which do not materially impair the use thereof in the operation of any Borrower ’ s business; and ( j ) Liens disclosed on Schedule 1.2.
“ Person ” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint
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venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
“ Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan and a Multiemployer Plan ), maintained for employees of any Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees .
“ Pledge Agreement ” shall mean any pledge agreements executed subsequent to the Closing Date by any Pe rson to secure the Obligations , in form and substance reasonably satisfactory to Agent .
“ PNC ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.
“ Post-Term Cash Collateral ” shall have the meaning set forth in Section 2.10(e) hereof.
“ Post-Term Letter of Credit ” shall have the meaning set forth in Section 2.10(d) hereof.
“ Post-Term Letter of Credit Obligations ” shall have the meaning set forth in Section 2.10(e) hereof.
“ Pro Forma Balance Sheet ” shall have the meaning set forth in Section 5.5(a) hereof.
“ Pro Forma Financial Statements ” shall have the meaning set forth in Section 5.5(b) hereof.
“ Properly Contested ” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person ’ s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person ’ s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebted ness or Lien as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.
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“ Projections ” shall have the meaning set forth in Section 5.5(b) hereof.
“ Published Rate ” shall mean the rate of interest published each Business Day in the Wall Street Journal “ Money Rates ” listing under the caption “ London Interbank Offered Rates ” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the Eurodollar Rate for a one month period as published in another publication selected by the Agent).
“ Purchasing CLO ” shall have the meaning set forth in Section 16.3(d) hereof.
“ Purchasing Lender ” shall have the meaning set forth in Section 16.3(c) hereof.
“ RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.
“ Real Property ” shall mean all of each Borrower ’ s right, title and interest in and to the owned and leased premises identified on Sched ule 4.19 hereto or which is hereafter owned or leased by any Borrower.
“ Receivables ” shall mean and include, as to each Borrower, all of such Borrower ’ s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.
“ Receivables Advance Rate ” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof.
“ Register ” shall have the meaning set forth in Section 16.3(e).
“ Reimbursement Obligation ” shall have the meaning set forth in Section 2.12(b)hereof.
“ Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.
“ Reportable Compliance Event ” shall mean that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations with the actual or possible violation of any Anti-Terrorism Law.
“ Reportable Event ” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder.
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“ Required Lenders ” shall mean Lenders (not including the Swing Loan Lender (in its capacity as such Swing Loan Lender) or any Defaulting Lender) holding more than fifty percent ( 50 %) of either (a) the aggregate of the Revolving Commitment Amounts of all Lenders (excluding any Defaulting Lender), or (b) after the termination of all commitments of the Lenders hereunder, the sum of (x) the outstanding Revolving Advances, and (y) (i) the aggregate of the Maximum Undrawn Amount of all outstanding Letters of Credit and outstanding Swing Loans multiplied by (ii) the Revolving Commitments Percentages of all Lenders as most recently in effect excluding any Defaulting Lender; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders (excluding any Defaulting Lender).
“ Reserve Percentage ” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “ Eurocurrency Liabilities ” .
“ Revolving Advances ” shall mean Advances made other than Letters of Credit and the Swing Loans .
“ Revolving Commitment ” shall mean, as to any Lender, the obligation of such Lender (if applicable), to make Revolving Advances and participate in Swing Loans and Letters of Credit, in an aggregate principal and/or face amount not to exceed the Revolving Commitment Percentage of such Lender.
“ Revolving Commitment Amount ” of any Lender shall mean the Revolving Commitment Amount set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by or to a Lender pursuant to Section 16.3(c) or (d) hereof or upon any Borrower Revolver Increase pursuant to Section 2.24 in which such Lender shall participate.
“ Revolving Commitment Percentage ” shall mean the Revolving Commitment Percentage (if any) set forth adjacent to such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by or to a Lender pursuant to Section 16.3(c) or (d) hereof or upon any Borrower Revolver Increase pursuant to Section 2.24 in which such Lender shall participate (or, in the case of any Lender that became party to this Agreement after the Closing Date pursuant to Section 16.3(c) or (d) hereof, the Revolving Commitment Percentage (if any) of such Lender as set forth in the applicable Commitment Transfer Supplement).
“ Revolving Credit Note ” shall mean the promissory note referred to in Section 2.1(a) hereof.
“ Revolving Interest Rate ” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus two and one-half percent ( 2.50 %) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus three and one-half percent ( 3.50 %) with respect to Eurodollar Rate Loans.
“ Sanctioned Country ” shall mean a country subject to a sanctions program maintained by any Compliance Authority.
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“ Sanctioned Person ” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.
“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.
“ Section 20 Subsidiary ” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
“ Settlement Date ” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.
“ Subordinated Debt ” shall mean Indebtedness to Holdings, subordinated pursuant to a Subordination Agreement.
“ Subordinated Loan Documentation ” shall mean the subordinated promissory notes issued by Borrowers in favor of Holdings from time to time evidencing the subordinated loans made by Holdings to Borrowers , in form and substance reasonably satisfactory to Agent .
“ Subordination Agreement ” shall mean the Subordination Agreements executed by and among Agent, Borrowers and Holdings from time to time in the form of Exhibit 1. 4 attached hereto.
“ Subsidiary ” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.
“ Subsidiary Stock ” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Borrower (not to exceed 65% of the Equity Intere sts of any Foreign Subsidiary).
“ Supermajority Lenders ” shall mean Lenders (not including the Swing Loan Lender (in its capacity as such Swing Loan Lender) or any Defaulting Lender) holding no less than 66 2/3% of either (a) the aggregate of the Revolving Commitment Amounts of all Lenders (excluding any Defaulting Lender), or (b) after the termination of all commitments of the Lenders hereunder, the sum of (x) the outstanding Revolving Advances and (y) (i) the aggregate of the Maximum Undrawn Amount of all outstanding Letters of Credit and outstanding Swing Loans multiplied by (ii) the Revolving Commitments Percentages of all Lenders as most recently in effect excluding any Defaulting Lender.
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“ Swing Loan Lender ” shall mean PNC, in its capacity as lender of the Swing Loans.
“ Swing Loan Note ” shall mean the promissory note described in Section 2.4(a) hereof.
“ Swing Loan Request ” shall mean a request for Swing Loans made in accordance with Section 2.4(a)(i) hereof.
“ Swing Loans ” shall mean, collectively, Advances made by Swing Loan Lender to Borrowers pursuant to Section 2.4 hereof.
“ Swing Loan Request ” shall have the meaning set forth in Section 2.4(b) hereof.
“ Term ” shall have the meaning set forth in Section 13.1 hereof.
“ Termination Event ” shall mean (i) a Reportable Event with respect to any Plan ; (ii) the withdrawal of any Borrower or any member of the Controlled Group from a Plan during a plan year in which such entity was a “ substantial employer ” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Section 4203 or 4205 of ERISA, of any Borrower or any member of the Controlled Group from a Multiemployer Plan.
“ Third Party Contracts ” shall mean those certain ethanol m arketing agreements and disti ll e r s grain marketing agreements by and among a Person (other than an Affiliate Plant) and Borrowers, or any of them, and each individually referred to as a “ Third Party Contract ” .
“ Toxic Substance ” shall mean and include any material present on the Real Property or the Leasehold Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter enacted relating to toxic substances. “ Toxic Substance ” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
“ Trading with the Enemy Act ” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.
“ Transactions ” shall have the meaning s et forth in Section 5.5 hereof.
“ Transferee ” shall have the meaning set forth in Section 16.3(d) hereof.
“ Undrawn Availability ” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Loan Amount less the Maximum Undrawn Amount of all outstanding Letters of Credit , less the outstanding balance of any Fuel Taxes that are due and owing , minus (b) the sum of (i) the outstanding amount of Revolving Advances and
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Swing Loans , plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding ten (10) days or more past their due date unless extended on formal terms acceptable to Agent , plus (iii) fees and expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’ Account.
“ Unfunded Capital Expenditures ” shall mean Capital Expenditures made through Revolving Advances, Swing Loans or out of Borrowers ’ own funds other than through equity contributed subsequent to the Closing Date or purchase money or other financing or lease transactions permitted hereunder.
“ Unhedged Inventory ” shall mean Inventory of Borrowers for which Borrowers have not obtained back to back buy/sell hedging agreements.
“ Uniform Commercial Code ” shall have the meaning set forth in Section 1.3 hereof.
“ U.S. or United States ” shall mean the United States of America.
“ USA PATRIOT Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“ Week ” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.
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(a) Amount of Revolving Advances . Subject to the terms and conditions set forth in this Agreement including Sections 2.1 (b) and (c), each Lender, severally and not jointly, will make Revolving Advances in Dollars to Borrowers in aggregate amounts outstanding at any time equal to such Lender ’ s Revolving Commitment Percentage of the lesser of (x) the Maximum Loan Amount , less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit , less the outstanding balance of Swing Loans , less the outstanding balance of any Fuel Taxes that are due and owing or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(c) hereof ( “ Receivables Advance Rate ” ), of Eligible Receivables and Eligible Off-load Receivables , plus
(ii) up to 50 %, subject to the provisions of Sections 2.1(b) and ( c) , of the value of the Eligible In-Transit Inventory , Eligible On-Track Inventory and Eligible In-Tank Inventory (“Inventory Advance Rate”) , plus
(iii) up to 15%, subject to the provisions of Section 2.1(c) hereof (“ Cash Advance Rate” and together with the Receivables Advance Rate and the Inventory Advance Rate , collectively, the “Advance Rates” ), of the cash collections i n Borrowers’ Depository Account # 8026260253 maintained with Agent existing as of 1:00 p.m. (New York time) on the Business Day in which the Formula Amount is being calculated , minus
(iv) t he Availability Reserve, minus
(v) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus
(vi) the outstanding balance of any Fuel Taxes that are due and owing plus such other reserves as Agent may reasonably deem proper and necessary from time to time in its Permitted Discretion .
The amount derived from the sum of (x) Sections 2.1(a)(y)(i) , (ii) and (iii) minus (y) Section 2.1 (a)(y) ( i v ) , (v) and (vi) at any time and from time to time shall be referred to as the “ Formula Amount ” . To the extent requested by any Lender, t he Revolving Advances may be evidenced by one or mor e amended and restated secured promissory notes (collectively, the “ Revolving Credit Note ” ) substantially in the form attached hereto as Exhibit 2.1(a). Notwithstanding anything to the contrary contained in the foregoing or otherwise in this Agreement, the outstanding aggregate principal amount of Swing Loans and the Revolving Advances at any one time outstanding shall not exceed an amount equal to the lesser of (i) the Maximum Loan Amount , less the Maximum Undrawn Amount of all outstanding Letters of Credit , less the outstanding balance of any Fuel Taxes that are due and owing or (ii) the Formula Amount.
(b) Advances Against Eligible In-Transit Inventory , Eligible On-Track Inventory and Eligible In-Tank Inventory . Aggregate Advances made on account of (i) Eligible
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In-Transit Inventory , Eligible On-Track Inventory and Eligible In-Tank Inventory hereunder shall not exceed, at any time, an amount equal to $30 ,000,000 and (ii) cash collections referenced in 2.1(a)(y)(iii) shall not exceed, at any time, an amount equal to $5,000,000 .
(c) Discretionary Rights . The Receivables Advance Rate may be increased or decreased by Agent at any time and from time to time in the exercise of its Permitted Discretion . Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Receivables Advance Rate or increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent. The rights of Agent under this subsection are subject to the provisions of Section 16.2(b).
2.3 . Procedure for Revolving Advances Borrowing .
(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a Business Day of a Borrower ’ s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires to obtain a Eurodollar Rate Loan for any Advance (other than a Swing Loan, which may not be a Eurodollar Rate Loan) , Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which amount shall be in a minimum amount of $500,000 and in integral multiples of $500,000 thereafter, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two or three months; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to any Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) Eurodolla r Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term. Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
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succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days ’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.
(e) At its option and upon written notice given prior to 10:00 a.m. (New York time) at least three (3) Business Days ’ prior to the date of such prepayment, any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, including without limitation any Change in Law, shall make it unlawful for Lenders or any Lender (fo r purposes of this subsection (g ), the term “Lender” shall include any Lender and the office or branch where any Lender or any Person controlling such Lender makes or maintains
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any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders (or such affected Lender) to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive absent manifest error.
2.4 . Disbursement of Advance Proceeds . All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers ’ Account on Agent ’ s books. During the Term, Borrowers may use the Revolving Advances and Swing Loans by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the applicable Borrower on the day so requested by way of credit to such Borrower ’ s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request. The proceeds of each Swing Loan requested by Borrowing Agent on behalf of any Borrower shall be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds.
(a) Subject to the terms and conditions set forth in this Agreement , and in order to minimize the transfer of funds between Lenders and Agent for administrative convenience, Agent, the Lenders holding Revolving Commitments and Swing Loan Lender agree that in order to facilitate the administration of this Agreement, Swing Loan Lender may, at its election and option made in its sole discretion cancelable at any time for any reason whatsoever, make swing loan advances (“Swing Loans”) available to Borrowers as provided for in this Section 2.4 at any time or from time to time after the date hereof to, but not including, the expiration of the Term, in an aggregate principal amount up to but not in excess of the Maximum Swing Loan Advance Amount, provided that the outstanding aggregate principal amount of Swing Loans and the Revolving Advances at any one time outstanding shall not exceed an amount equal to the lesser of (i) the Maximum Loan Amount , l ess the Maximum Undrawn Amount of all outstanding Letters of Credit , less the outstanding balance of any Fuel Taxes that
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are due and owing or (ii) the Formula Amount. All Swing Loans shall be Domestic Rate Loans only. Borrowers may borrow (at the option and election of Swing Loan Lender) , repay and reborrow (at the option and election of Swing Loan Lender) Swing Loans and Swing Loan Lender may make Swing Loans as provided in this Section 2.4 during the period between Settlement Dates. All Swing Loans shall be evidenced by a secured promissory note (the “Swing Loan Note”) substantially in the form attached hereto as Exhibit 2.4 (a). Swing Loan Lender’s agreement to make Swing Loans under this Agreement is cancelable at any time for any reason whatsoever and the making of Swing Loans by Swing Loan Lender from time to time shall not create any duty or obligation, or establish any course of conduct, pursuant to which Swing Loan Lender shall thereafter be obligated to make Swing Loans in the future
(b) Upon either (x) any request by Borrowing Agent for a Revolving Advance made pursuant to Section 2.2(a) hereof or (y) the occurrence of any deemed request by Borrowers for a Revolving Advance pursuant to the provisions of the last sentence of Section 2.2(a) hereof, Swing Loan Lender may elect, in its sole discretion, to have such request or deemed request treated as a request for a Swing Loan, and may advance same day funds to Borrowers as a Swing Loan; provided that notwithstanding anything to the contrary provided for herein, Swing Loan Lender may not make Swing Loan Advances if Swing Loan Lender has been notified by Agent or by Required Lenders that one or more of the applicable conditions set forth in Section 8.2 of this Agreement have not been satisfied or the Revolving Commitments have been terminated for any reason.
(c) Upon the making of a Swing Loan (whether before or after the occurrence of a Default or Event of Default and regardless of whether a Settlement has been requested with respect to such Swing Loan), each Lender holding a Revolving Commitment shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from Swing Loan Lender, without recourse or warranty, an undivided interest and participation in such Swing Loan in proportion to its Revolving Commitment Percentage. Swing Loan Lender or Agent may, at any time, require the Lenders holding Revolving Commitments to fund such participations by means of a Settlemen t as provided for in Section 2.20 ( c ) below . From and after the date, if any, on which any Lender holding a Revolving Commitment is required to fund, and funds, its participation in any Swing Loans purchased hereunder, Agent shall promptly distribute to such Lender its Revolving Commitment Percentage of all payments of principal and interest and all proceeds of Collateral received by Agent in respect of such Swing Loan; provided that no Lender holding a Revolving Commitment shall be obligated in any event to make Revolving Advances in an amount in excess of its Revolving Commitment Amount minus its Participation Commitment of the Maximum Undrawn Amount of all outstanding Letters of Credit .
2.6 . Maximum Advances . The aggregate balance of Revolving Advances plus Swing Loans outstanding at any time shall not exceed the lesser of (a) the Maximum Loan Amount less the Maximum Undrawn Amount of all issued and outstanding Letters of Credit less the outstanding balance of any Fuel Taxes that are due and owing or (b) the Formula Amount.
(a) The Revolving Advances and Swing Loans shall be due and payable in
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full on the last day of the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent ’ s agreement to conditionally credit Borrowers ’ Account as of the next Business Day following Agent ’ s receipt of those items of payment, each Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day following Agent ’ s receipt of such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payment constitutes good funds in Agent ’ s account. Agent is not, however, required to credit Borrowers ’ Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers ’ Account for the amount of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office by wire transfer not later than 1:00 P.M. (New York time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers ’ Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.
2.8. Repayment of Excess Advances . The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.
2.9 . Statement of Account . Agent shall maintain, in accordance with its customary procedures, a loan account ( “ Borrowers ’ Account ” ) in the name of Borrowers in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrowers during such month. The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a written statement of Borrowers ’ specific exceptions thereto within thirty (30) days after such statement is received by Borrowing Agent. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.
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2.10. Letters of Credit . Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby and/or trade Letters of Credit ( “ Letters of Credit ” ) for the account of any Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances and Swing Loans plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Loan Amount less the outstanding balance of any Fuel Taxes that are due and owing or (y) the Formula Amount (calculated without giving effect to the deductions provided for in Section 2.1(a)(y)(v)) . The Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Cred it shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest .
2.11. Issuance of Letters of Credit .
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m. (New York time), at least five (5) Business Days ’ prior to the proposed date of issuance, Agent ’ s form of Letter of Credit Application (the “ Letter of Credit Application ” ) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrowing Agent, on behalf of Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit ’ s date of issuance and in no event later than the last day of the Term. Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time the Letter of Credit is issued ( “ UCP ” ) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590) ( “ ISP98 Rules ” ), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP.
(c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent for a Letter of Credit hereunder.
(d) Notwithstanding anything to the contrary set forth in Section 2.10(b) or any other provision of this Agreement, Borrower s may request and Agent (or any other Issuer) may issue Letters of Credit (and/or renewals or extensions of existing Letters of Credit) under this Agreement with an expiry date that extends beyond the last day of the Term as then in effect
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when such Letter of Credit (or the extension or renewal thereof) is requested (any such Letter of Credit so issued, renewed or extended, a “ Post-Term Letter of Credit ” ), subject to all other existing terms and conditions of and provisions in this Agreement regarding Letters of Credit, including any terms, conditions and provisions regarding the requesting and issuance thereof, but provided that, under no circumstances may any such Post-Term Letter of Credit as so issued, renewed or extended have an expiry date later than the twelve-month anniversary of the last day of the Term as in effect when such Post-Term Letter of Credit is so issued, renewed or extended.
(e) All of the obligations, liabilities and indebtedness of any kind or nature of Borrower s with respect to any and all such Post-Term Letter of Credits (including all reimbursement obligations and obligations to pay Letter of Credit Fees and obligations to pay interest in respect of any disbursement made by Agent in connection with a drawing under a Post-Term Letter of Credit that is not immediately reimbursed by Borrower s (including any such fees, charges and interest accruing thereon after the last day of the Term, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to Borrower s , whether or not a claim for post-filing or post-petition fees, charges and interest is allowed in such proceeding)) (any such obligations, liabilities and indebtedness, the “ Post-Term Letter of Credit Obligations ” ) shall remain Obligations of Borrower s secured by the Collateral pursuant to the Liens created under this Agreement and the Other Documents both prior to and after the expiration of the Term, and Agent and Lenders shall have no obligations to release any Liens on the Collateral notwithstanding the overall termination of this Agreement and of the commitments of the Lenders with respect to Revolving Advances, until such time as the last such Post-Term Letter of Credit shall have expired or terminated or shall been fully drawn and all Post-Term Letter of Credit Obligations (other than contingent indemnities and expense reimbursement obligations to the extent no claim therefore has been made, or is reasonably expected to be made) have been paid in full in cash, provided that, notwithstanding the foregoing, on the last day of the Term, Borrower s may provide cash collateral (any such cash collateral, the “ Post-Term Cash Collateral ” ) to Agent to be held as security for such Post-Term Letter of Credit Obligations (and Borrower s hereby grant to Agent a Lien and security interest in any such Post-Term Cash Collateral so provided) in an amount equal to one hundred and ten percent (110 %) of the then-outstanding undrawn face amount of all such Post-Term Letters of Credit plus the amount of all Letter of Credit Fees that would accrue with respect to such Post-Term Letters of Credit from and after the last day of the Term through the expiry date as then in effect for each such Post Term Letter of Credit, and in such event, if all other Obligations (other than contingent indemnities and expense reimbursement obligations to the extent no claim therefore has been made, or is reasonably expected to be made) have been paid in full in cash, Agent and Lenders will agree to release the Liens and security interests on all other Collateral (subject to customary payoff releases and indemnities) in accordance with this Agreement. Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and Borrower s mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. Borrower s agree that upon the coming due of any such Post-Term Letter of Credit obligations, Agent may use such Post-Term Cash Collateral to pay and satisfy such Post-Term Letter of Credit Obligations.
(f) Notwithstanding anything to the contrary contained in this Agreement and/or the overall termination of this Agreement on the last day of the Term (subject to the
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survival of the provisions thereof that survive the termination of this Agreement by the terms thereof), all of the applicable provisions of Article II, Sections 2.9, 2.10, 2.11 and Section 3.2 of this Agreement, any Letter of Credit application for any Post-Term Letter of Credit and any other documents executed by and/or between Borrower s , Agent and/or Issuer with respect to any Post-Term Letter of Credit (other than any provisions giving Borrower s the right or ability to request that additional Letters of Credit be issued or that existing Letters of Credit be renewed or extended) shall survive the termination of this Agreement on the last day of the Term for the benefit of Agent and Lenders (but not for the benefit of Borrower s ), and Borrower s shall remain bound thereby, including without limitation of the obligations under Section 3.2 of this Agreement for Borrower s to pay Letter of Credit Fees to Agent and Issuer with respect to any Post-Term Letter of Credit for so long as each Post-Term Letter of Credit shall remain outstanding and the obligations under Section 2.9 for Borrower s to pay interest on any disbursements or payments made by Agent and/or Issuer relating to any Post-Term Letter of Credit until reimbursed.
(g) Nothing contained in this Agreement shall be construed under any circumstances as an agreement by Agent and/or Lenders to extend the Term or require or obligate in any way Agent, Lenders and/or Issuer to make any Revolving Advances or to issue any new Letters of Credit (or extend or renew any existing Letters of Credit) on or after the last day of the Term.
2.12. Requirements For Issuance of Letters of Cred it .
(a) Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as the “ Applicant ” or “ Account Party ” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent ’ s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefor.
(b) In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred, (i) to sign and/or endorse such Borrower ’ s name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign such Borrower ’ s name on bills of lading; (iii) to clear Inventory through the United States of America Customs Department ( “ Customs ” ) in the name of such Borrower or Agent or Agent ’ s designee, and to sign and deliver to Customs officials powers of attorney in the name of Borrower for such purpose; and (iv) to complete in such Borrower ’ s name or Agent ’ s, or in the name of Agent ’ s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent ’ s or its attorney ’ s willful misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.
2.13. Disbursements, Reimbursement .
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(a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender ’ s Revolving Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent shall have received such notice, the Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “ Reimbursement Obligation ” ) Agent prior to 12:00 Noon, New York time on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “ Drawing Date ” ) in an amount equal to the amount so paid by Agent. In the event Borrowers fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 Noon, New York time, on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers shall be deemed to have requested that a Domestic Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of the Maximum Loan Amount , less the Maximum Undrawn Amount or the Formula Amount and subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent an amount in immediately available funds equal to its Revolving Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to have made a Domestic Rate Loan to Borrowers in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender ’ s Revolving Commitment Percentage of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such Lender ’ s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.12(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.
(d) With respect to any unreimbursed drawing that is not converted into a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section 2.12(b), because of Borrowers ’ failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each a “ Letter of Credit Borrowing ” ) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Domestic Rate Loan. Each Lender ’ s payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its
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participation in such Letter of Credit Borrowing and shall constitute a “ Participation Advance ” from such Lender in satisfaction of its Participation Commitment under this Section 2.12.
(e) Each Lender ’ s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled; and (z) all Persons (other than the Borrowers) have been fully reimbursed for all payments made under or relating to Letters of Credit.
2.14 . Repayment of Participation Advances .
(a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrowers (i) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender ’ s Revolving Commitment Percentage of such funds, except Agent shall retain the amount of the Revolving Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent (and, to the extent that any of the other Lender(s) holding a Revolving Commitment have funded any portion of such Defaulting Lender’s Participation Advance in accordance with the provisions of Section 2.23, Agent will pay over to such Non-Defaulting funding Lenders a pro rata portion of the funds so withheld from such Defaulting Lender).
(b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Revolving Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.
2.15. Documentation . Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent ’ s interpretations of any Letter of Credit issued on behalf of such Borrower and by Agent ’ s written regulations and customary practices relating to letters of credit, though Agent ’ s interpretations may be different from such Borrower ’ s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Borrowing Agent ’ s or any Borrower ’ s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.16. Determination to Honor Drawing Request . In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be
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responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
2.17. Nature of Participation and Reimbursement Obligations . Each Lender ’ s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16 under all circumstances (other than the obligation to make Revolving Ad vances or Participation Advances by any Lender as a result of the gross negligence or willful misconduct of Agent) , including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, any Borrower or any other Person for any reason whatsoever;
(ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.12;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit was procured);
(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent ’ s Affiliates has been notified thereof;
(vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
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(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by the Agent or any of Agent ’ s Affiliates to issue any Letter of Credit in the form requested by Borrowing Agent, unless the Agent has received written notice from Borrowing Agent of such failure within three (3) Business Days after the Agent shall have furnished Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on any Borrower or any Guarantor;
(x) any breach of this Agreement or any Other Document by any party thereto;
(xi) the occurrence or continuance of an insolvency proceeding with respect to any Borrower or any Guarantor;
(xii) the fact that a Default or Event of Default shall have occurred and be continuing;
(xiii) the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
2.18. Indemnity . In addition to amounts payable as provided in Section 16.5, each Borrower hereby agrees to protect, indemnify, pay and save harmless Agent , any of Agent ’ s Affiliates and Issuer that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent , any of Agent ’ s Affiliates or Issuer may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the Agent or Issuer as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the w rongful dishonor by the Agent. any of Agent ’ s Affiliates or Issuer of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “ Governmental Acts ” ).
2.19. Liability for Acts and Omissions . As between Borrowers and Agent , Swing Loan Lender and Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it
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should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent ’ s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from liability for Agent ’ s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent ’ s Affiliates be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys ’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant ’ s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “ Order ” ) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth
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above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to any Borrower or any Lender.
2.20. Additional Payments . Any sums expended by Agent or any Lender due to any Borrower ’ s failure to perform or comply with its obligations under this Agreement or any Other Document including any Borrower ’ s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers ’ Account as a Revolving Advance and added to the Obligations.
2.21. Manner of Borrowing and Payment .
(a) Each borrowing of Revolving Advances shall be advanced according to the applicable Revolving Commitment Percentage s of Lenders.
(b) Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Revolving Advances, shall be applied first to the outstanding Swing Loans and second to the Revolving Advances pro rata according to the applicable Revolving Commitment Percentage s of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in immediately available funds.
(c) (i) Unless Agent has elected to make a Swing Loan in accordance with this Agreement, p romptly after receipt by Agent of a request for a Revolving Advance pursuant to Section 2.2(a), Agent shall notify Lenders of its receipt of such request specifying the information provided by Borrowing Agent and the apportionment among Lenders of the requested Revolving Advance as determined by Agent. Each Lender shall remit the principal amount of each Revolving Advance to Agent such that Agent is able to, and Agent shall, to the extent Lenders have made funds available to it for such purpose and subject to Section 8.2, fund such Revolving Advance to Borrower in U.S. Dollars and immediately available funds at the Payment Office prior to 1 :00 p.m. central time , on the applicable borrowing date; provided that if any Lender fails to remit such funds to Agent in a timely manner, Agent may elect in its sole discretion to fund with its own funds the Revolving Advance of such Lender on such borrowing date, and such Lender shall be subject to the repayment obligation in Section 2.20(c)(ii).
(i) Unless Agent shall have received notice from a Lender prior to the proposed date of any Revolving Advance that such Lender will not make available to Agent such Lender’s Revolving Commitment Percentage of such Revolving Advance, Agent may assume that such Lender has made such share available on such date in accordance with Section 2.20(c)(i) and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Revolving Advance available to Agent, then the applicable Lender and Borrowers severally agree to pay to Agent forthwith on demand such corresponding amount with interest thereon, for
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each day from and including the date such amount is made available to Borrowers to but excluding the date of payment to Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation, and (ii) in the case of a payment to be made by Borrower, the interest rate applicable to Revolving Advances consisting of Domestic Rate Loans. If such Lender pays its share of the applicable Revolving Advance to Agent, then the amount so paid shall constitute such Lender’s Revolving Advance. Any payment by Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to Agent.
(ii) So long as Swing Loan Lender elects to make Swing Loans, Swing Loan Lender shall, after receipt by it of a Swing Loan Request pursuant to Section 2.4(b), fund such Swing Loan to Borrower in U.S. Dollars and immediately available funds at the Payment Office prior to 12 :00 p.m. New York time , on the borrowing date.
(iii) PNC, shall request settlement with Lenders at least once a week or on any date that PNC elects, by notifying Lenders of such requested settlement by facsimile, telephone or electronic transmission no later than 12:00 p.m., New York time on the date of such requested settlement and each Lender shall make a Revolving Advance in an amount equal to such Lender's Revolving Commitment Percentage of the aggregate principal amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Revolving Advances in an amount in excess of its Revolving Commitment Amount . Revolving Advances made pursuant to the preceding sentence shall bear interest at the interest rate applicable to Revolving Advances consisting of Domestic Rate Loans and shall be deemed to have been properly requested in accordance with Section 2.2(a) without regard to any of the requirements of that provision. PNC shall provide notice to Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Advances are to be made under this Section 2.20(c)(iv) and of the apportionment among Lenders, and Lenders shall be unconditionally obligated to fund such Revolving Advances (whether or not the conditions specified in Section 8.2 are then satisfied) by the time PNC so requests, which shall not be earlier than 1 2:00 p.m. New York time, on the Business Day after the date Lenders receive such notice from PNC. If any such amount is not transferred to PNC by any Lender on such settlement date, PNC shall be entitled to recover such amount on demand from such Lender together with interest thereon as specified in Section 2. 23 .
(d) (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1 2 :00 p.m., New York time , on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows (or more frequently if requested by Agent in its sole discretion) : (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then upon the written notice of Agent received prior to 12:00 p.m. New York time, each Lender shall provide Agent with funds in an amount equal to its applicable Revolving Commitment Percentage of the difference between (w)
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such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Revolving Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.
(e) If any Lender or Participant (a “Benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such Benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
(f) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Revolving Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate (computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall not prejudice or
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otherwise adversely affect Borrowers’ rights (if any) against such Lender.
(a) Subject to Section 4.3 hereof, when any Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, Borrowers shall repay the Advances , subject to the right to reborrow hereunder, in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent pursuant to an express trust hereby, separate and segregated from all other funds, a ssets and property of Borrowers . The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Repayments under this paragraph (a) shall be applied first , to the outstanding principal balance of the Revolving Advances and Swing Loans (in the order determined by Agent) and second , to be held by Agent as cash collateral to the extent of any outstanding Letter of Credit Obligations, provided that , after the occurrence and during the continuance of an Event of Default, such repayments shall be applied to the Advances and the other Obligations in such order as Agent may determine in its sole discretion.
(b) Upon either (i) the issuance and/or incurrence of any Indebtedness for borrowed money (other than Indebtedness permitted in accordance with the provisions of Section 7.8) by any Borrower or (ii) the issuance of any additional Equity Interests (other than Equity Interests issued to employees, officers or directors of any Borrower) or receipt of any additional capital contributions by any Borrower, Borrowers shall repay the Advances , subject to the right to reborrow hereunder, in an amount equal to the net cash proceeds of such issuance, incurrence and/or capital contribution (i.e., gross proceeds less the reasonable costs of such issuance, incurrence and/or capital contribution), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net cash proceeds, and until the date of payment, such proceeds shall be held in trust for Agent pursuant to an express trust hereby, separate and segregated from all other funds, assets and property of Borrowers. The foregoing shall not be deemed to be implied consent to any such issuance and/or incurrence of Indebtedness or issuance of additional Equity Interests otherwise prohibited by the terms and conditions hereof (to the extent, if any, of any such prohibition contained herein). R epayments under this subparagraph (b ) shall be applied first , to the outstanding principal balance of the Revolving Advances and Swing Loans (in the order determined by Agent) and second , to be held by Agent as cash collateral to the extent of any outstanding Letter of Credit Obligations, provided that , after the occurrence and during the continuance of an Event of Default, such repayments shall be applied to the Advances and the other Obligations in such order as Agent may determine in its sole discretion.
(a) Borrowers shall apply the proceeds of Advances to (i) pay fees and expenses rela ting to this transaction and (ii) provide for its working capital needs and reimburse drawings under Letters of Credit.
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(b) Without limiting the generality of Section 2.22(a) above, neither the Borrowers, the Guarantors nor any other Person which may in the future become party to this Agreement or the Other Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.
(a) Notwithstanding anything to the contrary contained herein, in the event any Lender is a Defaulting Lender , all rights and obligations hereunder of such Defaulting Lender and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.2 3 so long as such Lender is a Defaulting Lender.
(b) (i) except as otherwise expressly provided for in this Section 2.2 3 , Revolving Advances shall be made pro rata from Lenders holding Revolving Commitments which are not Defaulting Lenders based on their respective Revolving Commitment Percentages, and no Revolving Commitment Percentage of any Lender or any pro rata share of any Revolving Advances required to be advanced by any Lender shall be increased as a result of any Lender being a Defaulting Lender. Amounts received in respect of principal of any type of Revolving Advances shall be applied to reduce such type of Revolving Advances of each Lender (other than any Defaulting Lender) holding a Revolving Commitment in accordance with their Revolving Commitment Percentages; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.
(ii) fees pursuant to Section 3.3 hereof shall cease to accrue in favor of such Defaulting Lender.
(iii) if any Letter of Credit Obligations (or drawings under any Letter of Credit for which the Issuer has not been reimbursed) are outstanding or exist at the time any such Lender holding a Revolving Commitment becomes a Defaulting Lender, then:
(A) the Defaulting Lender’s Participation Commitment of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated among the Non-Defaulting Lenders holding Revolving Commitments in proportion to the respective Revolving Commitment Percentages of such Non-Defaulting Lenders to the extent (but only to the extent) that (x) such reallocation does not cause the aggregate sum of outstanding Revolving Advances made by any such Non-Defaulting Lender holding a Revolving Commitment plus such Lender’s reallocated Participation Commitment in the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the Revolving Commitment Amount of any such Non-Defaulting Lender, and (y) no Default or Event of Default has occurred and is continuing at such time;
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(B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, the Borrowers shall within one Business Day following notice by the Agent cash collateralize for the benefit of the Issuer the Borrowers’ obligations corresponding to such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with Section 3.2(b) for so long as such Obligations are outstanding;
(C) if the Borrowers cash collateralize any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit pursuant to clause (B) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.2(a ) with respect to such Defaulting Lender’s Revolving Commitment Percentage of Maximum Undrawn Amount of all Letters of Credit during the period such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit are cash collateralized;
(D) if the Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated pursuant to clause (A) above, then the fees payable to the Lenders holding Revolving Commitments pursuant to Section 3.2(a) shall be adjusted and reallocated to the Non-Defaulting Lenders holding Revolving Commitments in accordance with such reallocation; and
(E) if all or any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither reallocated nor cash collateralized pursuant to clause (A) or (B) above, then, without prejudice to any rights or remedies of the Issuer or any other Lender hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect to such Defaulting Lender’s Revolving Commitment Percentage of the Maximum Undrawn Amount of all Letters of Credit shall be payable to the Issuer (and not to such Defaulting Lender) until (and then only to the extent that) such Revolving Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated and/or cash collateralized; and
(iv) so long as any Lender holding a Revolving Commitment is a Defaulting Lender, the Issuer shall not be required to issue, amend or increase any Letter of Credit, unless such Issuer is satisfied that the related exposure and the Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any such issuance, amendment, increase or funding) will be fully allocated to the Non-Defaulting Lenders holding Revolving Commitments and/or cash collateral for such Letters of Credit will be provided by the Borrowers in accordance with clause s (A) and (B) above, and participating interests in any newly issued or increased Letter of Credit shall be allocated among the Non-Defaulting Lenders in a manner consistent with Section 2.23(b)(iii)(A) above (and such Defaulting Lender shall not participate therein).
(c) A Defaulting Lender shall not be entitled to give instructions to Agent or
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to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents, and all amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall not be deemed to be a Lender, to have any outstanding Advances or a Revolving Commitment Percentage , provided, that this clause (c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification described in clauses (i) or (ii) of Section 16.2(b).
(d) Other than as expressly set forth in this Section 2.23 , the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.2 3 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.
(e) In the event that the Agent, the Borrowers, and the Issuer agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Agent will so notify the parties hereto, and, if such cured Defaulting Lender is a Lender holding a Revolving Commitment, then Participation Commitments of the Lenders holding Revolving Commitments (including such cured Defaulting Lender) of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated to reflect the inclusion of such Lender’s Revolving Commitment, and on such date such Lender shall purchase at par such of the Revolving Advances of the other Lenders as the Agent shall determine may be necessary in order for such Lender to hold such Revolving Advances in accordance with its Revolving Commitment Percentage.
(f) If Issuer has a good faith belief that any Lender holding a Revolving Commitment has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Issuer, as the case may be, shall have entered into arrangements with the Borrower o r such Lender, satisfactory to Issuer, as the case may be, to defease any risk to it in respect of such Lender hereunder.
2.25. Increase of the Maximum Loan Amount by Borrowers .
(a) Borrowers may, by written notice to Agent, request that Agent increase the Maximum Loan Amount (each a “ Borrower Revolver Increase ”) by (i) adding one or more new lenders to the revolving credit facility under this Agreement (each a “Section 2.24 New Lender”) who wish to participate in such Borrower Revolver Increase and/or (ii) increasing the Revolving Commitment Amount of one or more Revolving Lenders party to this Agreement who wish to participate in such Borrower Revolver Increase; provided, however, that (w) Borrowers may only add a Section 2.24 New Lender if, and only to the extent, there is insufficient participation on behalf of the existing Revolving Lenders, (x) no Default or Event of Default shall have occurred and be continuing as of the date of such request or as of the effective date of such Borrower Revolver Increase (each a “ Borrower Increase Date ”) or shall occur as a result thereof, (y) any Section 2.24 New Lender that becomes party to this Agreement pursuant to this
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Section 2.24 shall satisfy the requirements of Section 16.3 hereof and shall be acceptable to Agent and consented to by Borrowers and (z) the other conditions set forth in this Section 2.24 are satisfied. Agent shall use commercially reasonable efforts to arrange for the syndication of any Borrower Revolver Increase. Agent shall promptly inform the Revolving Lenders of any such request made by Borrowers. The aggregate amount of Borrower Revolver Increase s hereunder shall not exceed $2 5 ,000,000 and no single Borrower Revolver Increase shall be for an amount less than $10,000,000.
(b) On a Borrower Increase Date, (i) each Section 2.24 New Lender that has chosen to participate in such Borrower Revolver Increase shall, subject to the conditions set forth in Section 2.24(a), become a Revolving Lender party to this Agreement as of such Borrower Increase Date and shall have a Revolving Commitment Amount in an amount equal to its share of such Borrower Revolver Increase (and its Revolving Commitment Percentage shall be equal to the percentage equivalent of a fraction the numerator of which shall be the Revolving Commitment Amount of such Section 2.24 New Lender and the denominator of which shall be the Maximum Loan Amount after giving effect to such Borrower Revolver Increase) and (ii) each Revolving Lender that has chosen to increase its Revolving Commitment Amount pursuant to this Section 2.24 will have its Revolving Commitment Amount increased by the amount of its share of the Borrower Revolver Increase as of such Borrower Increase Date (and its Revolving Commitment Percentage shall be adjusted as appropriate); provided, however, that (x) Agent and each Lender participating in such Borrower Revolver Increase shall have received from Borrowers payment of any fees and/or expenses then due with respect to such Borrower Revolver Increase and Agent shall have received from Borrowers payment of all out-of-pocket costs and expenses incurred by Agent in connection with such Borrower Revolver Increase, and (y) Agent shall have received on or before such Borrower Increase Date the following, each dated such date: (i) an assumption agreement from each Section 2.24 New Lender participating in such Borrower Revolver Increase, if any, in form and substance satisfactory to Agent, duly executed by such Section 2.24 New Lender, Agent and Borrowers; (ii) confirmation from each Revolving Lender participating in such Borrower Revolver Increase of the increase in the amount of its Revolving Commitment Amount and of any change in its Revolving Commitment Percentage , in form and substance satisfactory to the Agent; (iii) a certificate of Borrowing Agent certifying that no Default or Event of Default shall have occurred and be continuing or shall occur as a result of such Borrower Revolver Increase; (iv) a certificate of Borrowing Agent certifying that the representations and warranties made by each Borrower herein and in the Other Documents are true and complete in all respects with the same force and effect as if made on and as of such date (or, to the extent any such representation or warranty specifically relates to an earlier date, such representation or warranty is true and complete in all respects as of such earlier date); (v) supplements or modifications to this Agreement and the Other Documents and such additional Other Documents, including any new Revolving Credit Notes to Section 2.24 New Lenders and replacement Revolving Credit Notes to Revolving Lenders that agree to participate in such Borrower Revolver Increase, that Agent reasonably deems necessary in order to document such Borrower Revolver Increase and otherwise assure and give effect to the rights of Agent and Revolving Lenders in this Agreement and the Other Documents; (vi) such other documents, instruments and information as Agent or its counsel shall reasonably deem necessary in connection with such Borrower Revolver Increase; and (vii) additional fees calculated on the amount of the Borrower Revolver Increase and payable to Agent for the benefit of Lenders (including the Section 2.24 New Lenders) participating therein, and to Agent, the amount of
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which shall be determined at the time of the Borrower Revolver Increase based upon the market at such time for similar transactions, which shall be mutually agreeable to Borrower and Agent. On such Borrower Increase Date, upon fulfillment of the conditions set forth in this Section 2.24, Agent shall (i) effect a settlement of all outstanding Advances among the Revolving Lenders that will reflect the adjustments to the Revolving Commitment Percentage s of the Revolving Lenders as a result of such Borrower Revolver Increase and (ii) notify Revolving Lenders (including any Section 2.24 New Lenders) participating in such Borrower Revolver Increase and the Borrowers, on or before 12:00 noon, by telecopier or e-mail, of the occurrence of such Borrower Revolver Increase to be effected on such Borrower Increase Date.
3.1. Interest . Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances, the applicable Revolving Interest Rate and (ii) with respect to Swing Loans, the rate set forth in subclause (a) of the definition of Revolving Interest Rate (as applicable, the “Contract Rate”). Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the applicable Contract Rate shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the applicable Contract Rate plus two (2%) percent per annum (the “Default Rate”).
(a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by three and one half percent (3.50%) per annum, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “ Letter of Credit Fees ” ). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer ’ s prevailing charges for that type of
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transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason.
(b) At any time following the occurrence of an Event of Default or the expiration of the Term Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and ten percent (110 %) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes Agent, in its discretion, on such Borrower ’ s behalf and in such Borrower ’ s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender ’ s possession at any time. Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. No Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and perform ance in full of all Obligations; (y) expiration of all Letters of Credit ; and (z) termination of this Agreement.
3.3. Facility Fee and Fee Letter .
(a) If, for any calendar quarter during the Term, the average daily unpaid balance of the Revolving Advances (and for purposes of this calculation, all Swing Loans advanced by PNC shall be treated as Revolving Advances) and undrawn amount of any outstanding Letters of Credit for each day of such calendar quarter does not equal the Maximum Loan Amount , then Borrowers shall pay to Agent for the ratable benefit of Lenders a fee at a rat e equal to one-half of one percent (.50%) on the amount by which the Maximum Loan Amount exceeds such average daily unpaid balance. Such fee shall be payable to Agent in arrears on the first day of each April, July, October and January with respect to the previous three month period .
(b) Borrowers shall pay the amount s required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter .
3.5. Computation of Interest and Fees . Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension.
3.6. Maximum Charges . In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrowers,
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and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrowers and the provisions hereof shall be deemed amended to provide for such permissible rate.
3.7. Increased Costs . In the event that any Applicable Law, or any Change in Law or in the interpretation or application thereof, or compliance by Swing Loan Lender, or any Lender (for purposes of this Section 3.7, the term “ Lender ” shall include Agent or any Lender and any corporation or bank controlling Agent , S wing Loan Lender, or any Lender) and the office or branch where Agent , Swing Loan Lender, or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
(a) subject Agent , Swing Loan Lender, or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent , Swing Loan Lender, or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of Agent , Swing Loan Lender, or any Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent , Swing Loan Lender or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent , Swing Loan Lender, or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent , Swing Loan Lender or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent , Swing Loan Lender or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent , Swing Loan Lender or such Lender deems to be material, then, in any case Bor rowers shall promptly pay Agent, Swing Loan Lender or such Lender, upon its demand, such additional amount as will compensate Agent , Swing Loan Lender or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar R ate, as the case may be. Agent, Swing Loan Lender or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent manifest error.
3.8. Basis For Determining Interest Rate Inadequate or Unfair . In the event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar
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Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic notice of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.
(a) In the event that Agent , Swing Loan Lender or any Lender shall have determined that any Applicable Law, or guideline regarding capital adequacy, or any Change in Law , or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent, Swing Loan Lender or any L ender (for purposes of this Section 3.9, the term “ Lender ” shall include Agent, Swing Loan Lender or any Lender and any corporation or bank controlling Agent, Swing Loan Lender or any Lender ) and the office or branch where Agent, Swing Loan Lender or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent, Swing Loan Lender or any Lender ’ s capital as a consequence of its obligations hereunder to a level below that which Agent, Swing Loan Lender or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent, Swing Loan Lender or each Lender ’ s policies with respect to capital adequacy) by an amount deemed by Agent, Swing Loan Lender or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent, Swing Loan Lender or any Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent, Swing Loan Lender or any Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent, Swing Loan Lender and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicab le Law , Change in Law or condition.
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(b) A certificate of Agent , Swing Loan Lender or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent manifest error.
3.10. Gross Up for Taxes . If any Borrower shall be required by Applicable Law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a “ Payee ” and collectively, the “ Payees ” ), (a) the sum payable to such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after making all required withholding or deductions, the applicable Payee or Payees receives an amount equal to the sum it would have received had no such withholding or deductions been made (the “ Gross-Up Payment ” ), (b) such Borrower shall make such withholding or deductions, and (c) such Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall be obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof.
3.11. Withholding Tax Exemption .
(a) Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations ( “ Regulations ” )) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code. The term “ Withholding Certificate ” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.
(b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows: (i) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by any Borrower hereunder for the account of such Payee; (ii) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent). Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the
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occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing Agent or Agent.
(c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Code.
4.1. Security Interest in the Collateral . To secure the prompt payment and performance to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender and Swing Loan Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent ’ s security interest and shall cause its financial statements to reflect such security interest. Each Borrower shall promptly provide Agent with written notice of all commercial tort claims, such notice to contain the case title together with the applicable court and a brief description of the claim(s). Upon delivery of each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.
4.2. Perfection of Security Interest . Each Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent ’ s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately , and in any event, within ten (10) days, discharging all Liens other than Permitted Encumbran ces, (ii) obtaining Lien Waiver/Inventory Acknowledgments , (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent ’ s security interest and Lien under the Uniform Commercial Code or other Applicable Law. By its signature hereto, each Borrower hereby authorizes Agent to file against such Borrower, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein). All charges, expenses and fees Agent may incur in doing any of the
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foregoing, and any local taxes relating thereto, shall be charged to Borrowers ’ Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent ’ s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately upon demand.
4.3. Disposition of Collateral . Each Borrower will safeguard and protect all Collateral for Agent ’ s general account and make no disposition thereof whether by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary Course of Business and (b) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $100,000 and only to the extent that (i) the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Agent ’ s first priority security interest or (ii) the proceeds of which are remitted to Agent to be applied pursuant to Section 2.21.
4.4. Preservation of Collateral . Following the occurrence of a Default or Event of Default, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent ’ s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of any Borrower ’ s premises a custodian who shall have full authority to do all acts necessary to protect Agent ’ s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use any Borrower ’ s owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of Borrowers ’ owned or leased property. Each Borrower shall cooperate fully with all of Agent ’ s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct. All of Agent ’ s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrowers ’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.
4.5. Ownership of Collateral .
(a) With respect to the Collateral, at the time the Collateral becomes subject to Agent ’ s security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower that appear on such documents and agreements shall be genuine and each Borrower shall have full capacity to execute same; and (iv) each Borrower ’ s Equipment and Inventory shall be located as set forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof.
(b) (i) There is no location at which any Borrower has any Inventory (except
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for Inventory in transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of any Borrower is stored; none of the receipts received by any Borrower from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person ’ s assigns; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all R eal P roperty owned or leased by each Borrower, together with the names and addresses of any landlords.
4.6. Defense of Agent ’ s and Lenders ’ Interests . Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent ’ s interests in the Collateral shall continue in full force and effect. During such period no Borrower shall, without Agent ’ s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend Agent ’ s interests in the Collateral against any and all Persons whatsoever. At any time following demand by Agent for payment of all Obligations, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials. If Agent exercises this right to take possession of the Collateral, Borrowers shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law. Each Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent ’ s order and if they shall come into any Borrower ’ s possession, they, and each of them, shall be held by such Borrower in trust as Agent ’ s trustee, and such Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement.
4.7. Books and Records . Each Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business. All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrowers.
4.8. Financial Disclosure . Each Borrower hereby irrevocably authorizes and directs
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all accountants and auditors employed by such Borrower at any time during the Term to exhibit and deliver to Agent and each Lender copies of any of such Borrower ’ s financial statements, trial balances or other accounting records of any sort in the accountant ’ s or auditor ’ s possession, and to disclose to Agent and each Lender any information such accountants may have concerning such Borrower ’ s financial status and business operations. Each Borrower hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will attempt to obtain such information or materials directly from such Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies.
4.9. Compliance with Laws . Each Borrower shall comply with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of such Borrower ’ s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect. The assets of Borrowers at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets of Borrowers so that such insurance shall remain in full force and effect.
4.10. Inspection of Premises . At all reasonable times Agent and each Lender shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Borrower ’ s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of each Borrower ’ s business and Agent shall conduct not less than three (3) such field examinations in each calendar year; provided that, so long as no Default or Event of Default has occurred and is continuing, Borrowers shall not be obligated to pay the costs, fees and expenses in connection with more than four (4) such field examinations in any consecutive twelve-month period. Agent, any Lender and their agents may enter upon any premises of any Borrower at any time during business hours and at any other reasonable time, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Borrower ’ s business.
(a) The assets and properties of each Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of such Borrower so that such insurance shall remain in full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral. At each Borrower ’ s own cost and expense in amounts and with carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and properties in which such Borrower has an interest insured against the hazards of fire, flood (including for any Real Property located in a Special Flood Area, Federal Flood Insurance or private insurance that meets the requirements set forth by FEMA, in its Mandatory Purchase of Flood Insurance Guidelines) , sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to such Borrower ’ s including business interruption insurance; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to such Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured ’ s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of such Borrower either directly or
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through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker ’ s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which such Borrower is engaged in business; (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and lender loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a), and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and lender loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days ’ prior written notice is given to Agent. In the event of any loss thereunder, the carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for such loss to Agent and not to such Borrower and Agent jointly. If any insurance losses are paid by check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse such Borrower ’ s name thereon and do such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a) and (b) above. All loss recoveries received by Agent upon any such insurance may be applied to the Obligations, in such order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid by Borrowers to Agent, on demand.
(b) Each Borrower shall take all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure on any real property that will be subject to a mortgage in favor of Agent, for the benefit of the Lenders, and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws.
4.12. Failure to Pay Insurance . If any Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers ’ Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. Payment of Taxes . Each Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes. If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent ’ s or any Lender ’ s opinion, may possibly
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create a valid Lien on the Collateral, Agent may without notice to Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof. The amount of any payment by Agent under this Section 4.13 shall be charged to Borrowers ’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made), Agent may hold without interest any balance standing to Borrowers ’ credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.
4.14. Payment of Leasehold Obligations . Each Borrower shall at all times pay, when and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Agent ’ s request will provide evidence of having done so.
(a) Nature of Receivables . Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and (other than with respect to Off-load Receivables) delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered by a Borrower as of the date each Receivable is created. Same shall be due and owing in accordance with the applicable Borrower ’ s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers . Each Customer, to the best of each Borrower ’ s knowledge, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of any Borrower who are not solvent such Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables.
(c) Location of Borrowers . Each Borrower ’ s chief executive office is located at 9420 Underwood Ave., Suite 100 , Omaha, Nebraska . Until written notice is given to Agent by Borrowing Agent of any other office at which any Borrower keeps its records pertaining to Receivables, all such records shall be kept at such executive office.
(d) Collection of Receivables . Until any Borrower ’ s authority to do so is terminated by Agent (which notice Agent may give at any time following the occurrence of an Event of Default or a Default or when Agent in its sole discretion deems it to be in Lenders ’ best interest to do so), each Borrower will, at such Borrower ’ s sole cost and expense, but on Agent ’ s behalf and for Agent ’ s account, collect as Agent ’ s property and in trust for Agent all amounts received on Receivables, and shall not commingle such collections with any Borrower ’ s funds or use the same except to pay Obligations. Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness.
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(e) Notification of Assignment of Receivables . At any time following the occurrenc e of a Default or an Event of De fault, Agent shall have the right to send notice of the assignment of, and Agent ’ s security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral. Thereafter, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both. Agent ’ s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrowers ’ Account and added to the Obligations.
(f) Power of Agent to Act on Borrowers ’ Behalf . Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed. Each Borrower hereby constitutes Agent or Agent ’ s designee as such Borrower ’ s attorney with power (i) at any time: (A) to endorse such Borrower ’ s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (B) to sign such Borrower ’ s name on any invoice , bill of lading or customs documentation relating to any of the Receivables or Inventory , drafts against Customers, assignments and verifications of Receivables; (C) to send verifications of Receivables to any Customer; (D) to sign such Borrower ’ s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent ’ s interest in the Collateral and to file same; and (ii) at any time following the occurrence of a Default or Event of Default: (A) to demand payment of the Receivables; (B) to enforce payment of the Receivables by legal proceedings or otherwise; (C) to exercise all of such Borrower ’ s rights and remedies with respect to the collection of the Receivables and any other Collateral; (D) to settle, adjust, compromise, extend or renew the Receivables; (E) to settle, adjust or compromise any legal proceedings brought to collect Receivables; (F) to prepare, file and sign such Borrower ’ s name on a proof of claim in bankruptcy or similar document against any Customer; (G) to prepare, file and sign such Borrower ’ s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (H) to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right at any time following the occurrence of an Event of Default or Default, to change the address for delivery of mail addressed to any Borrower to such address as Agent may designate and to receive, open and dispose of all mail addressed to any Borrower.
(g) No Liability . Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom. Following the
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occurrence of an Event of Default or Default Agent may, without notice or consent from any Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. Agent is authorized and empowered to accept following the occurrence of an Event of Default or Default the return of the goods represented by any of the Receivables, without notice to or consent by any Borrower, all without discharging or in any way affecting any Borrower ’ s liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account . All proceeds of Collateral shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other “ blocked account ” ( “ Blocked Accounts ” ) established at a bank or banks (each such bank, a “ Blocked Account Bank ” ) pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrowing Agent and be acceptable to Agent or (ii) depository accounts ( “ Depository Accounts ” ) established at the Agent for the deposit of such proceeds. Each applicable Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked Accounts shall immediately become the property of Agent and Borrowing Agent shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited. Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder. All deposit accounts and investment accounts of each Borrower and its Subsidiaries are set forth on Schedule 4.15(h). Agent shall apply all funds received by it from the Blocked Accounts and/or Depository Accounts to the satisfaction of the Obligations (including the cash collateralization of the Letters of Credit) in such order as Agent shall determine in its sole discretion, provided that, in the absence of any Event of Default, Agent shall apply all such funds representing collection of Receivables first to the prepayment of Revolving Advances.
(i) Adjustments . No Borrower will, without Agent ’ s consent, compromise or adjust any Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the business of such Borrower.
4.16. Inventory . To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment . All material Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved. No Borrower shall use or operate the Equipment in violation of any law, statute, ordinance, code, rule or regulation. Each Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3 hereof.
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4.18. Exculpation of Liability . Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower ’ s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof. Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of any Borrower ’ s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrower of any of the terms and conditions thereof.
(a) Borrowers shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance with all Environmental Laws and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities.
(b) Borrowers shall establish and maintain a system to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance.
(c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers shall use their best efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “ Hazardous Discharge ” ) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any Borrower ’ s interest therein (any of the foregoing is referred to herein as an “ Environmental Complaint ” ) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “ Authority ” ), then Borrowing Agent shall, within five (5) Business Days, give written notice of same to Agent detailing facts and circumstances of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.
(e) Borrowing Agent shall promptly forward to Agent copies of any request
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for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of correspondence between any Borrower and the Authority regarding such claims to Agent until the claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file under any Environmental Laws. Such information is to be provided solely to allow Agent to protect Agent ’ s security interest in and Lien on the Real Property and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent ’ s interest in the Collateral: (i) give such notices or (ii) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and any Borrower.
(g) Promptly upon the written request of Agent from time to time, Borrowers shall provide Agent, at Borrowers ’ expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property. Any report or investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability, damage and expense, claims, costs, fines and penalties, including attorney ’ s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of
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value of the Real Property as a result of the foregoing except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender. Borrowers ’ obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances. Borrowers ’ obligation and the indemnifications hereunder shall survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrower ’ s right, title and interest in and to its owned and leased premises.
4.20. Financing Statements . Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.
4.21. Real Estate . In the event Borrowers, or any of them, acquire any Real Property, Borrowers shall execute and deliver any and all agreements, documents and instruments requested by Agent to enable Agent to have a first priority Lien on such Real Property, including, without limitation, (i) a m ortgage in favor of Agent to secure the Obligations; (ii) ALTA survey acceptable to remove any survey exceptions from the title policy issued to Agent insuring the m ortgage; (iii) ALTA t itle insurance (with endorsements reasonably acceptable to Agent, which shall include a zoning endorsement) issued to Agent insuring the mor tgage in favor of Agent referenced above as a first Lien on such Real Property ; (iv) a Phase I environmental report, in form and substance reasonably acceptable to Agent; (v) a Flood certificate, in form and substance reasonably acceptable to Agent and, if such real estate is located in a Special Flood Area, Federal Flood Insurance as required by Section 4.11 ; and (vi) a real estate appraisal complying with FIRREA and otherwise , in form and substance reasonably acceptable to Agent .
4.22. Appraisals . Agent may, in its Permitted Discretion, exercised in a commercially reasonable manner, at any time after the Closing Date, engage the services of an independent appraisal firm or firms of reputable standing, satisfactory to Agent, for the purpose of appraising the then current values of Borrowers’ Inventory. Absent the occurrence and continuance of an Event of Default at such time, Agent shall consult with Borrowers as to the identity of any such firm. All of the fees and out-of-pocket costs and expense of any such firm (collectively, “appraisal amounts”) shall be paid for when due, in full and without off-set, by Borrowers ; provided, however, Borrowers shall not be obligated to pa y such appraisal amounts if no Default or Event of Default has occurred . In the event the value of Borrowers’ Inventory, as so determined pursuant to such appraisal, is less than anticipated by Agent or Lenders, such that the Revolving Advances against Eligible Inventory, are in fact in excess of such Advances permitted hereunder, then, promptly upon Agent’s written demand for same, Borrowers shall make mandatory prepayments of the then outstanding Revolving Advances made against such Eligible Inventory so as to eliminate the excess Advances.
V. REPRESENTATIONS AND WARRANTIES.
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Each Borrower represents and warrants as follows:
5.1. Authority . Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder a nd thereunder. This Agreement , the Subordination Agreement and the Other Documents have been duly executed and delivered by each Borrower, and this Agreement , the Subordination Agreement and the Other Documents constitute the legal, valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors ’ rights generally. The execution, delivery and performance of this Agreement and of the Other Documents (a) are within such Borrower ’ s limited liability company powers, have been duly authorized by all necessary company action, are not in contravention of law or the terms of such Borrower ’ s operating agreement, certificate of formation or other applicable documents relating to such Borrower ’ s formation or to the conduct of such Borrower ’ s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound, including the Subordinated Loan Documentation (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement, charter document, instrument, operating agreement or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound.
5.2. Formation and Qualification .
(a) Each Borrower is duly formed and in good standing under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for such Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and complete copies of its certificate of formation and operating agreement and will promptly notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on Schedule 5.2(b).
5.3. Survival of Representations and Warranties . All representations and warranties of such Borrower contained in this Agreement and the Other Documents shall be true at the time of such Borrower ’ s execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.
5.4. Tax Returns . Each Borrower ’ s federal tax identification number is set forth on Schedule 5.4. Each Borrower has filed all federal, state and local tax returns and other reports each is required by law to file and has paid all taxes, assessments, fees and other governmental
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charges that are due and payable. Federal, state and local income tax returns of each Borrower have been examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ending December 31, 200 9 . The provision for taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books.
(a) The pro forma balance sheet of Borrowers on a Consolidated Basis (the “ Pro Forma Balance Sheet ” ) furnished to Agent for the most recent accounting period prior to or on the Closing Date reflects the consummation of the transactions contemplated under this Agreement (collectively, the “ Transactions ” ) and is accurate, complete and correct and fairly reflects the financial condition of Borrowers on a Consolidated Basis as of the Closing Date after giving effect to the Transactions, and has been prepared in accordance with GAAP principles , consistently applied. The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by the Presid ent, Chief Financial Officer, Treasurer or Controller of Borrowing Agent. All financial statements referred to in this subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in accordance with GAAP, except for the omission of footnotes and as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections and projected balance sheets of Borrowers on a Consolidated Basis as of the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the “ Projections ” ) were prepared by the Chief Financial Officer, Treasurer or Controller of GPTG , are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrowers ’ judgment based on present circumstances of the most likely set of conditions and course of action for the projected period. The Projections together with the Pro Forma Balance Sheet, are referred to as the “ Pro Forma Financial Statements ” .
(c) The consolidated and consolidating balance sheets of Holdings , their Subsidiaries and such other Persons described therein (including the accounts of all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of December 31, 20 12 , and the related statements of income, changes in stockholder ’ s equity, and changes in cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur ) and present fairly the financial position of Borrowers and their Subsidiaries at such date and the results of their operations for such period. The consolidated and consolidating balance sheets of Borrowers, their Subsidiaries and such other Persons described therein (including the accounts of all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of December 31 , 201 2 , and the related statements of income, changes in stockholder ’ s equity, and changes in cash flow for the period ended on such date, present fairly the financial position of Borrowers and their Subsidiaries at such date and the results of their operations for such period. Since December 31, 2012 there has been no change in the condition, financial or otherwise, of Borrowers or their
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Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Borrowers and their respective Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in the aggregate has been materially adverse.
5.6. Entity Names . No Borrower has been known by any other corporate name in the past five years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has any Borrower been the surviving company of a merger or consolidation or acquired all or substantially all of the assets of any Person during the preceding five (5) years.
5.7. O.S.H.A. and Environmental Compliance .
(a) Each Borrower has duly complied with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations.
(b) Each Borrower has been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws.
(c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “ Releases ” ) of Hazardous Substances at, upon, under or within any Real Property including any premises leased by any Borrower; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property including any premises leased by any Borrower; (iii) the Real Property including any premises leased by any Borrower has never been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property including any premises leased by any Borrower, excepting such quantities as are handled in accordance with all applicable manufacturer ’ s instructions and governmental regulations and in proper storage containers and as are necessary for the operation of the commercial business of any Borrower or of its tenants.
(d) All Real Property owned by Borrowers is insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Borrower in accordance with prudent business practice in the industry of such Borrower. Each Borrower has taken all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure located upon any Real Property that will be subject to a Mortgage in favor of Agent, for the benefit of the Lenders, and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default ; ERISA Compliance .
(a) After giving effect to the Transactions, each Borrower will be solvent,
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able to pay its debts as they mature, will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened litigation, arbitration, actions or proceedings which involve the possibility of having a Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the Obligations.
(c) No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal.
(d) No Borrower nor any member of the Controlled Group maintains or is required to contribute to any Plan other than those listed on Schedule 5.8(d) hereto. (i) No Plan has incurred any “ accumulated funding deficiency, ” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, each Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA and Section 412 of the Code in respect of each Plan, and each Plan is in compliance with Sections 412, 430 and 436 of the Code and Sections 206(g), 302 and 303 of ERISA, without regard to waivers and variances; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Borrower nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4971, 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a “ prohibited transaction ” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of the Controlled Group has any fiduciary
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responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of any Borrower or any member of the Controlled Group; (xii) neither any Borrower nor any member of the Controlled Group maintains or is required to contribute to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any member of the Controlled Group has withdrawn, completely or partially, within the meaning of Section 4203 or 4205 of ERISA, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.
5.9. Patents, Trademarks, Copyrights and Licenses . All patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications, design rights, tradenames, assumed names, trade secrets and licenses owned or utilized by any Borrower are set forth on Schedule 5.9, are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business; there is no objection to or pending challenge to the validity of any such patent, trademark, copyright, design rights, tradename, trade secret or license and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower and all trade secrets used by any Borrower consist of original material or property developed by such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof. Each of such items has been maintained so as to preserve the value thereof from the date of creation or acquisition thereof. With respect to all software used by any Borrower, such Borrower is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.
5.10. Licenses and Permits . Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state, provincial or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect.
5.11. Default of Indebtedness . No Borrower is in default in the payment of the principal of or interest on any Indebtedness or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder.
5.12. No Default . No Borrower is in default in the payment or performance of any of its contractual obligations , the obligations under which are in excess of $500,00 0 , and no Default
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has occurred.
5.13. No Burdensome Restrictions . No Borrower is party to any contract or agreement the performance of which could have a Material Adverse Effect. Each Borrower has heretofore delivered to Agent true and complete copies of all material contracts to which it is a party or to which it or any of its properties is subject. No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.
5.14. No Labor Disputes . No Borrower is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower ’ s employees threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto.
5.15. Margin Regulations . No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “ purchasing ” or “ carrying ” any “ margin stock ” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “ purchasing ” or “ carrying ” “ margin stock ” as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act . No Borrower is an “ investment company ” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.
5.17. Disclosure . No representation or warranty made by any Borrower in this Agreement, or in any financial statement, report, certificate or any other document furnished in connection herewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower has not disclosed to Agent in writing with respect to the transactions contemplated or evidenced by this Agreement which could reasonably be expected to have a Material Adverse Effect.
5.19 Swaps . No Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “ two-way basis ” without regard to fault on the part of either party.
5.20. Conflicting Agreements . No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any
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way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations . Neither any Borrower nor any Affiliate of any Borrower is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.
5.22. Business and Property of Borrowers . Upon and after the Closing Date, Borrowers do not propose to engage in any business other than the marketing of ethanol and distillers grains and activities necessary to conduct the foregoing. On the Closing Date and at all times thereafter, each Borrower owns all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower.
5.23. Ineligible Securities . Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a securities Affiliate of Agent or any Lender.
5.24. Federal Securities Laws . Neither any Borrower nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.
5.25. Equity Interests . The authorized and outstanding Equity Interests of each Borrower and Guarantor (other than Holdings) is as shown on Sched ule 5.25 hereto. All of the Equity Interests of each Borrower has been duly and validly authorized and issued and is fully paid and non-assessable and has been sold and delivered to the holders hereof in compliance with, or under valid exemption from, all federal and state laws and the rules and regulations of each Governmental Body governing the sale and delivery of securities. Except for the rights and obligations shown on Schedule 5.25 , there are no subscriptions, warrants, options, calls, commitments, rights or agreement by which any Borrower or any of the shareholders of any Borrower is bound relating to the issuance, transfer, voting or redemption of shares of its Equity Interests or any pre-emptive rights held by any Person with respect to the Equity Interests of Borrowers. Except as shown on Schedule 5.25 , Borrowers have not issued any securities convertible into or exchangeable for shares of its Equity Interests or any options, warrants or other rights to acquire such shares or securities convertible into or exchangeable for such shares.
Each Borrower shall, until payment in full of the Obligations and termination of this Agreement:
6.1. Payment of Fees . Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b)
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the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may, without making demand, charge Borrowers ’ Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets . (a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right or other right included in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.
6.3. Violations . Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower which could reasonably be expected to have a Material Adverse Effect.
6.4. Government Receivables . Take all steps necessary to protect Agent ’ s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, any state or any department, agency or instrumentality of any of them.
6.5. Fixed Charge Coverage Ratio . Cause to be maintained as of the end of each fiscal quarter, commencing with the fiscal quarter ending March 31, 20 1 3 , a Fixed Charge Coverage Ratio of not less than 1.15 to 1.0, measured on a rolling four quarter basis.
6.6. Execution of Supplemental Instruments . Execute and deliver to Agent from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may request, in order that the full intent of this Agreement may be carried into effect.
6.7. Payment of Indebtedness . Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and each Borrower shall have provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times to any applicable subordination arrangement in favor of Lenders. Notwithstanding anything to the contrary set forth above,
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Borrowers shall not prepay any of its obligations and liabilities to any Affiliate.
6.8. Standards of Financial Statements . Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to the omission of footnotes and for the effect of normal year-end audit adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).
6.9. Federal Securities Laws . Promptly notify Agent in writing if Holdings , any Borrower or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.
6.10 Change in Management . Promptly notify Agent in writing if an executive officer of Borrower holding position of President, Chief Executive Officer, Chief Financial Officer or Treasurer is no longer employed by, and holding that position at, GPTG or its parent .
(a) Use commercially reasonable efforts to d eliver, or cause to be delivered, to Agen t w ithin ninety (90) d ays following the Closing Date, Lien Waiver Agreements from the owner s of each third party facility that stores Inventory of the Borrowers .
(b) Cause to be delivered to Agent within seven (7) days following the Closing Date, evidence satisfactory to Agent that the Borrowers’ insurance coverage for property losses, including Inventory, is in an amount and content satisfactory to Agent in its sole discretion.
No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets .
(a) Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i) dispositions of Inventory and Equipment to the extent expressly permitted by Section 4.3 and (ii) any other sales or dispositions expressly permitted by this Agreement.
7.2. Creation of Liens . Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.
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7.3. Guarantees . Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except the endorsement of checks in the Ordinary Course of Business.
7.4. Investments . Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers ’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, and (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof.
7.5. Loans . Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate , except with respect to (i) extensions of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business and (ii) temporary extensions of credit in the form of advance payment for products to the Plant Affiliates in an aggregate amount not to exceed $1,000,000 at any one time .
7.6. Capital Expenditures . Contract for, purchase or make any expenditure or commitments for Capital Expenditures in any fiscal year in an aggregate amount for all Borrowers in excess of $ 1,0 00,000 .
7.7. Distributions . Pay or make any distribution on any Equity Interest of Borrower or apply any of its funds, property or assets to the purchase, redemption or other retirement of any Equity Interest, or of any options to purchase or acquire any such Equity Interest of any Borrower except that :
(i) so long as (a) a notice of termination with regard to this Agreement shall not be outstanding, and (b) no Event of Default or Default shall have occurred and would not occur after giving pro forma effect to such payment(s), and (c) the purpose for such purchase, redemption or distribution shall be as set forth in writing to Agent at least ten (10) days prior to such purchase, redemption or distribution and such purchase, redemption or distribution shall in fact be used for such purpose, any Borrower shall be permitted to make distributions to its members in an aggregate amount equal to the Increased Tax Burden of its members ;
(ii) at any time following December 31, 2012 so long as (a) a notice of termination with regard to this Agreement shall not be outstanding, (b) no Event of Default or Default shall have occurred and would not occur after giving pro forma effect to such payment(s), (c) Borrowers have an average Undrawn Availability of at least $ 10, 000,000 for the prior thirty day period after giving pro forma effect to such payments , and (d) Borrowers are in compliance with the Fixed
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Charge Coverage Ratio set forth in Section 6.5 calculated as of the date of such distribution after giving pro forma effect to such payments, any Borrower shall be permitted to make distributions in any fiscal year to Holdings in an aggregate amount not to exceed fifty percent (50%) of Borrowers’ net income calculated as of the end of the previous fis cal year .
Payments to members for taxes shall be made so as to be available when the tax is due, including in respect of estimated tax payments. In the event (x) the actual distribution to members made pursuant to subclause (i) of this Section 7.7 exceeds the actual income tax liability of any member due to such Borrower ’ s status as a limited liability company, or (y) if such Borrower was a subchapter C corporation, such Borrower would be entitled to a refund of income taxes previously paid as a result of a tax loss during a year in which such Borrower is a limited liability company, then the members shall repay such Borrower the amount of such excess or refund, as the case may be, no later than the date the annual tax return must be filed by such Borrower (without giving effect to any filing extensions). In the event such amounts are not repaid in a timely manner by any member, then such Borrower shall not pay or make any distribution with respect to, or purchase, redeem or retire, any membership interest of such Borrower held or controlled by, directly or indirectly, such member until such payment has been made.
7.8. Indebtedness . Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to Lenders , (ii) Indebtedness incurred for Capital Expenditures permitted under Section 7.6 hereof and (iii) unsecured Subordinated Debt, so long as (a) no Default or Event of Default has occurred or would occur after giving effect to the i ncurrence of such Indebtedness, (b) receipt by Agent of written notice five (5) days prior to the in currence of such Indebtedness, (c) such Indebtedness is made on terms and conditions reason ably acceptable to Agent and (d) Agent has received an execute d Subordination Agreement .
7.9. Nature of Business . Substantially change the nature of the business in which it is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted.
7.10. Transactions with Affiliates . Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions (i) set forth on Schedule 7.10 , (ii) so long as no Default or E vent of Default has occurred, relating to payments to Holdings for reimbursement of (x) payroll and other payroll-related obligations and (y) other allocated expenses incurred by Holdings for the benefit of any Borrower in an amount not to exceed $250,000 in the aggregate per calendar month , and ( i ii) disclosed to the Agent, which are in the Ordinary Course of Business, on an arm ’ s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate . Notwithstanding anything to the contrary set forth herein, no transaction with an Affiliate otherwise permitted under this Section 7.10 shall require Borrowers to make payments to such Affiliates in connection with such transaction on payment terms of less than a monthly average
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of 3 days.
7.11. Leases . Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased property would exceed $ 2,000,000 in any one fiscal year in the aggregate for all Borrowers.
(a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a borrower and becomes jointly and severally liable for the obligations of Borrowers hereunder and under any other agreement between any Borrower and Lenders and (ii) Agent shall have received all documents, including legal opinions, it may reasonably require to establish compliance with each of the foregoing conditions.
(b) Enter into any partnership, joint venture or similar arrangement.
7.13. Fiscal Year and Accounting Changes . C hange its fiscal year from December 31 without the prior written consent of Agent, which consent shall not be unreasonably withheld or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.
7.14. Pledge of Credit . Now or hereafter pledge Agent ’ s or any Lender ’ s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than such Borrower ’ s business as conducted on the date of this Agreement.
7.15. Amendment of Certificate of Formation, Operating Agreement . Amend, modify or waive any term or material provision of its Certificate of Formation or Limited Liability Company Agreement unless required by law.
7.16. Compliance with ERISA . (i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “ prohibited transaction ” , as that term is defined in Section 406 of ERISA or Section 4975 of the Code, (iii) incur, or permit any Plan to incur, any “ accumulated funding deficiency ” , as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Borrower or any member of the Controlled Group or the imposition of a lien on the property of any Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA and the Code, without regard to any waivers or
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variances, or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan, or (x) cause, or permit any member of the Controlled Group to cause, a representation or warranty in Section 5.8(d) to cease to be true and correct.
7.17. Prepayment of Indebtedness . At any time, directly or indirectly, prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness of any Borrower.
7.19. Membership/Partnership Interests . Elect to treat or permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “ security ” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be.
7.20. Trading with the Enemy Act . Engage in any business or activity in violation of the Trading with the Enemy Act.
7.21. Affiliate Contracts . (i) Amend, modify or waive any material term or provision of any Affiliate Contract or any Third Party Contract as in effect on the Closing Date without the prior wri tten consent of Required Lender s , (ii) enter into any new Affiliate Contract or Third Party Contract following the Closing Date, unless such contract is (a) substantially similar to the form of contracts entered into by Borrowers with the Affiliate Plants prior to the Closing Date and (b) promptly delivered to Agent or (iii) offer more favorable marketing fee arrangements under any Affiliate Contract than those marketing fee arrangements offered under any Third Party Contract .
7.22. Subordinated Debt . At any time, directly or indirectly, pay, prepay, repurchase, redeem, retire or otherwise acquire or make any payment on account of any principal of, interest on or premium payable in connection with the repayment or redemption of the Subordinated Debt , except as expressly permitted in the applicable Subordination Agreement.
7.23. Other Agreements . Enter into any material amendment, waiver or modification of the Subordinated Loan Documentation or any related agreements.
7.24. Unhedged Inventory. Maintain Unhedged Inventory in excess of $5,000,000 at any one time.
8.1. Conditions to Initial Advances . The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Lenders, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:
(a) Note s . Agent shall have received the Note s duly executed and delivered
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by an authorized officer of each Borrower;
(b) Filings, Registrations and Recordings . Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by the Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, or other evidence satisfactory to it, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;
(c) Company Proceedings of Borrowers . Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Managing Member of each Borrower authorizing (i) the execution, delivery and performance of this Agreeme nt, the Notes and any related agreements (collectively the “ Documents ” ) and (ii) the granting by each Borrower of the security interests in and liens upon the Collateral in each case certified by the Secretary, or an Assistant Secretary , of each Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Borrowers . Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the incumbency and signature of the officers of each Borrower executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;
(e) Corporate Proceedings of each Guarantor . Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of each Guarantor authorizing the execution, delivery and performance of each Guaranty and each Other Document to which it is a party certified by the Secretary or an Assistant Secretary of such Guarantor as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;
(f) Incumbency Certificates of each Guarantor . Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Guarantor, dated the Closing Date, as to the incumbency and signature of the officers of such Guarantor executing the Guaranty and any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;
(g) Certificates . Agent shall have received a copy of the Articles or Certificate of Incorporation /Formation of each Borrower and each Guarantor, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation / formation, as applicable, toge ther with copies of the By-Laws/ Limited Liability Agreement of each Borrower and each Guarantor and all agreements of each Borrower ’ s and each Guarantor ’ s shareholders/ members, as applicable, certified as accurate
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and complete by the Secretary of each Borrower and each Guarantor;
(h) Good Standing Certificates . Agent shall have received good standing certificates for each Borrower and each Guarantor dated not more than thirty (30) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each Borrower ’ s and each Guarantor ’ s jurisdiction of incorporation / formation, as applicable, and each jurisdiction where the conduct of each Borrower ’ s and each Guarantor ’ s business activities or the ownership of its properties necessitates qualification;
(i) Legal Opinion . Agent shall have received the executed legal opinion of Husch Blackwell Sanders LLP in form and substance satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement, the Notes, th e Other Documents, the Guaranty , the Guarantor Security Agreement, the Pledge Agreement and related agreements as Agent may reasonably require and each Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;
(j) No Litigation . (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against Holdings , GPCM or any Borrower or against the officers or directors of Holdings , GPCM or any Borrower (A) in connection with this Agreement, the Other Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to Holdings , GPCM or any Borrower or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body;
(k) Financial Condition Certificates . Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(k).
(l) Collateral Examination . Agent shall have completed Collateral examinations, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory, General Intangibles, and Equipment of each Borrower and all books and records in connection therewith;
(m) Fees . Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III hereof;
(n) Pro Forma Financial Statements . Agent shall have received a copy of the Pro Forma Financial Statements which shall be satisfactory in all respects to Lenders;
(o) Insurance . Agent shall have received in form and substance satisfactory to Agent, certified copies of Borrowers ’ casualty insurance policies, together with l ender loss payable endorsements on Agent ’ s standard form of l ender loss payee endorsement naming Agent as l ender loss payee, and certified copies of Borrowers ’ liability insurance policies, together with endorsements naming Agent as a co-insured;
(p) Payment Instructions . Agent shall have received written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to
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this Agreement;
(q) Blocked Accounts . Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral;
(r) Consents . Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem necessary;
(s) No Adverse Material Change . (i) since December 31, 20 11 , there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;
(t) Leasehold Agreements . Agent shall have received landlord, mortgagee or warehouseman agreements satisfactory to Agent with respect to all premises leased by Borrowers at which Inventory and/or books and records are located;
(u) Guarantees and Other Documents . Agent shall have received (i) each executed Guaranty , Guarantor Security Agreement and Pledge Agreement and (ii) the executed Other Documents, all in form and substance satisfactory to Agent;
(v) Contract Review . Agent shall have reviewed all material contracts of Borrowers including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements and such contracts and agreements shall be satisfactory in all respects to Agent;
(w) Closing Certificate . Agent shall have received a closing certificate signed by the Chief Financial Officer of each Borrower dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) Borrowers are on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing;
(x) Borrowing Base . Agent shall have received evidence from Borrowers that the aggregate amount of Eligible Receivables , Eligible Off-load Receivables , Eligible In-Tank Inventory, Eligible In-Transit Inventory , Eligible On-Track Inventory and Eligible Inventory less any and all reserves established by Agent is sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date;
(y) Undrawn Availability . After giving effect to the initial Advances hereunder, Borrowers shall have Undrawn Availability of at least $ 10 ,000,000;
(z) Compliance with Laws . Agent shall be reasonably satisfied that each
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Borrower is in compliance with all pertinent federal, state, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act;
(aa) Lien Waiver /Inventory Acknowledgment . Agent shall have received executed Lien Waiver /Inventory A cknowledgment from Blendstar ; and
(bb) Other . All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel.
8.2. Conditions to Each Advance . The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:
(a) Representations and Warranties . Each of the representations and warranties made by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date;
(b) No Default . No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date; provided, however that Agent, in its sole discretion, may , unless Required Lenders have instructed Agent otherwise in writing, continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances . In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.
Each request for an Advance by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement:
9.1. Disclosure of Material Matters . Immediately , and in any event within five days, upon learning thereof, report to Agent all matters affecting the value, enforceability or collectibility of any material portion of the Collateral, including any Borrower ’ s reclamation or repossession of, or the return to any Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.
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9.2. Schedules . Deliver to Agent on or before:
(i) the fifteenth (15th) day of each month as and for the prior month,
(a) a detailed schedule of the accounts receivable ageings of Borrowers, presented on both an invoice and due date basis, inclusive of reconciliations to the general ledger; and
(b) a detailed schedule of the accounts payable of Borrowers,
(ii) the Tuesday of each calendar week as of Friday of the prior calendar week;
(a) a summary of the accounts receivable ageings of Borrowers on both an invoice and due date basis;
(b) a summary of the accounts payable schedules of Borrowers;
(c) a schedule of the ineligible Receivables of Borrowers; and
(d) a Borrowing Base Certificate (with supporting schedules) in form and substance satisfactory to Agent (which shall be calculated as of ( 1) Friday of the prior calendar week and ( 2) on any day by which Borrowers request a revolving advance subject to Agent’s discretion to forgo such requirement in its sole discretion, both of which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement).
In addition, each Borrower will deliver to Agent at such intervals as Agent may require: (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery and (iv) such further schedules, documents and/or information regarding the Collateral as Agent may require including trial balances and test verifications. Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form satisfactory to Agent and executed by each Borrower and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.
9.3. Environmental Reports . Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with a certificate signed by the President of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws. To the extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth with specificity all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance.
9.4. Litigation . Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Borrower or any Guarantor, whether or not the claim is
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covered by insurance, and of any litigation, suit or administrative proceeding, which in any such case affects the Collateral or which could reasonably be expected to have a Material Adverse Effect.
9.5. Material Occurrences . Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied (other than the omission of footnotes and the effects of normal year-end adjustment s for any financial statements delivered to A gent (other than the annual financial statements ) ) , the financial condition or operating results of any Borrower as of the date of such statements; (c) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; ( d ) each and every default by any Borrower which might result in the acceleration of the maturity of any Indebtedness, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or could be accelerated, and the amount of such Indebtedness; ( e ) any other development in the business or affairs of any Borrower which could reasonably be expected to have a Material Adverse Effect and (f) any event of default under the Subordinated Loan Documentation ; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto.
9.6. Government Receivables . Notify Agent immediately if any of its Receivables arise out of contracts between any Borrower and the United States, any state, or any department, agency or instrumentality of any of them.
9.7. Annual Financial Statements . Furnish Agent and Lenders within one hundred twenty (120) days after the end of each fiscal year of Borrowers, financial statements of Holdings and Borrowers on a consolidating and consolidated basis including, but not limited to, statements of income and stockholders ’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified public accounting firm selected by Borrowers (the “ Accountants ” ). T he reports shall be accompanied by a Compliance Certificate.
9.8. Quarterly Financial Statements . Furnish Agent and Lenders within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet of (i) Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders ’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter and (ii) Borrowers and Holdings on a consolidated basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers and Holdings on a consolidated basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarte r , in each case prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers ’ or Holding’s business, as applicable . The
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reports shall be accompanied by a Compliance Certificate.
9.9. Monthly Financial Statements . Furnish Agent and Lenders within thirty (30) days after the end of each month (other than for the months of March, June, September and December which shall be delivered in accordance with Sections 9.7 and 9.8 as applicable), an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders ’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers ’ business. The reports shall be accompanied by a Compliance Certificate.
9.10. Other Reports . Furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, with copies of such material financial statements, reports and returns as each Borrower shall send to its members.
9.11. Additional Information . Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Note s have been complied with by Borrowers including, without the necessity of any request by Agent, (a) copies of all material environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower ’ s opening of any new office or place of business or any Borrower ’ s closing of any existing office or place of business, and (c) promptly upon any Borrower ’ s learning thereof, notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by which any Borrower is bound.
9.12. Projected Operating Budget . Furnish Agent and Lenders, no later than ten ( 1 0) days prior to the beginning of each Borrower ’ s fiscal years commencing with fiscal year 201 4 , a month by month projected operating budget and cash flow of Borrowers on a consolidated and consolidating basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by the Chief Financial Officer , Chief Executive Officer, or Executive Vice President and Treasurer of each Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements and that such officer has no reason to question the reasonableness of any material assumptions on which such projections were prepared.
9.13. Variances From Operating Budget . Furnish Agent, concurrently with the delivery of the financial statements referred to in Section 9.7 and each monthly report, a written report summarizing all material variances from budgets submitted by Borrowers pursuant to Section 9.12 and a discussion and analysis by management with respect to such variances.
9.14. Notice of Suits, Adverse Events . Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Borrower by any Governmental Body or any other Person that is material to the operation of any Borrower ’ s business, (ii) any
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refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by any Borrower or any Guarantor with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Borrower or any Guarantor, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Borrower or any Guarantor.
9.15. ERISA Notices and Requests . Furnish Agent with immediate written notice in the event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or any member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Borrower or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any member of the Controlled Group was not previously contributing shall occur, (v) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (ix) any Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
9.16. Additional Documents . Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.
The occurrence of any one or more of the following events shall constitute an “ Event of Default ” :
10.1. Nonpayment . Failure by any Borrower to pay any principal or interest on the
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Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document;
10.2. Breach of Representation . Any representation or warranty made or deemed made by any Borrower or any Guarantor in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made;
10.3. Financial Information . Failure by any Borrower to (i) furnish financial information when due or when requested, or (ii) permit the inspection of its books or records , which failure is not cured within five (5) days from the occurrence of such failure;
10.4. Judicial Actions . Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Borrower ’ s Inventory or Receivables or against a material portion of any Borrower ’ s other property;
10.5. Noncompliance . Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Borrower or any Guarantor or any Person to perform, keep or observe any term, provision, condition, covenant herein contained, or contained in any Other Document or any other agreement or arrangement, now or hereafter entered into between any Borrower or any Guarantor or such Person, and Agent or any Lender, or (ii) failure or neglect of any Borrower to perform, keep or observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days from the occurrence of such failure or neglect;
10.6. Judgments . Any judgment or judgments are rendered against any Borrower for an aggregate amo unt in excess of $250 ,000 or against all Borrowers for an ag gregate amount in excess of $250 ,000 and (i) enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there shall be any period of forty (40) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance);
10.7. Bankruptcy . Any Borrower or any Guarantor shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing;
10.8. Inability to Pay . Any Borrower or any Guarantor shall admit in writing its
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inability, or be generally unable, to pay its debts as they become due or cease operations of its present business;
10.9. Subsidiary Bankruptcy . Any Subsidiary of any Borrower, or any Guarantor, shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing;
10.10. Material Adverse Effect . The occurrence of any Material Adverse Effect;
10.11. Lien Priority . Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest;
10.12. Guarantor Cross Default. A default of the obligations of Guarantor under any other agreement for debt of borrowed money to which it is a party, which default is not cured with in any applicable grace period which would permit the debt-holder to accelerate the obligations thereunder .
10.13. Cross Default . A default of any material obligations of any Borrower under any other agreement to which it is a party which default is not cured within any applicable grace period;
10.14. Breach of Guaranty , Guarantor Security Agreement or Pledge Agreement . Termination or breach of any Guaranty, Guarantor Security Agreement, Pledge Agreement or similar agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor or pledgor attempts to terminate, challenges the validity of, or its liability un der, any such Guaranty, Guarantor Security Agreement, Pledge Agreement or similar agreement ;
10.15. Change of Ownership . Any Change of Ownership or Change of Control shall occur;
10.16. Invalidity . Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on any Borrower or any Guarantor, or any Borrower or any Guarantor shall so claim in writing to Agent or any Lender;
10.17. Licenses . (i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent trademark or tradename of any Borrower or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (C ) schedule or conduct a hearing on the renewal of any
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license, permit, trademark, tradename or patent necessary for the continuation of any Borrower ’ s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, tradename or patent , the effect of any of which may have a Material Adverse Effect ; (ii) any agreement which is necess ary and material to the operation of any Borrower ’ s business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect;
10.18. Seizures . Any portion of the Collateral shall be seized or taken by a Governmental Body, or any Borrower or the title and rights of any Borrower or any Original Owner which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which might, in the opinion of Agent, upon final determination, result in impairment or loss of the security provided by this Agreement or the Other Documents;
10.19 Operations . The operations of any Borrower are interrupted at any time for more than three (3) consecutive days, unless such Borrower shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this section, an Event of Default shall be deemed to have occurred if such Borrower shall be receiving the proceeds of business interruption insurance for a period of thirty (30) consecutive days;
10.20 Pension Plans . An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect ;
10.21. Subordinated Loan Default . An event of default has occurred under the Subordinated Loan Documentation or the Subordination Agreement or any party to the Subordination Agreement (other than Agent) attempts to terminate, challenges the validity of, or its obligations under, such Subordination Agreement , or any Subordination Agreement shall cease to be in full force and effect ; or
10.22. Reportable Compliance Event . The occurrence of any Reportable Compliance Event, or any Borrower’s failure to immediately report a Reportable Compliance Event in accordance with Section 16.18 hereof.
10.23. Equity Cure Right . Notwithstanding the provisions of Section 10.5 or Article XI to the contrary, Holdings may, but shall not be obligated to, cure any potential Event of Default under Section 6.5 (a “Financial Covenant Default”) by making a capital contribution into
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Borrowers in the form of new cash equity contributions in an aggregate principal amount equal to or greater than the amount (the “EBITDA Shortfall Amount”) that, when added to EBITDA on a dollar-for-dollar basis for the relevant testing period, would have caused Borrowers to be in full compliance with Section 6.5 for such testing period (each, an “Equity Cure”); provided that (a) such Equity Cure shall be in an aggregate minimum amount of $1,000,000 and in integral multiples of $500,000 thereafter, (b) such Equity Cure must be effected no later than 10 days after the delivery of the Compliance Certificate (or the date on which such Compliance Certificate was required to have been delivered to Agent) detailing the respective Financial Covenant Calculations prior to exercise of the Equity Cure Right and the pro-forma result following exercise of the Equity Cure Right, (c) no more than two (2) Equity Cures may be made during any four (4) consecutive quarters during the Term , ( d ) each such Equity Cure shall be delivered by wire transfer of immediately available funds to one of Borrower’s Depositary Accounts, as specified by Agent, for application to the outstanding principal amount of the Revolving Advances; and ( e ) notwithstanding anything to the contrary contained in the foregoing, no such rights to effectuate an Equity Cure may be exercised in any case where the potential Event of Default under Section 6.5, after taking into account any prior Equity Cure exercised in the preceding three (3) quarters (not to exceed $5,000,000) , arises from Borrowers having a Fixed Charge Coverage Ratio, measured on a rolling four quarter basis, of less than .75 to 1.0. Upon the receipt by Borrowers of each such Equity Cure, each such Financial Covenant Default shall be recalculated giving effect to the following pro forma adjustments:
(a) EBITDA shall be increased, solely for the purpose of determining the existence of an Event of Default under Section 6.5, with respect to the relevant testing period and all future testing periods that includes the last month of the testing period in respect of which such Equity Cure was made; and
(b) if, after giving effect to the foregoing recalculations, Borrowers shall then be in compliance with the requirements of Section 6.5, Borrowers shall be deemed to have satisfied the requirements of Section 6.5, with the same effect as though there had been no failure to comply therewith.
XI. LENDERS ’ RIGHTS AND REMEDIES AFTER DEFAULT.
(a) Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter, at the option of Required Lenders all Obligations shall be immediately due and payable and Required Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a petition against any Borrower in any involuntary case under any state or federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Borrower. Upon the occurrence of any Event of Default, Agent shall have the right to , and at the direction of Required Lenders shall, exercise any and all rights and remedies provided for herein, under the Other Documents, under the
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Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process. Agent may enter any of any Borrower ’ s premises or other premises without legal process and without incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a convenient place. With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by each Borrower. In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of each Borrower ’ s (a) trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods. The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof. Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefor.
(b) To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of
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the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent ’ s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).
11.2. Agent ’ s Discretion . Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent ’ s or Lenders ’ rights hereunder.
11.3. Setoff . Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower ’ s property held by Agent and such Lender to reduce the Obligations.
11.4. Rights and Remedies not Exclusive . The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.
11.5 Allocation of Payments After Event of Default . Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent ’ s discretion and shall, after acceleration of the Obligations hereunder , be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys ’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders under this Agreement and the Other Documents and any protective advances made by the Agent with respect to the Collateral under or pursuant to the terms of this Document;
SECOND, to payment of any fees owed to the Agent;
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THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys ’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of this Agreement;
FOURTH, to the payment of all of the Obligations consisting of accrued interest on account of the Swing Loans;
FIFTH:, to the payment of the outstanding principal amount of the Obligations consisting of Swing Loans;
SIXTH , to the payment of all of the remaining Obligations consisting of accrued fees and interest;
SEVENTH , to the payment of the Obligations , and to the payment of Lender Provided Interest Rate Hedge and Cash Management Liabilities (in each case, only to the extent of reserves established for the Lender Provided Interest Rate Hedge or Cash Management Liabilities against the Formula Amount , which reserves, when implemented, shall not have the effect of causing an Out-of-Formula Loan ), and payment or cash collateralization of any outstanding Letters of Credit in accordance with Section 3.2(b) hereof, and not repaid pursuant to clauses “FIRST” through “SIXTH” above.
EIGHTH, to payment or cash collateralization of Cash Management Liabilities and Hedge Liabilities, to the extent not provided for above.
NINTH , to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses “ FIRST ” through “ EIGHTH ” above;
TENTH , to all Obligations owing to any Defaulting Lender; and
ELEVENTH , to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses “ SIXTH ” , “ SEVENTH ” , “ EIGHTH ” and “NINTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “ SEVENTH ” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “ SEVENTH” and “ EIGHTH ” above in the manner provided in this Section 11.5.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
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12.1. Waiver of Notice . Each Borrower hereby waives notice of non-payment of any of the Obligations , demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.
12.2. Delay . No delay or omission on Agent ’ s or any Lender ’ s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.
12.3. Jury Waiver . EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term . This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until April 25 , 2016 (the “ Term ” ) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time upon ninety (90) days ’ prior written notice upon payment in full of the Obligations.
13.2. Termination . The termination of the Agreement shall not affect any Borrower ’ s, Agent ’ s or any Lender ’ s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrowers ’ Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each
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Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to each Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full.
14.1. Appointment . Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in the Fee Letter ), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement (including collection of the Note s ) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.
14.2. Nature of Duties . Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Borrower. The duties of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth
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herein.
14.3. Lack of Reliance on Agent and Resignation . Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of each Borrower and each Guarantor in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of each Borrower and each Guarantor. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Other Document, or of the financial condition of any Borrower or any Guarantor, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note s , the Other Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default.
Agent may resign on sixty (60) days ’ written notice to each of Lenders and Borrowing Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “ Agent ” shall mean such successor agent effective upon its appointment, and the former Agent ’ s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent ’ s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent . If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.
14.5. Reliance . Agent and Lenders shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.
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14.6. Notice of Default . Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “ notice of default ” . In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.
14.7. Indemnification . To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Revolving Commitment Percentage ), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent ’ s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).
14.8. Agent in its Individual Capacity . With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “ Lender ” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender. Agent may engage in business with any Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.
14.9. Delivery of Documents . To the extent Agent receives financial statements required under Sections 9.5, 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.
14.10. Borrowers ’ Undertaking to Agent . Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, each Borrower hereby undertakes with Agent to pay to Agent on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower ’ s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.
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14.11. No Reliance on Agent ’ s Customer Identification Program . Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender ’ s, Affiliate ’ s, participant ’ s or assignee ’ s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “ CIP Regulations ” ), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.
14.12. Other Agreements . Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender. Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.
15.1. Borrowing Agency Provisions .
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment).
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(c) All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against any Borrower, the release by Agent or any Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to the other Borrowers or any Collateral for such Borrower ’ s Obligations or the lack thereof. Each Borrower waives all suretyship defenses.
(d) Without limiting the generality of subsection (c) above, the maximum aggregate amount for which any Borrower shall be liable hereunder shall not exceed the maximum amount for which such Borrower can be liable without rendering this Agreement or any Other Document, as it relates to such Borrower, subject to avoidance under applicable requirements of law relating to fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of title 11 of the United States Code or any applicable provisions of comparable requirements of law) (collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of this Agreement for purposes of Fraudulent Transfer Laws shall take into account the right of contribution established in subsection (e) below and, for purposes of such analysis, give effect to any discharge of intercompany debt as a result of any payment made hereunder.
(e) To the extent that any Borrower shall be required hereunder to pay any portion of any Obligation exceeding the greater of (a) the amount of the value actually received by such Borrower and its Subsidiaries from the Loans and other Obligations and (b) the amount such Borrower would otherwise have paid if such Borrower had paid the aggregate amount of the Obligations (excluding the amount thereof repaid by a Borrower that received the benefit of the funds advanced that constituted Obligations) in the same proportion as such Borrower’s net worth on the date enforcement is sought hereunder bears to the aggregate net worth of all the Borrowers on such date, then such Borrower shall be reimbursed by such other Borrowers for the amount of such excess, pro rata, based on the respective net worth of such other Borrowers on such date.
15.2. Waiver of Subrogation . Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligations hereunder, or against or with respect to the other Borrowers ’ property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination of this Agreement and repayment in full of the Obligations.
16.1. Governing Law . This Agreement and each Other Document (unless and except to the extent expressly provided otherwise in any such Other Document), and all matters relating hereto or thereto or arising herefrom or therefrom (whether arising under contract law, tort law or
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otherwise) shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York . Any judicial proceeding brought against any Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of New York , United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified or registered mail (return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America, or, at the Agent’s option, by service upon Borrowing Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within the State of New York . Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Borrower in the courts of any other jurisdiction. Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower waives the right to remove any judicial proceeding brought against such Borrower in any state court to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of New York, State of New York .
(a) This Agreement and the documents executed concurrently herewith contain the entire understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by each Borrower ’ s, Agent ’ s and each Lender ’ s respective officers. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and Borrowers may, subject to the provisions of this Section 16.2(b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental
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agreement shall:
(i) increase the Revolving Commitment Percentage, or the maximum dollar amount of the Revolving Commitment Amount of any Lender without the consent of such Lender directly affected thereby;
(ii) whether or not any Advances are outstanding, extend the Term or the time for payment of principal or interest of any Advance (excluding the due date of any mandatory prepayment of an Advance), or any fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Advances or reduce any fee payable to any Lender, without the consent of each Lender directly affected thereby (except that Required Lenders may elect to waive or rescind any imposition of the Default Rate under Section 3.1 or of default rates of Letter of Credit fees under Section 3.2 (unless imposed by Agent));
(iii) increase the Maximum Loan Amount (except in accordance with Section 2.24) without the consent of all Lenders;
(iv) alter the definition of the term Required Lenders or alter, amend or modify this Section 16.2(b) without the consent of all Lenders;
(v) alter, amend or modify the provisions of Section 11.5 without the consent of all Lenders;
(vi) release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of $1,000,000 without the consent of all Lenders;
(vii) change the rights and duties of Agent without the consent of all Lenders;
(viii) Subject to the provisions set forth below permit any Revolving Advance to be made if after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the Formula Amount for more than thirty ( 3 0) consecutive Business Days in any ninety (90) consecutive day period or exceed the lesser of (1) one hundred and five percent (10 5 %) of the Formula Amount and (2) the Maximum Loan Amount without the consent of all Lenders ;
(ix) increase the Advance Rates above the Advance Rates in effect on the Closing Date, increase the sublimits set forth in the Formula Amount or alter the definitions of Eligible Receivables, Eligible Off-load Receivables, Eligible Inventory, Eligible In-Transit Inventory, Eligible On-Track Inventory or Eligible In-Tank Inventory in a manner that would increase the Formula Amount without the consent of Supermajority Lenders ;
(x) release any Borrower or Guarantor (except as permitted herein) without the consent of all Lenders ; or
(xi) amend or modify the pro rata treatment of Lenders as set forth in Section 2.20 hereof without the consent of all Lenders .
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(c) Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.
(d) If any action to be taken by Agent or Lenders hereunder requires unanimous consent and a Lender fails to give its consent, then provided that the Required Lenders have provided such consent, authorization or agreement, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by the Agent (the “ Designated Lender ” ), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers. In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender ’ s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.
(e) Notwithstanding (i) the existence of a Default or an Event of Default, (ii) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or the commitments of Lenders to make Revolving Advances hereunder have been terminated for any reason, or (iii) any other contrary provision of this Agreement, Agent may at its discretion and without the consent of any Lender, voluntarily permit the outstanding Revolving Advances at any time to exceed the Formula Amount by up to five percent ( 5 %) of the Formula Amount for up to thirty ( 3 0) consecutive Business Days in any ninety (90) consecutive day period so long as the aggregate Revolving Advances (including Out-of-Formula Loans) do not exceed the lesser of (1) one hundred and five percent (105%) of the Formula Amount and (2) the Maximum Loan Amount minus the Maximum Undrawn Amount of Letters of Credit minus the outstanding balance of Swing Loan s (the “Out-of-Formula Loans”) . If Agent is willing in its sole and absolute discretion to permit such Out-of-Formula Loans, the Lenders holding the Revolving Commitments shall be obligated to fund such Out-of-Formula Loans in accordance with their respective Revolving Commitment Percentages, and such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Defau lt Rate for Revolving Advances co nsisting of Domestic Rate Loans ; provided that, if Agent does permit Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a) nor shall any Lender be obligated to fund Revolving Advances in excess of its Revolving Commitment Amount. For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be either “Eligible Receivables” , “ Eligible Off-load Receivables ”, “Eligible Inventory”, “ Eligible In-Transit Inventory ” , “ Eligible On-Track Inventory ” or “ Eligible In-Tank Inventory ”, as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collatera l. In the event
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Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than five percent ( 5 %), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess. Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence. To the extent any Out-of-Formula Loans are not actually funded by the other Lenders as provided for in this Section 16.2(e), Agent may elect in its discretion to fund such Out-of-Formula Loans and any such Out-of-Formula Loans so funded by Agent shall be deemed to be Revolving Advances made by and owing to Agent, and Agent shall be entitled to all rights (including accrual of interest) and remedies of a Lender holding a Revolving Commitment under this Agreement and the Other Documents with respect to such Revolving Advances.
(f) In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders, at any time in the Agent’s sole discretion, regardless of (i) the existence of a Default or an Event of Default or termination of the commitments of Lenders to make Revolving Advances hereunder for any reason, or (ii) any other contrary provision of this Agreement, to make Revolving Advances to Borrowers on behalf of the Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreemen t (the “Protective Advances”); provided, that the Protective Advances made hereunder shall not exceed five percent (5 %) of the Maximum Loan Amount and provided further that at any time after giving effect to any such Protective Advances, the outst anding Revolving Advances , Swing Loans a nd Maximum Undrawn Amount of al l outstanding Letters of Credit do not exceed the Maximum Loan Amount . The Lenders holding the Revolving Commitments shall be obligated to fund such Protective Advances and effect a settlement with Agent therefore upon demand of Agent in accordance with their respective Revolving Commitment Percentages. To the extent any Protective Advances are not actually funded by the other Lenders as provided for in this Section 16.2(f), any such Protective Advances funded by Agent shall be deemed to be Revolving Advances made by and owing to Agent, and Agent shall be entitled to all rights (including accrual of interest) and remedies of a Lender holding a Revolving Commitment under this Agreement and the Other Documents with respect to such Revolving Advances.
16.3. Successors and Assigns; Participations; New Lenders .
(a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each Lender, all future holders of the Obligations and their respective successors and assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other Persons (each such transferee or purchaser of a participating interest, a “ Participant ” ) ; provided, however, that (i) in no case shall a P articipant have the right
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to enforce any of the terms of this Agreement or any Other Document, and (ii) the consent of such P articipant shall not be required (either directly, as a restraint on such Lender’s ability to consent hereunder or otherwise) to exercise or refrain from exercising any powers or rights such Lender may have under or in respect of this Agreement or any Other Documents (including the right to enforce or direct enforcement of the Obligations) or for any amendments, waivers or consents with respect to this Agreement or any Other Document, except for those described in Section 16.2(b)(i), (ii) and (iv) . Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant ’ s interest in the Advances.
(c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed (and which shall not be required for sales, assignments or transfers to Affiliates of any Lender) , may sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to one or more additional Persons (subject to Section 16.3(g) hereof) and one or more additional Persons may commit to make Advances hereunder (each a “ Purchasing Lender ” ), in minimum amounts of not less than $ 5 ,000,000 , pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording ; provided, Purchasing Lenders shall not include a ny Affiliate of any Borrower, Guarantor , any Defaulting Lender or natural Person . Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Revolving Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Revolving Commitment Percentage s arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Revolving Commitment Percentage s arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
(d) Any Lender, with the consent of Agent which shall not be unreasonably
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withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “ Purchasing CLO ” and together with each Participant and Purchasing Lender, each a “ Transferee ” and collectively the “ Transferees ” ), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned ( “ Modified Commitment Transfer Supplement ” ), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose. Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing CLO. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
(e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “ Register ” ) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.
(f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender ’ s possession concerning such Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or in connection with such Lender ’ s credit evaluation of such Borrower.
(g) Notwithstanding anything to the contrary contained in this Agreement, any Lender may at any time and from time to time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto .
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16.4. Application of Payments . Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower ’ s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.
16.5. Indemnity . Each Borrower shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the willful misconduct of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment). Without limiting the generality of the foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) asserted against or incurred by any of the indemnitees described above in this Section 16.5 by any Person under any Environmental Laws or similar laws by reason of any Borrower ’ s or any other Person ’ s failure to comply with laws applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous Waste, or other Toxic Substances. Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless from and against all liability in connection therewith.
16.6. Notice . Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 16.6 only, a “ Notice ” ) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “ e-mail ” ) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “ Website Posting ” ) if Notice of such Website Posting (including the information necessary to access such site) has previously
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been delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with this Section 16.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 16.6 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;
(c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the applicable party ’ s facsimile machine ’ s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;
(e) In the case of electronic transmission, when actually received;
(f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 16.6; and
(g) If given by any other means (including by overnight courier), when actually received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.
(A) If to Agent or PNC at:
PNC Bank, National Association
200 South
Wacker
Drive, Suite 600
Chicago, Illinois 60606
Attention: Portfolio Manager
Telephone: 312-454-2920
Facsimile: 312-454-2919
with a copy to:
with a copy to:
PNC Bank, National Association
PNC Agency Services
PNC Firstside Center
108
500 First Avenue, 4th Floor
Pittsburgh, Pennsylvania 15219
Attention: Lisa Pierce
Telephone: 412 - 762-6442
Facsimile: 412 - 762-8672
With an additional copy to:
Blank Rome LLP
One Logan Square
130 N. 18th Street
Philadelphia, Pennsylvania 19103
Att ention : Lawrence F. Flick, II, Esquire
Telephone: 215-569-5556
Facsimile: 215-832-5556
(B) If to a Lender other than Agent, as specified on the signature pages hereof
(C) If to Borrowing Agent or any Borrower:
Green Plains Trade Group LLC
450 Regency Parkway, Suite 400
Omaha, Nebraska 68114
Attention: Patrich Simpkins Executive Vice President
Telephone: 402-884-8700
Facsimile: 402-884-8776
with a copy to:
c/o Green Plains Trade Group LLC
450 Regency Parkway, Suite 400
Omaha, Nebraska 68114
Attn: Michelle S. Mapes, Esquire
Telephone: 402-315-1629
Facsimile: 402-884-8776
16.7. Survival . The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.
16.8. Severability . If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.
16.9. Expenses . All costs and expenses including reasonable attorneys ’ fees (including
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the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement or any consents or waivers hereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent ’ s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent ’ s or any Lender ’ s rights hereunder and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent ’ s or any Lender ’ s transactions with any Borrower , any Guarantor or Holdings or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement and all related agreements, documents and instruments, may be charged to Borrowers ’ Account and shall be part of the Obligations.
16.10. Injunctive Relief . Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.
16.11. Consequential Damages . Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Borrower or any Guarantor (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.
16.12. Captions . The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.
16.13. Counterparts; Facsimile Signatures . This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.
16.14. Construction . The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.
16.15. Confidentiality; Sharing Information . Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent ’ s, such Lender ’ s and such Transferee ’ s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such
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confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 16.15 as if it were a Lender hereunder. Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.
16.16. Publicity . Each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate.
16.17. Certifications From Banks and Participants; USA PATRIOT Act .
(a) Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “ shell ” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.
(b) Each Lender that is subject to the Patriot Act hereby notifies the Borrowers that t he USA PATRIOT Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an "account" with such financial institution. Consequently, Lender may from time to time request, and Borrower shall provide to Lender, Borrower's name, address, tax identification number
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and/or such other identifying information as shall be necessary for Lender to comply with the USA PATRIOT Act and any other Anti-Terrorism Law.
16.18. Anti-Money Laundering/International Trade Law Compliance . Each Borrower represents and warrants to the Agent, as of the date of this Agreement, the date of each Advance, the date of any renewal, extension or modification of this Agreement, and at all times until this Agreement has been terminated and all Obligations have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (b) the Advances will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (c) the funds used to repay the Obligations are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any laws of the United States, including but not limited to any Anti-Terrorism Laws. The Borrowers covenant and agree that they shall immediately notify the Agent in writing upon the occurrence of a Reportable Compliance Event.
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Each of the parties has signed this Agreement as of the day and year first above written.
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BORROWER: |
GREEN PLAINS TRADE GROUP LLC |
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By: _ /s/ Jerry L. Peters _________ Name: Jerry L. Peters Title: Chief Financial Officer |
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
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AGENT: |
PNC BANK, NATIONAL ASSOCIATION , a s Agent By: _ /s/ James Simpson ___________ Name: James Simpson Title: Vice President
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[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
S- 2
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LENDER: |
PNC BANK, NATIONAL ASSOCIATION , as Lender
By: _ /s/ James Simpson _________ Name: James Simpson Title: Senior Vice President
Revolving Commitment Percentage : 29.923076923 %
Revolving Commitment Amount $ 35,000,000 |
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
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LENDER: |
BANK OF AMERICA , as a Lender
By: _ /s/ Brad H. Breidenbach _________ Name: Brad H. Breidenbach Title: Senior Vice President
Revolving Commitment Percentage : 26.923076923 %
Revolving Commitment Amount : $ 35,000,000
Address for notices:
Bank of America 135 S. LaSalle Street Chicago, IL 60603 Attention: Charles F airchild , Vice President Tel: 312-904-7153 Fax: 312-904-7190
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[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
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LENDER: CITIBANK, N.A . , as a Lender
By: _ /s/ Miles D. McManus ______
Name: Miles D. McManus
Title: Vice President
Revolving Commitment Percentage : 19.230769231 %
Revolvi ng Commitment Amount: $25,0 00,000
Address for Notice:
Citibank, N.A.
1 Court Square, 18 th Floor
Long Island City, NY 11101
Attention: Richard Levenson
Tel: 718-248-3699
Fax: 347-535-0369
With a copy to:
Citibank, N.A.
1 Court Square, 18 th Floor
Long Island City, NY 11101
Attention: Jeff Grobarcik,
Tel: 718-248-8483
Fax: 718-248-2676
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
S- 5
LENDER: BMO HARRIS BANK N.A. , as a Lender
By: _ /s/ Craig Thistlethwaite ______
Name: Craig Thistlethwaite
Title: Director
Revolving Commitment Percentage: 15.384615385 %
Revolving Commitment Amount: $ 20,0 00,000
Address for Notice:
BMO Harris Bank N.A.
111 West Monroe S treet Floor 20 East
Chicago, IL 60603
Attention: Anjanette Winners
Telephone: 312-461-2243
Facsimile: 312-765-1641
With a copy to:
B MO Harris Bank N.A.
111 West Monroe Street Floor 20 East
Chicago, IL 60603
Attention: Craig Thistlewaite
Telephone: 312-461-2171
Facsimile: 312-765-1641
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
S- 6
LENDER: ALOSTAR BANK OF COMMERCE , as a
Lender
By: _ /s/ Tim Velzy ___________
Name: Tim Velzy
Title: Vice President
Revolving Commitment Percentage : 11.538461538 %
Revolvi ng Commitment Amount: $ 15,0 00,000
A ddress for Notice:
Alostar Bank of Commerce
3630 Peachtree Road, NE, Suite 1050
Atlanta, GA 30326
Attention: Tim Velzy
Tel: 404-365-7121
Fax: 404-365-7112
With a copy to:
Alostar Bank of Commerce
3630 Peachtree Road, NE, Suite 1050
Atlanta, GA 30326
Attention: Susan Hall
Tel: 404-365-7110
Fax: 404-365-7112
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT]
S- 7
SECOND AMEN D ED AND RESTATED REVOLVING CREDIT NOTE
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$ 35 , 0 00,000 |
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April 26 , 2013 |
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FOR VALUE RECEIVED , Green Plains Trade Group LLC , a Delaware limited liability company (“ G TRADE ”) , and each Person join ed as a Borrower from time to time (each a “Borrower”, and collectively, the “ Borrowers ”), hereby promise to pay, jointly and severally, to the order of PNC Bank, National Association (“ Lender ”), at the office of Agent (as defin ed below) at the address set forth in the Loan Agreement (as defin ed below) or at such other place as Agent may from time to time designate to any Borrower in writing: (i) at the end of the Term or (ii) earlier as provid ed in the Loan Agreement, the lesser of the principal sum of Thirty Five Million Dollars ($ 35 , 0 00,000) or such lesser sum which then represents such Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extend ed to any Borrower by Lender pursuant to Section 2.1(a) of the Loan Agreement, in lawful money of the Unit ed States of America in imm ed iately available funds, together with interest on the principal hereunder remaining unpaid form time to time, at the rate or rates from time to time in effect under the Loan Agreement.
THIS SECOND AMEN D ED AND RESTATED REVOLVING CREDIT NOTE is execut ed and deliver ed under and pursuant to the terms of that certain Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof (as the same may be amend ed , restat ed , supplement ed or otherwise modifi ed from time to time, the “ Loan Agreement ” ), by and among the Borrowers, the various financial institutions nam ed therein or which herea fter become a party thereto as L enders and PNC Bank, National Association , in its capacity as agent for Lenders (in such capacity, “ Agent ” ) and in its capacity as a Lender. Capitaliz ed terms us ed herein and not otherwise defin ed herein shall have the meanings provid ed in the Loan Agreement.
Each Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Loan Agreement.
This Second Amended and Restated Revolving Cr ed it Note is one of the Notes referr ed to in the Loan Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specifi ed . This Second Amended and Restated Revolving Credit Note amends and restates, but does not extinguish the obligations evidenced by , that certain Amended and Restated Revolving Credit Note executed by GTRADE in favor of PNC in the original principal amount of $ 4 0,000,000 dated January 21, 2011 .
THIS SECOND AME N DED AND RESTATED REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK .
IN WITNESS WHEREOF, the undersigned has executed this Note the day and year first written above intending to be legally bound hereby.
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GREEN PLAINS TRADE GROUP LLC |
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By: |
_ /s/ Patrich Simpkins _____________ |
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Name: |
Patrich Simpkins |
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Title: |
Executive Vice President, Finance |
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and Treasurer |
REVOLVING CREDIT NOTE
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$ 25 , 0 00,000 |
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April 26 , 2013 |
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FOR VALUE RECEIVED , Green Plains Trade Group LLC , a Delaware limited liability company (“ G TRADE ”) , and each Person join ed as a Borrower from time to time (each a “ Borrower ”, and collectively, the “ Borrowers ”), hereby promise to pay, jointly and severally, to the order of Citibank , N .A. (“ Lender ”), at the office of Agent (as defin ed below) at the address set forth in the Loan Agreement (as defin ed below) or at such other place as Agent may from time to time designate to any Borrower in writing: (i) at the end of the Term or (ii) earlier as provid ed in the Loan Agreement, the lesser of the principal sum of Twenty Five Million Dollars ($ 25 , 0 00,000) or such lesser sum which then represents such Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extend ed to any Borrower by Lender pursuant to Section 2.1(a) of the Loan Agreement, in lawful money of the Unit ed States of America in imm ed iately available funds, together with interest on the principal hereunder remaining unpaid form time to time, at the rate or rates from time to time in effect under the Loan Agreement.
THIS REVOLVING CREDIT NOTE is execut ed and deliver ed under and pursuant to the terms of that certain Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof (as the same may be amend ed , restat ed , supplement ed or otherwise modifi ed from time to time, the “ Loan Agreement ” ), by and among the Borrowers, the various financial institutions nam ed therein or which hereafter become a party thereto as lenders and PNC Bank , National Association in its capacity as agent for Lenders (in such capacity, “ Agent ” ) and in its capacity as a Lender. Capitaliz ed terms us ed herein and not otherwise defin ed herein shall have the meanings provid ed in the Loan Agreement.
Each Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Loan Agreement.
This Revolving Cr ed it Note is one of the Notes referr ed to in the Loan Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specifi ed .
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK .
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IN WITNESS WHEREOF, the undersigned has executed this Note the day and year first written above intending to be legally bound hereby. |
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GREEN PLAINS TRADE GROUP LLC |
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By: |
_ /s/ Patrich Simpkins _____________ |
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Name: |
Patrich Simpkins |
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Title: |
Executive Vice President, Finance |
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and Treasurer |
REVOLVING CREDIT NOTE
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$ 2 0 , 0 00,000 |
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April 26 , 2013 |
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FOR VALUE RECEIVED , Green Plains Trade Group LLC , a Delaware limited liability company (“ G TRADE ”) , and each Person join ed as a Borrower from time to time (each a “ Borrower ”, and collectively, the “ Borrowers ”), hereby promise to pay, jointly and severally, to the order of BMO Harris Bank N .A. (“ Lender ”), at the office of Agent (as defin ed below) at the address set forth in the Loan Agreement (as defin ed below) or at such other place as Agent may from time to time designate to any Borrower in writing: (i) at the end of the Term or (ii) earlier as provid ed in the Loan Agreement, the lesser of the principal sum of Twenty Million Dollars ($ 2 0 , 0 00,000) or such lesser sum which then represents such Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extend ed to any Borrower by Lender pursuant to Section 2.1(a) of the Loan Agreement, in lawful money of the Unit ed States of America in imm ed iately available funds, together with interest on the principal hereunder remaining unpaid form time to time, at the rate or rates from time to time in effect under the Loan Agreement.
THIS REVOLVING CREDIT NOTE is execut ed and deliver ed under and pursuant to the terms of that certain Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof (as the same may be amend ed , restat ed , supplement ed or otherwise modifi ed from time to time, the “ Loan Agreement ” ), by and among the Borrowers, the various financial institutions nam ed therein or which hereafter become a party thereto as lenders and PNC Bank , National Association in its capacity as agent for Lenders (in such capacity, “ Agent ” ) and in its capacity as a Lender. Capitaliz ed terms us ed herein and not otherwise defin ed herein shall have the meanings provid ed in the Loan Agreement.
Each Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Loan Agreement.
This Revolving Cr ed it Note is one of the Notes referr ed to in the Loan Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specifi ed .
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK .
IN WITNESS WHEREOF, the undersigned has executed this Note the day and year first written above intending to be legally bound hereby.
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GREEN PLAINS TRADE GROUP LLC |
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By: |
_ /s/ Patrich Simpkins _____________ |
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Name: |
Patrich Simpkins |
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Title: |
Executive Vice President, Finance |
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and Treasurer |
REVOLVING CREDIT NOTE
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$ 15 , 0 00,000 |
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April 26 , 2013 |
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FOR VALUE RECEIVED , Green Plains Trade Group LLC , a Delaware limited liability company (“ G TRADE ”) , and each Person join ed as a Borrower from time to time (each a “ Borrower ”, and collectively, the “ Borrowers ”), hereby promise to pay, jointly and severally, to the order of Alostar Bank of C ommerce (“ Lender ”), at the office of Agent (as defin ed below) at the address set forth in the Loan Agreement (as defin ed below) or at such other place as Agent may from time to time designate to any Borrower in writing: (i) at the end of the Term or (ii) earlier as provid ed in the Loan Agreement, the lesser of the principal sum of Fifteen Million Dollars ($ 15 , 0 00,000) or such lesser sum which then represents such Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extend ed to any Borrower by Lender pursuant to Section 2.1(a) of the Loan Agreement, in lawful money of the Unit ed States of America in imm ed iately available funds, together with interest on the principal hereunder remaining unpaid form time to time, at the rate or rates from time to time in effect under the Loan Agreement.
THIS REVOLVING CREDIT NOTE is execut ed and deliver ed under and pursuant to the terms of that certain Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof (as the same may be amend ed , restat ed , supplement ed or otherwise modifi ed from time to time, the “ Loan Agreement ” ), by and among the Borrowers, the various financial institutions nam ed therein or which hereafter become a party thereto as lenders and PNC Bank , National Association in its capacity as agent for Lenders (in such capacity, “ Agent ” ) and in its capacity as a Lender. Capitaliz ed terms us ed herein and not otherwise defin ed herein shall have the meanings provid ed in the Loan Agreement.
Each Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever as further set forth in the Loan Agreement.
This Revolving Cr ed it Note is one of the Notes referr ed to in the Loan Agreement, which among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayments of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain terms and conditions therein specifi ed .
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK .
IN WITNESS WHEREOF, the undersigned has executed this Note the day and year first written above intending to be legally bound hereby.
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GREEN PLAINS TRADE GROUP LLC |
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By: |
_ /s/ Patrich Simpkins _____________ |
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Name: |
Patrich Simpkins |
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Title: |
Executive Vice President, Finance |
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and Treasurer |
REVOLVING CREDIT NOTE
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$ 3 5 , 0 00,000 |
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April 26 , 2013 |
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FOR VALUE RECEIVED , Green Plains Trade Group LLC , a Delaware limited liability company (“ G TRADE ”) , and each Person join ed as a Borrower from time to time (each a “ Borrower ”, and collectively, the “ Borrowers ”), hereby promise to pay, jointly and severally, to the order of Bank of America (“ Lender ”), at the office of Agent (as defin ed below) at the address set forth in the Loan Agreement (as defin ed below) or at such other place as Agent may from time to time designate to any Borrower in writing: (i) at the end of the Term or (ii) earlier as provid ed in the Loan Agreement, the lesser of the principal sum of Thirty Five Million Dollars ($ 35 , 0 00,000) or such lesser sum which then represents such Lender’s Revolving Commitment Percentage of the aggregate unpaid principal amount of all Revolving Advances made or extend ed to any Borrower by Lender pursuant to Section 2.1(a) of the Loan Agreement, in lawful money of the Unit ed States of America in imm ed iately available funds, together with interest on the principal hereunder remaining unpaid form time to time, at the rate or rates from time to time in effect under the Loan Agreement.
THIS REVOLVING CREDIT NOTE is pursuant to the terms of that certain Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof (as the same may be amend ed , restat ed , supplement ed or otherwise modifi ed from time to time, the “ Loan Agreement ” ), by and among the Borrowers, the various financial institutions nam ed therein or which hereafter become a party thereto as lenders and PNC Bank , National Association in its capacity as agent for Lenders (in such capacity, “ Agent ” ) and in its capacity as a Lender. Capitaliz ed terms us ed herein and not otherwise defin ed herein shall have the meanings provid ed in the Loan Agreement.
[Bank of America chose not to execute a Revolving Credit Note in reliance on the execut ed Second Amended and Restated Revolving Cred it and Security Agreement, dat ed as of the date hereof . ]
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) AND SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002
I, Todd A. Becker, certify that:
1. I have reviewed this Quarterly Report on Form 10- Q of Green Plains Renewable Energy, Inc. ;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a ‑15(e) and 15d ‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: May 2, 2013 |
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/s/ Todd A. Becker |
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Todd A. Becker |
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President and Chief Executive Officer (Principal Executive Officer) |
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jerry L. Peters , certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Green Plains Renewable Energy, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a ‑15(e) and 15d ‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: May 2, 2013 |
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/s/ Jerry L. Peters |
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Jerry L. Peters |
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Chief Financial Officer (Principal Financial Officer) |
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES ‑OXLEY ACT OF 2002
In connection with the Quarterly Report of G reen Plains Renewable Energy, Inc. (the “Company”) on Form 10- Q for the fiscal quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd A. Becker , President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge :
1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company .
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Date: May 2, 2013 |
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/s/ Todd A. Becker |
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Todd A. Becker |
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President and Chief Executive Officer |
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES ‑OXLEY ACT OF 2002
In connection with the Quarterly Report of G reen Plains Renewable Energy, Inc. (the “Company”) on Form 10- Q for the fiscal quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jerry L. Peters , Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge :
1) The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company .
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Date: May 2, 2013 |
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/s/ Jerry L. Peters |
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Jerry L. Peters |
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Chief Financial Office r |