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8-K - FORM 8K - NEDAK ETHANOL, LLC | form8k_010510.htm |
Exhibit
10.1
FORBEARANCE
AGREEMENT
THIS FORBEARANCE AGREEMENT
(the “Agreement”) is entered into by and
between NEDAK Ethanol, LLC, a Nebraska limited liability company, (the “Borrower”),
and Arbor Bank, a Nebraska banking corporation (the “Lead
Lender”) with the intent and agreement that this Agreement shall be
effective as of December 31, 2009 (the “Effective
Date”). Lead Lender and Borrower shall each individually be a
“Party” and collectively, the “Parties”.
RECITALS
A. Reference
is made to that certain Loan Agreement dated as of June 19, 2007 (the
“Loan
Agreement”), by and among Borrower and Lead Lender, and the Promissory
note issued thereunder by Borrower and made payable to Lead Lender dated as of
June 19, 2007 in the principal sum of $6,864,000 (the “Borrower’s
Note”) under which Lead Lender and certain other lenders has provided tax
increment financing in connection with the development by Borrower of a 44
million gallon ethanol plant in the City of Atkinson (the “Facility”). Unless
otherwise defined, terms in this Agreement with an initial capital will have the
meaning given such term in the Loan Agreement.
B. Due
to certain requirements and covenants of the Borrower under the Borrower’s
Senior Credit Facility, Borrower has been prohibited from completing the
transfer of funds to the Debt Service Reserve Fund sufficient to maintain
balances required by the Loan Agreement. The Borrower is presently
negotiating with Borrower’s Senior Lender to make certain revisions to the
Senior Credit Facility, and also to obtain a USDA Business and Industry Guaranty
(the “B&I Guaranty”) of a new working capital facility to be provided by the
Senior Creditor to support operations of the Facility.
C. Lead
Lender has requested that Borrower grant to Lead Lender, as security for the
Borrower’s Note, a security interest in certain real property related to the
Facility (such security interest to be subordinate to the interest granted to
the Senior Lenders in connection with the Senior Credit
Facility.) Borrower and Lead Lender wish to cooperate in seeking the
required consent of the Senior Lender for grant of such security interest and
other amendments to the Loan Agreement.
NOW,
THEREFORE, in consideration of the foregoing, and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower and Lead Lender agree as follows:
1. Pre-condition to
Agreement. As a pre-condition to Lead Lender entering into
this Agreement, Borrower has agreed to authorize a transfer from the Debt
Service Reserve Fund to satisfy the principal payment on the Borrower's Note due
December 31, 2009.
2. Consent. Lead
Lender acknowledges that Senior Lender consent is required for proposed changes
to the Loan Agreement and the grant of any security interest in the
Facility. Borrower and Lead Lender agree to cooperatively seek the
consent of Senior Lender to allow the amendments to the Loan Agreements listed
on Exhibit A hereto. Such amendments shall be upon mutually agreeable
terms and subject to reasonable conditions set by the parties and the Senior
Lender.
3. Standstill. In
return for Borrower satisfying the payment described in Section 1 hereto and
cooperating on revisions to , and so long as there is no other breach under the
Loan Documents, other than Borrower’s inability to fulfill its obligations under
Section 8 of the Loan Agreement and Section 4 of the Borrower’s Note,
Lead Lender hereby agrees to forbear from exercising its rights and remedies
under the Loan Document for a period beginning as of the Effective Date of this
Agreement and ending the earlier of (a) March 31, 2010 and (b) 30 days
following the approval of the B&I Guaranty (“Standstill
Period”).
4. Impact of
Forbearance. Lead Lender’s agreement to forbear under this
Agreement shall not constitute an extension of the maturity date under the Loan
Documents, a waiver of any defaults under the Loan Documents and except as
specifically agreed to under the terms of this Agreement and for the term of
this Agreement, Lead Lender shall at all times retain all rights and remedies
available to it under the Loan Documents and applicable law. Borrower
agrees that the Loan shall remain due and payable subject to the terms of this
Agreement. Lead Lender’s agreement to forbear from exercising its
remedies under the Loan Documents shall terminate upon the expiration of the
Standstill Period under this Agreement.
5. Reporting
Requirements. Borrower agrees to provide Lead Lender
with all statements, reports, and certificates that Borrower is required to
provide to the Senior Lender beginning on the Effective Date and lasting though
the Standstill Period. Moreover, Borrower shall deliver the required
material to Lead Lender simultaneously with the Senior Lender.
6. Default. Beginning
on the Effective Date and lasting though the Standstill Period, if any event
occurs that causes a default under the Senior Creditor Facility (and is not
cured in accordance with the Senior Creditor Facility), then Borrower will be
deemed to have breached the Agreement. Borrower agrees to immediately
notify Lead Lender of any default under the Senior Credit Facility.
7. Termination. If
Borrower liquidates, files for bankruptcy, or winds down at any point beginning
on the Effective Date lasting through the Standstill Period, then Borrower shall
be deemed to have breached the Agreement.
8. Effect of
Breach. In the event Borrower breaches the Agreement, the
Agreement shall terminate in all respects as of the date of such breach and Lead
Lender shall thereafter have no further duties or obligations with respect to
this Agreement.
9. No Other Waivers of
Amendments. Except as provided herein, all of the terms,
conditions, and provisions of the Loan Documents remain in full force and effect
without modification and Borrower shall comply therewith. This
Agreement shall not be deemed to constitute a waiver or a cure of any events or
default under the Loan Documents.
10. Good Faith Consideration of
Additional Amendments. Notwithstanding Section 9 hereto,
the Parties agree to negotiate in good faith such additional amendments as
necessary to maintain the viability of the Borrower’s operation of the
Facility.
11. Multiple Counterparts and
Facsimile Execution. This Agreement may be executed in
multiple counterparts originals, each of which shall constitute one and the same
document and shall be deemed an original. This Agreement may be
executed by facsimile signatures which shall be deemed to have the same force
and effect as an original signature.
12. Authority. By
executing this Agreement, each of the undersigned represents that: (a) the
person executing this Agreement on its behalf is duly authorized and empowered
to execute and deliver this Agreement; and (b) this Agreement constitutes the
legal, valid and binding obligation of the parties hereto, enforceable against
such parties in accordance with its terms.
13. Notices. Any
and all notices, requests, or other communications contemplated by or with
respect to this Agreement shall be made in accordance with the Loan
Documents.
14. Governing
Law. This Agreement shall be governed as set forth in the Loan
Documents.
15. Successors and
Assigns. This Agreement is binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns.
[Signature Page
Follows.]
IN
WITNESS WHEREOF, the parties hereto execute this Agreement this 31st day of
December, 2009
LEAD
LENDER:
ARBOR
BANK
By: /s/ Jon R.
Wilson
Name:
Jon R.
Wilson
Title: Market
President
BORROWER:
NEDAK
ETHANOL, LLC
By: /s/ Jerome
Fagerland
Name: Jerome
Fagerland
Title: President
and General Manager
S-1
Exhibit
A
to
Forbearance
Agreement
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1)
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NEDAK
Deed of Trust in the amount of $2,400,000 to be executed in favor of TIF
lenders after B&I Guaranty is received and related loan funded or in
the event the B&I Guaranty is
denied.
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2)
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NEDAK
grants a security interest in all reserve funds established under the Loan
Documents.
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3)
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Loan
documents will be amended to:
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a.
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Reduce
the interest rate from 9.5% to 6.0% on Borrower's Note beginning on
January 1, 2010 and continuing three (3) years at which point the 9.5%
interest rate will be reinstated. Provided however, in the
event of a default by the Borrower, the interest rate reduction shall
immediately be terminated.
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b.
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Reduce
Debt Service Reserve to an amount equal to 12 months of principal
payment.
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c.
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Debt
Service Reserve funding to be contingent on previous year
profitability. Amount necessary to make one payment to be
funded in January of each 2011 and
2012.
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d.
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Require
the financial covenants and ratios to be commensurate with the financial
covenants and ratios to be agreed upon with the Senior
Lender.
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A-1