Exhibit 10.3
ASSIGNMENT OF ETHANOL MERCHANDISING AGREEMENT
This Assignment of Ethanol Merchandising Agreement is made as of the 2nd
day of May, 2007, by and between SOUTHWEST IOWA RENEWABLE ENERGY, LLC, an Iowa
limited liability company (the "Company") and AGSTAR FINANCIAL SERVICES, PCA,
and its successors and assigns, as Agent (in such capacity, the "Agent") for the
benefit of the Banks (the "Banks") in connection with that certain Credit
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement").
A. Company and Banks have entered into a Credit Agreement, dated on or
about May 2, 2007, pursuant to which Banks will extend to Company various credit
facilities for the purposes of acquiring, constructing, equipping, furnishing
and operating an ethanol production facility to be located in Pottawattamie
County, Iowa.
B. As a condition to extending the various credit facilities to Company,
the Banks have required the execution of this Assignment by Company.
Accordingly, in consideration of the foregoing, the parties agree as follows:
1. The Company does hereby grant, assign, transfer and set over unto the
Agent all of its right, title and interest in and to that certain Ethanol
Merchandising Agreement dated November 1, 2006 (the "Contract"), by and between
the Company and Lansing Ethanol Services, LLC, a Delaware limited liability
company ("Marketer"), providing for the purchase of ethanol by Marketer from
Company, a true and correct copy of which is attached hereto as Exhibit A.
2. The Company agrees that the Agent and the Banks do not assume any of the
obligations or duties of the Company under and with respect to the Contract
unless and until the Agent shall have given written notice to Marketer that it
has affirmatively exercised its right to perform under the Contract following
the occurrence of an Event of Default under the Credit Agreement. In the event
that the Agent does not personally undertake to perform under the Contract, for
the benefit of the Banks, the Agent and the Banks shall have no liability
whatsoever for the performance of any of such obligations or duties. For the
purpose of performing under the Contract, the Agent may for the benefit of the
Banks, in its absolute discretion, reassign its right, title and interest in the
Contract, upon notice to Marketer but without any requirement of the Company's
consent.
3. The Company represents and warrants there have been no prior assignments
of the Contract, that the Contract is a valid and enforceable agreement and that
neither party is in default thereunder and that all covenants, conditions and
agreements have been performed as required therein, except those not due to be
performed until after the date hereof. The Company agrees that no material
change in the terms thereof shall be valid without the prior written approval of
the Agent, which approval shall not be unreasonably withheld. Except as
otherwise permitted under the Credit Agreement, the Company agrees not to
assign, sell, pledge, mortgage or otherwise transfer or encumber its interest in
the Contract so long as this Assignment is in effect.
4. The Company hereby irrevocably constitutes and appoints the Agent as
attorney-in-fact to demand, receive and enforce the Company's rights with
respect to the Contract, to make payments under the Contract and to give
appropriate receipt, releases and satisfactions for and on behalf of and in the
name of the Company, at the option of the Agent in the name of the Agent, with
the same force and effect as the Company could do if this Assignment had not
been made.
5. This Assignment shall constitute a perfected, absolute and present
assignment provided that the Agent shall have no right under this Assignment to
enforce the provisions of the Contract until an Event of Default shall occur
under the Agreement. Upon the occurrence of any such Event of Default, the Agent
may, without affecting any of its rights or remedies against the Company under
any other instrument, document or agreement, exercise its rights under this
Assignment as the Company's attorney-in-fact in any manner permitted by law.
6. The Company hereby agrees to indemnify and hold Agent and the Banks
harmless from and against any and all claims, demands, liabilities, losses,
lawsuits, judgment, and costs and expenses, including without limitation
reasonable attorneys' fees, to which Agent and the Banks may become exposed, or
which Agent and Banks may incur, in exercising any of its rights under this
Assignment.
7. Subject to the aforesaid limitation of further assignment by the
Company, this Assignment shall be binding upon the Company, its successors and
assigns, and shall inure to the benefit of the Agent and the Banks, their
successors and assigns.
8. This Assignment can be waived, modified, amended, terminated or
discharged only explicitly in writing signed by the Agent. A waiver signed by
the Agent shall be effective only in a specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any of the Agent's or the Bank's rights or remedies hereunder.
All rights and remedies of the Agent and the Banks shall be cumulative and shall
be exercised singularly or concurrently, at the Agent's option, and the exercise
or enforcement of any one such right or remedy shall neither be a condition to
nor bar the exercise of enforcement of any other.
9. Company agrees that it shall not agree to termination of the Contract
without first having entered into an agreement with a substitute ethanol
marketer acceptable to the Agent. Company agrees that it shall promptly provide
to Agent a copy of any notice of breach of the Contract that it sends to
Marketer or receives from Marketer. In addition to the foregoing, in the event
that Company decides to terminate the Contract, Company agrees that it shall
provide Agent at least 60 days prior written notice of its intent to terminate
the Contract.
10. All capitalized terms used in this Assignment, but not otherwise
defined herein, shall have the meanings as set forth in the Credit Agreement.
11. Upon the repayment in full of all obligations due the Banks by Company
and there being no continuing obligation to extend credit to Company under the
Credit Agreement, the assignment granted herein shall terminate and all rights,
title and interest in and to the Contract shall revert back to Company. Upon any
such termination, Agent will, at the expense
of Company, execute and deliver to Company such documents as Company shall
reasonably request to evidence the termination of the assignment.
12. This Assignment and Acknowledgement and Consent to Assignment may be
executed in two or more counterparts, each of which counterpart shall be deemed
to be an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Company executed this Assignment of Ethanol
Merchandising Agreement this 2nd day of May, 2007.
SOUTHWEST IOWA RENEWABLE ENERGY, LLC
an Iowa limited liability company
/s/ ▇▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇
Its: General Manager
/s/ ▇▇▇▇▇ ▇▇▇▇
By: ▇▇▇▇▇ ▇▇▇▇
Its: Board Chairman
ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT
In consideration of the Banks making the loan to the Company described in
the foregoing Assignment, the undersigned, Lansing Ethanol Services, LLC, a
Delaware limited liability company ("Marketer") hereby consents to the above
Assignment and acknowledges and agrees with the Agent as follows:
1. Marketer has read the Assignment and this Acknowledgement and Consent to
Assignment and understands all of the provisions therein and herein.
2. Marketer has agreed to purchase ethanol from the Company in accordance
with the terms and provisions of that certain Ethanol Merchandising Agreement
dated November 1, 2006, a true and correct copy of which is attached as Exhibit
A (the "Contract").
3. The Contract is in full force and effect and has not been amended or
assigned (other than pursuant to the above Assignment) and no event has occurred
or failed to occur as of the date hereof which, but for the passage of time or
the giving of notice or both, would be a default thereunder.
4. The Assignment is a perfected, absolute and present assignment, provided
that Agent has no right under the Assignment to take any actions under Paragraph
4 of the Assignment or enforce the provisions of the Contract until an Event of
Default occurs under the Credit Agreement.
5. Upon the occurrence of an Event of Default under the Credit Agreement,
Marketer shall, at the Agent's request, continue performance under the Contract
for the benefit of the Agent and the Banks in accordance with the terms thereof,
provided that such occurrence does not result in an event of default under
Section 9.3 of the Contract.
6. The Agent may enforce the obligations of the Contract with the same
force and effect as if enforced by the Company and may perform the obligations
of the Company. Marketer will accept such performance in lieu of performance by
the Company and in full satisfaction of the Company's obligations thereunder for
which performance is made.
7. Marketer will give the Agent written notice of any default by the
Company under the Contract, such notice to be provided to Agent within five days
of having become aware of such default. Marketer will not terminate the Contract
on account of any default of the Company thereunder without written notice of
such default to the Agent and providing the Agent thirty (30) days (5 days in
the case of nonpayment pursuant to a Sales Contract as defined in the Contract)
notice to cure the default. In accordance with Section 9.6 of the Contract,
Agent must give notice of its intent to effect a cure or breach of the Company
within 20 calendar days after the Agent's receipt of the notice contemplated by
the first sentence of this Section 7. However, nothing herein shall require the
Agent to cure any default of the Company under the Contract.
8. If Marketer sends a written notice to the Company pursuant to Section
4.1 of the Contract indicating Marketer's intention to terminate the Contract,
Marketer will at the same time send a copy of this written notice to the Agent.
9. All capitalized terms used in this Acknowledgment and Consent, but not
otherwise defined herein, shall have the meanings as set forth in the Credit
Agreement.
Dated: May 2, 2007
MARKETER:
LANSING ETHANOL SERVICES, LLC, a
Delaware limited liability company
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its CEO & President
EXHIBIT A
Ethanol Merchandising Agreement
By and Between Company and Lansing Ethanol Services, LLC
