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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.
(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
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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.
(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.
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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.
(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:
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(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 license of any governmental authority is
necessary in connection with the execution, delivery, performance,
or enforcement o
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