EXHIBIT 10.2
CONSTRUCTION AND TERM LOAN
SUPPLEMENT
THIS SUPPLEMENT to the Master Loan Agreement dated
November 20, 2006, (the “MLA”), is entered into as
of November 20, 2006, between FARM CREDIT SERVICES OF
AMERICA, FLCA (“Farm Credit”) and ABE FAIRMONT,
LLC, Fairmont, Nebraska (the “Company”).
SECTION 1. The Construction and Term Loan
Commitment. On the terms
and conditions set forth in the MLA and this Supplement, Farm
Credit agrees to make construction loans to the Company from time
to time during the period set forth below in an aggregate principal
amount not to exceed, at any one time outstanding, $6,500,000.00
(the “Commitment”). Under the Commitment, amounts
borrowed and later repaid may not be reborrowed. No advance shall
be made until evidence has been provided to the Agent (as that term
is defined in the MLA) as required in Section 7(A)(vii) of the
MLA that all requisite equity funds have been received by the
Company and that such funds shall have been utilized for the
construction of the Improvements (as defined herein).
SECTION 2. Purpose. The purpose of the Commitment is to partially
finance the Company’s construction of a 100 million
gallon (annual) ethanol plant (the “Improvements”)
identified in the plans and specifications provided to and approved
by Agent pursuant to Section 7(A)(xi) of the MLA (as the same
may be amended pursuant to Section 12(A) herein, the
“Plans”), on real property owned by the Company near
Fairmont, Nebraska (the “Property”), and the Company
agrees to utilize the proceeds of the Commitment for that purpose
only.
SECTION 3. Term. The term of the Commitment shall be from the
date hereof, up to and including September 1, 2007, or such
later date as Agent may, in its sole discretion, authorize in
writing.
SECTION 4. Disbursements of
Proceeds.
(A) Disbursement Procedures.
(1) Limits on Advances.
Agent shall not be required to
advance funds: (i) for any category or line item of
acquisition or construction cost an amount greater than the amount
specified therefor in the Project Budget (as defined in
Section 7(A)(xi) of the MLA); or (ii) for any services
not yet performed or for materials or goods not yet incorporated
into the Improvements or delivered to and properly stored on the
Property. No advance hereunder shall exceed 100% of the aggregate
costs actually paid or currently due and payable and represented by
invoices accompanying a Request for Construction Loan Advance
submitted pursuant to Section 9(B)(1) herein less the amount
of retainage (“Retainage”) set out in the construction
contract between the Company and Fagen, Inc., and other
construction contracts of the Company for the
Improvements.
(2) Advance of Retainage.
The Retainage (but in no case
greater than the unused balance of the Commitment allocated for
construction) will be advanced by Agent to the Company pursuant to
the conditions set forth in such construction contracts, upon
written request by the Company certifying the satisfaction of such
conditions precedent for payment of Retainage.
(B) Payments to Third Parties.
If there is an Event of Default (as
defined in the MLA) at its option and without further authorization
from the Company, Agent is authorized to make advances under the
Commitment by paying, directly or jointly with the Company, any
person to whom Agent in
1
good faith determines payment is
due and any such advance shall be deemed made as of the date on
which Agent makes such payment and shall be secured under the deed
of trust/mortgage securing the Commitment and any other loan
documents securing the Commitment as fully as if made directly to
the Company.
SECTION 5. Interest and Fees.
(A) Interest. The Company agrees to pay interest on the unpaid
principal balance of the loans in accordance with one or more of
the following interest rate options, as selected by the
Company:
(1) Agent Base Rate.
At a rate per annum equal at all
times to 50 Basis Points above the rate of interest established by
Agent from time to time as its Agent Base Rate, which Rate is
intended by Agent to be a reference rate and not its lowest rate.
The Agent Base Rate will change on the date established by Agent as
the effective date of any change therein and Agent agrees to notify
the Company of any such change.
(2) Quoted Rate. At a fixed rate per annum to be quoted by Agent
in its sole discretion in each instance. Under this option, rates
may be fixed on such balances and for such periods, as may be
agreeable to Agent in its sole discretion in each instance,
provided that: (1) the minimum fixed period shall be
180 days; (2) amounts may be fixed in increments of
$500,000.00 or multiples thereof; and (3) the maximum number
of fixes in place at any one time shall be ten.
(3) LIBOR. At a fixed rate per annum equal to
“LIBOR” (as hereinafter defined) plus 3.40%. Under this
option: (1) rates may be fixed for “Interest
Periods” (as hereinafter defined) of 1, 2, 3, 6, 9, or
12 months as selected by the Company; (2) amounts may be
fixed in increments of $500,000.00 or multiples thereof;
(3) the maximum number of fixes in place at any one time shall
be ten; and (4) rates may only be fixed on a “Banking
Day” (as hereinafter defined) on 3 Banking Days’ prior
written notice. For purposes hereof: (a) “LIBOR” shall
mean the rate (rounded upward to the nearest sixteenth and adjusted
for reserves required on “Eurocurrency Liabilities” (as
hereinafter defined) for banks subject to “FRB
Regulation D” (as herein defined) or required by any
other federal law or regulation) quoted by the British Bankers
Association (the “BBA”) at 11:00 a.m. London time
2 Banking Days before the commencement of the Interest Period for
the offering of U.S. dollar deposits in the London interbank market
for the Interest Period designated by the Company; as published by
Bloomberg or another major information vendor listed on BBA’s
official website; (b) “Banking Day” shall mean a day on
which Agent 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; (c)
“Interest Period” shall mean a period commencing on the
date this option is to take effect and ending on the numerically
corresponding day in the next calendar month or the month that is
2, 3, 6, 9, or 12 months thereafter, as the case may be;
provided, however, that: (i) in the event such ending day is
not a Banking Day, such period shall be extended to the next
Banking Day unless such next Banking Day falls in the next calendar
month, in which case it shall end on the preceding Banking Day; and
(ii) if there is no numerically corresponding day in the
month, then such period shall end on the last Banking Day in the
relevant month; (d) “Eurocurrency Liabilities” shall
have meaning as set forth in “FRB Regulation D”;
and (e) “FRB Regulation D” shall mean
Regulation D as promulgated by the Board of Governors of the
Federal Reserve System, 12 CFR Part 204, as
amended.
2
The Company shall select the
applicable rate option at the time it requests a loan hereunder and
may, subject to the limitations set forth above, elect to convert
balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period,
interest shall automatically accrue at the variable rate option
unless the amount fixed is repaid or fixed for an additional period
in accordance with the terms hereof. Notwithstanding the foregoing,
rates may not be fixed in such a manner as to cause the Company to
have to break any fixed rate balance in order to pay any
installment of principal. All elections provided for herein shall
be made electronically (if applicable), telephonically or in
writing and must be received by Agent not later than 12:00 Noon
Company’s local time in order to be considered to have been
received on that day; provided, however, that in the case of LIBOR
rate loans, all such elections must be confirmed in writing upon
Agent’s request. Interest shall be calculated on the actual
number of days each loan is outstanding on the basis of a year
consisting of 360 days and shall be payable monthly in arrears
by the 20th day of the following month or on such other day in such
month as Agent shall require in a written notice to the Company;
provided, however, in the event the Company elects to fix all or a
portion of the indebtedness outstanding under the LIBOR interest
rate option above, at Agent’s option upon written notice to
the Company, interest shall be payable at the maturity of the
Interest Period and if the LIBOR interest rate fix is for a period
longer than 3 months, interest on that portion of the
indebtedness outstanding shall be payable quarterly in arrears on
each three-month anniversary of the commencement date of such
Interest Period, and at maturity.
(B) Loan Origination Fee.
In consideration of the Commitment,
the Company agrees to pay to Agent a loan origination fee in the
amount of $72,500.00 (less any payments already received by Agent)
upon the execution hereof.
SECTION 6. Promissory Note.
The Company promises to repay the
loans on June 1, 2009. If any installment due date is not a
day on which Agent is open for business, then such installment
shall be due and payable on the next day on which Agent is open for
business. In addition to the above, the Company promises to pay
interest on the unpaid principal balance hereof at the times and in
accordance with the provisions set forth in Section 5
hereof.
SECTION 7. Prepayment. Subject to the broken funding surcharge
provision of the MLA, the Company may on one Business Day’s
prior written notice prepay all or any portion of the loan(s).
Unless otherwise agreed, all prepayments will be applied to
principal installments in the inverse order of their maturity.
However, in addition to the foregoing, prepayment of any Loan
balance due to refinancing, or refinancing of any unadvanced
Commitment, up to and including June 1, 2009 will result in a
3% prepayment charge in addition to any broken funding surcharges
which may be applicable, based on the amounts prepaid and on the
total amount of the Commitments in effect at such time.
SECTION 8. Security.
Security is set forth in the MLA.
SECTION 9. Additional Conditions Precedent.
(A) Initial Advance.
Agent’s obligation to make the
initial advance is subject to the satisfaction of each of the
following additional conditions precedent on or before the date of
such advance:
3
(1) List of
Permits. Receipt by Agent
of a detailed list of all permits required for both the
construction of the improvements and the operation of the facility
setting forth for each listed permit whether such permit is
required for commencement of construction or required for
commencement of operation, and identifying to Agent’s
satisfaction whether such permits have been issued or can
reasonably be expected to be issued.
(2) Construction Permits.
Receipt by Agent of evidence of
issuance of all permits that are required to be obtained prior to
the commencement of construction of the improvements.
(3) Engineer’s
Certificate. Receipt by
Agent of a report of Agent’s retained engineer (pursuant to
the provisions of Section 14(D)) indicating that the current
plans and specifications of the Improvements and the related
contracts establish that the finished project will have adequate
natural gas, electricity, water and waste water treatment to
service the requirements of the project.
(B) Each Advance. Agent’s obligation to make each advance
hereunder, including the initial advance, is subject to the
satisfaction of each of the following additional conditions
precedent on or before the date of such advance:
(1) Request for Construction Loan
Advance. That Agent
receives an executed request for construction loan advance from the
Company in the form of Exhibit A attached hereto (the
“Request for Construction Loan Advance”), together with
all items called for therein.
(2) Construction Certificate.
If an independent inspector has been
employed by Agent pursuant to Section 14(D), a certificate or
report of such inspector to the effect that the construction of the
Improvements to the date thereof has been performed in a good and
workmanlike manner and in accordance with the Plans, stating the
estimated total cost of construction of the Improvements, stating
the percentage of in-place construction of the Improvements, and
stating that the remaining non-disbursed portion of the Commitment
is adequate to complete the construction of the
Improvements.
SECTION 10. Representations and
Warranties. In addition
to the representations and warranties contained in the MLA, the
Company represents and warrants as follows:
(A) Project Approvals; Consents;
Compliance. The Company
has obtained all Project Approvals relating to the construction and
operation of the Improvements, except those the Company has
disclosed to Agent in writing. All such Project Approvals
heretofore obtained remain in full force and effect and the Company
has no reason to believe that any such Project Approval not
heretofore obtained will not be obtained by the Company in the
ordinary course during or following completion of the construction
of the Improvements. To the extent that any Project Approval may
terminate or become void or voidable or terminable, upon any sale,
transfer or other disposition of the Property or the Improvements,
including any transfer pursuant to foreclosure sale under the
Mortgage, the Company will cooperate with Agent to obtain any
replacement Project Approvals. No consent, permission,
authorization, order, or lic
