Exhibit 10.4
EXECUTION COPY
THIRD SUPPLEMENT
TO THE
MASTER CREDIT AGREEMENT
(2007 Expansion Loan
Facility)
THIS THIRD SUPPLEMENT TO THE MASTER AGREEMENT
(“ Third Supplement
”) is made and entered into as of August 10, 2007, by and
between GREAT PLAINS ETHANOL, LLC, d/b/a POET Biorefining –
Chancellor, a South Dakota limited liability company, and AGCOUNTRY
FARM CREDIT SERVICES, FLCA, a federal land credit association
organized under the Farm Credit Act of 1971, as amended. This Third
Supplement supplements the Master Credit Agreement between Lender
and Borrower dated as of even date herewith (as the same may be
amended, restated, supplemented or otherwise modified (other than
by Supplements entered into pursuant to Section 1.02
thereof) from time to time, the “ Master Agreement ”).
RECITALS:
Borrower has requested and Lender has approved
a $70 million multiple advance credit facility for the purpose of
financing a portion of Project Costs (as defined below) related to
the expansion of Borrower’s ethanol production plant (such
credit facility hereafter referred to as the “ 2007 Expansion Facility
”).
Upon satisfaction of certain conditions,
Advances made under the 2007 Expansion Facility will be converted
to a term loan and repaid in accordance with the terms of this
Third Supplement and the other Loan Documents.
AGREEMENT:
1.
Definitions . Capitalized terms used and not otherwise
defined in this Third Supplement have the meanings attributed to
them below or in the Master Agreement. Definitions in this Third
Supplement control over inconsistent definitions in the Master
Agreement, but only to the extent the defined terms apply to Loans
under this Third Supplement. Definitions set forth in the Master
Agreement control for all other purposes. As used in this Third
Supplement, the following terms have the following meanings:
“ 2007
Expansion Loan ” means the sum of all Advances made
pursuant to this Third Supplement.
“ 2007 Expansion
Loan Commitment Amount ” means the lesser of
(a) $70,000,000, and (b) 60% of Borrower’s net book value as
determined as of any quarterly reporting period.
“ 2007
Expansion Loan Documents ” means this Third
Supplement, the Disbursing Agreement, the 2007 Expansion Loan Note,
and all other draw requests, agreements, documents, certificates,
and instruments related to the 2007 Expansion Facility.
“ 2007 Expansion Loan
Maturity Date ” means the earlier of (a) April
1, 2016 and (b) the date on which the Obligations have been
declared or have automatically become due and payable, whether by
acceleration or otherwise.
“ 2007
Expansion Loan Note
” means the 2007 Expansion Loan Note made by Borrower payable
to the order of Lender, dated the date hereof, in the initial
aggregate principal amount of $70,000,000 in substantially the form
of Exhibit 3A attached hereto.
“ 2007
Expansion Loan Repayment Period ” means the period
beginning on the Loan Conversion Date and continuing through the
2007 Expansion Loan Maturity Date.
“Closing
Date” means August 10, 2007, for purposes of
this Third Supplement.
“ Construction Agreement ” means
the Agreement Between Owner and Design Builder between Borrower and
POET Design and Construction, Inc. formerly known as Broin
Research, Inc., assignee of Broin and Associates, Inc. dated
effective August 28, 2006, and the Agreement Between Owner and
Design Builder between Borrower and POET Design and Construction,
Inc. dated effective May 9, 2007, including all exhibits thereto,
as amended, restated, supplemented or otherwise modified from time
to time.
“ Construction Costs ” means
Borrower’s cost of purchasing real property for the Project,
designing and engineering the improvements contemplated in
connection with the Project, preparing the site, and constructing
the buildings and purchasing and installing equipment related to
the Project and other construction or real estate-related costs
listed on the sources and uses of funds statement presented to and
approved by Lender as amended, restated, supplemented or otherwise
modified and approved by Lender from time to time.
“ Construction Plans ” means the
final working plans for completion of the Project set forth in the
Construction Agreement, including all drawings, specifications,
details and manuals thereunder.
“ Disbursing Agent ” is initially
Homestead Escrow and Exchange Company, and in the event Homestead
Escrow and Exchange Company ceases to act as Disbursing Agent, the
Disbursing Agent will be a Person selected by Lender who succeeds
to such duties under the Disbursing Agreement.
“Disbursing
Agreement ” means the Disbursing Agreement
dated as of the date hereof among Lender, Borrower and the
Disbursing Agent, as amended, restated, supplemented or otherwise
modified from time to time.
“ Draw
Request ” has the meaning set forth in
Section 5(a) of this Third Supplement.
“ Funding Period ” means the period
from the date of this Third Supplement to the earliest of (a) the
Required Completion Date, (b) the date the 2007 Expansion Loan
Commitment Amount is fully drawn, and (c) the date all Obligations
outstanding under the Agreement have been declared or have
automatically become due and payable (whether by acceleration or
otherwise).
“ Inspecting Engineer ” means the
architectural, engineering or other consultant firm retained by
Lender, at Borrower’s cost, to conduct on-site inspections of
the work-in-progress related to the Project, and to issue periodic
reports to Lender as to progress of construction and adherence to
the Construction Plans. BKBM Engineering, Inc. will be the
Inspecting Engineer
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initially, and in the event BKBM Engineering,
Inc. ceases to perform the functions of Inspecting Engineer, Lender
will select a replacement Inspecting Engineer to perform the duties
described in the previous sentence.
“Interest
Election” has the meaning set forth in
Section 8 of this Third Supplement.
“Interest
Period” has the meaning set forth in
Section 8 of this Third Supplement.
“ LIBOR ” means the one month
London interbank rate reported on the tenth day of the month by the
Wall Street Journal from time to time in its daily listing
of money rates, defined therein as “the average of interbank
offered rates for dollar deposits in the London market based on
quotations at five major banks.” If a one month LIBOR
rate is not reported on the tenth day of such month, the one month
LIBOR rate reported on the first Business Day preceding the tenth
day of such month will be used. If this index is no longer
available, Lender will select a new index which is based on
comparable information.
“ Loan
Conversion Date ” means the earlier of (i) the date
Lender acknowledges that Substantial Completion of the Project has
occurred, and (ii) the Required Completion Date.
“Margin”
means three percentage points (3.00%) (300 basis points) as the
same may be adjusted pursuant to Section 8(c) of this Third
Supplement.
“ Project ” means the expansion of
Borrower’s existing dry milling ethanol plant near
Chancellor, South Dakota, including the construction of additional
storage facilities for corn, which, upon completion of the
expansion, will be capable of producing, not less than 100 million
gallons of fuel grade ethanol per year, and related byproducts of
dried, high protein, distillers grains with solubles, together with
all necessary and appropriate fixtures, equipment, attachments, and
accessories, as described in the Construction Plans, to be
constructed on the Real Estate.
“ Project Costs ” means without
duplication, the Construction Costs plus the other costs listed on
the sources and uses of funds statement presented to and approved
by Lender, as such statement may be amended, restated, supplemented
or otherwise modified from time to time.
“ Required Completion Date ” means
August 1, 2008.
“ Substantial Completion ” means
the occurrence of all of the following events with respect to the
Project: (a) all improvements related to the Project are completed
in accordance with the Construction Plans and are paid for in full,
free of all mechanic’s, labor, materialmen’s and other
similar Lien claims; (b) said completion has been certified by the
Inspecting Engineer and the Borrower, and no material punch-list
items remain to be completed; (c) all applicable requirements
of any Governmental Authority and all private restrictions and
covenants have been complied with or satisfied and that
unconditional certificates of occupancy (if required by a
Governmental Authority) for all of such improvements have been
issued; (d) Borrower has obtained all permits, licenses, and
other authorizations required by a Governmental Authority for
construction of the Project and operation of Borrower’s
business, and entered into all agreements necessary or appropriate
to operate the plant contemplated by the Project at maximum
capacity;
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(e)
all insurance required pursuant to the Loan Documents is in full
force and effect; and (f) Borrower has assigned all Material
Contracts to Lender.
“ Sworn
Construction Cost Statement ” means the itemized and
certified statement of actual and estimated costs of the Project
broken out into individual subcontracts, signed and sworn to by
Borrower, as the same may be revised in accordance with Section
5(d) of this Third Supplement.
“ Title
Company ” means Dakota Homestead Title Insurance
Company.
“ Variable Rate
” has the meaning set forth in Section 8 of
this Third Supplement.
2.
Effect of Third Supplement . This Third Supplement,
along with the Master Agreement and the other 2007 Expansion Loan
Documents, sets forth the terms of the 2007 Expansion Facility and
2007 Expansion Loan.
3.
Conditions Precedent . Lender will have no obligation to
make an Advance under this Third Supplement until each of the
following conditions precedent is satisfied or waived in accordance
with Section 8.02 of the Master Agreement:
(a)
Lender has received all fees and other amounts due and payable on
or prior to the date hereof, including the fees set forth in the
fee letter between Borrower and Lender dated May 21, 2007, and all
other fees and amounts for reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by
Borrower pursuant to any Loan Document or any other agreement with
Lender;
(b)
Lender has received this Borrower’s counterpart of this Third
Supplement and the 2007 Expansion Loan Note duly executed and
delivered by Borrower;
(c)
Lender has received the Disbursing Agreement duly executed and
delivered by Borrower and Disbursing Agent;
(d)
Lender has received Borrower’s counterparts of the Master
Agreement and all Loan Documents contemplated thereby, in each case
duly executed and delivered by Borrower, as well as all other duly
executed and delivered instruments, agreements, opinion letters,
and documents as Lender may require;
(e)
Borrower has provided documents and evidence satisfactory to Lender
that the sum of (1) and (2) below is equal to at least
$23,000,000:
(1)
Indebtedness permitted under Section 6.01(c) of the Master
Agreement which is fully, unconditionally, and irrevocably
committed; and
(2)
amounts previously expended on Project Costs.
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(f)
the representations and warranties set forth in the Master
Agreement are true and correct in all material respects as of the
date hereof;
(g)
all conditions precedent in the Master Agreement and each other
Loan Document have been satisfied;
(h)
no Default or Event of Default has occurred and is continuing;
and
(i)
Lender has received in form, substance, and detail satisfactory to
Lender in all respects an executed copy of the Construction
Agreement and each agreement with a subcontractor (to the extent
separately requested by Lender), together with (A) a copy of the
site plan, (B) a schedule listing all subcontracts relating to the
Project, and such other contracts, subcontracts and schedules as
Lender may request, (C) a work progress schedule showing estimated
completion time for each phase of the Project construction, (D) the
Sworn Construction Cost Statement, duly executed by Borrower,
including a reconciliation of actual costs incurred to-date against
budgeted amounts, (E) a copy of each permit and each other building
permit, license and other agreement that Borrower is required by
law to obtain in connection with the Project, together with a
schedule of all other necessary licenses and permits which must be
obtained in order to occupy and operate a dry mill ethanol
production facility (at maximum capacity in accordance with the
Construction Plans) on the Real Estate where the Project will be
built, and (F) a soil report related to the Real Estate where the
Project will be built, certified by a registered engineer
acceptable to Lender, including structural design recommendations
in form and substance satisfactory to Lender;
4.
Basic Terms .
During the Funding Period, Borrower may borrow and prepay, but may
not re-borrow, in accordance with the terms and conditions of the
Agreement and the other Loan Documents, 2007 Expansion Loans from
time to time in amounts up to the 2007 Expansion Loan Commitment
Amount. The aggregate principal amount outstanding under the 2007
Expansion Facility may not exceed the 2007 Expansion Loan
Commitment Amount at any time. Borrower may not borrow during the
continuance of a Default or Event of Default.
5.
Procedure for Advances, Loan Requirements .
(a)
Draw Request . During the Funding Period, Borrower may from
time to time request an Advance by providing Lender written notice
substantially in the form of Exhibit 3B attached hereto (a
“ Draw Request
”). The amount requested in any Draw Request must be at least
$100,000. Each Draw Request will be irrevocable and must be
received by Lender no later than 11:00 a.m. (Fargo, North Dakota
time) five Business Days prior to the requested funding date (which
must be a Business Day). Each Draw Request will constitute a
certification, representation and warranty that the conditions
precedent for an Advance under the Master Agreement and the
Disbursing Agreement have been satisfied and that no
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Material Contract has been entered into other
than those which are subject to a Collateral Assignment in favor of
Lender or which Lender has agreed in writing that no Collateral
Assignment will be required. Each Advance will be disbursed
through the Disbursing Agent pursuant to the terms and conditions
of the Disbursing Agreement, which is hereby incorporated herein by
reference, and the terms and conditions of the Master Agreement.
The proceeds of all Advances under this Third Supplement will be
used solely for funding Project Costs.
(b)
Other Advances . Notwithstanding anything herein to the
contrary, Lender may (without obligation), at any time and from
time to time, make an Advance without first receiving a Draw
Request and apply the proceeds of such Advance to pay any interest,
fees or other amount owing to Lender, release charges under prior
mortgages and security interests, or legal fees or other costs
payable by Borrower in connection with the Loan Documents or the
Project.
(c)
Funding Account . Unless otherwise authorized by Lender,
each Advance taken for the purpose of funding Construction Costs
will be disbursed by wire transfer to a deposit account of the
Disbursing Agent established for the sole purpose of funding
Construction Costs (and other Project Costs at Lender’s
option). All Advances will be considered received by Borrower upon
their receipt by Disbursing Agent in its deposit account.
(d)
Cost Information . All disbursements will be based on the
detailed breakdown of Project Costs set forth on the Sworn
Construction Cost Statement. If Borrower becomes aware of any
change in Project Costs that would increase the total cost of the
Project by more than $3,000,000 (in the aggregate along with
previous such cost increases) above the amount shown on the Sworn
Construction Cost Statement, Borrower will immediately notify
Lender in writing and promptly submit to Lender for its approval a
revised Sworn Construction Cost Statement. In such an event, no
additional Advance will be made until Lender approves the revised
Sworn Construction Cost Statement.
(e)
Loan in Balance, Deposit of Funds by Borrower . Whenever
Borrower determines that the sum of the un-disbursed portion of the
2007 Expansion Loan Commitment Amount will not be sufficient to
fully complete the Project in accordance with the Construction
Plans, whether s
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