MASTER LOAN AGREEMENT

Exhibit 10.1

 

MLA No. RI0470

 

MASTER LOAN AGREEMENT

 

 

THIS MASTER LOAN AGREEMENT is entered into as of March 15, 2007, between FARM CREDIT SERVICES OF AMERICA, FLCA ("Farm Credit") and SUPERIOR ETHANOL, L.L.C., Shenandoah, Iowa (the "Company").

 

BACKGROUND

 

From time to time Farm Credit may make loans to the Company.  In order to reduce the amount of paperwork associated therewith, Farm Credit and the Company would like to enter into a master loan agreement.  For that reason, and in consideration of Farm Credit making one or more loans to the Company, Farm Credit and the Company agree as follows:

 

SECTION 1.

Supplements.   In the event the Company desires to borrow from Farm Credit and Farm Credit is willing to lend to the Company, or in the event Farm Credit and the Company desire to consolidate any existing loans hereunder, the parties will enter into a Supplement to this agreement (a "Supplement").  Each Supplement will set forth the amount of the loan, the purpose of the loan, the interest rate or rate options applicable to that loan, the repayment terms of the loan, and any other terms and conditions applicable to that particular loan.  Each loan will be governed by the terms and conditions contained in this agreement and in the Supplement relating to the loan.  

 

SECTION 2.

Sale of Participation Interests and Appointment of Administrative Agent.   The Company acknowledges that concurrent with the execution of this Master Loan Agreement and related Supplements, Farm Credit is selling a participation interest in this Master Loan Agreement and Supplements executed concurrently herewith to CoBank, ACB (“CoBank”) (up to a 100% interest).  Pursuant to an Administrative Agency Agreement dated March 15, 2007, (the “Agency Agreement”), Farm Credit and CoBank appointed CoBank to act as Administrative Agent (“Agent”) to act in place of Farm Credit hereunder and under the Supplements and any security documents to be executed thereunder.  All funds to be advanced hereunder shall be made by Agent, all repayments by the Company hereunder shall be made to Agent, and all notices to be made to Farm Credit hereunder shall be made to Agent.  Agent shall be solely responsible for the administration of this agreement, the Supplements and the security documents to be executed by the Company thereunder and the enforcement of all rights and remedies of Farm Credit hereunder and thereunder.  Company acknowledges the appointment of the Agent and consents to such appointment.  

 

SECTION 3.

Availability.   Loans will be made available on any day on which Agent and the Federal Reserve Banks are open for business upon the telephonic or written request of the Company.  Requests for loans must be received no later than 12:00 Noon Company’s local time on the date the loan is desired.  Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company.  The Company shall furnish to Agent a duly completed and executed copy of a Delegation and Wire and Electronic Transfer Authorization Form of the Agent, and Agent shall be entitled to rely on (and shall incur no liability to the Company in acting on) any request or direction furnished in accordance with the terms thereof.

 

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

SECTION 4.

Repayment.   The Company's obligation to repay each loan shall be evidenced by the promissory note set forth in the Supplement relating to that loan or by such replacement note as Agent shall require.  Agent shall maintain a record of all loans, the interest accrued thereon, and all payments made with respect thereto, and such record shall, absent proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans.  All payments shall be made by wire transfer of immediately available funds, by check, or by automated clearing house or other similar cash handling processes as specified by separate agreement between the Company and Agent.  Wire transfers shall be made to ABA No. 307088754 for advice to and credit of Agent (or to such other account as Agent may direct by notice).  The Company shall give Agent telephonic notice no later than 12:00 Noon Company’s local time of its intent to pay by wire and funds received after 3:00 p.m. Company’s local time shall be credited on the next business day.  Checks shall be mailed to CoBank, ACB, Department 167, Denver, Colorado 80291-0167 (or to such other place as Agent may direct by notice).  Credit for payment by check will not be given until the later of:  (a) the day on which Agent receives immediately available funds; or (b) the next business day after receipt of the check.

 

SECTION 5.

Capitalization.   The Company agrees to purchase voting (Class D) or non-voting (Class E) stock in Farm Credit Services of America, ACA (currently a minimum of $1,000.00 worth of stock consisting of at least 200 shares of $5.00 par value stock) as required under the policy of Farm Credit at the time of acquisition.  Farm Credit policy may change from time to time.  Farm Credit shall have a first lien on the stock for payment of any liability of the Company to Farm Credit.  Said stock shall be owned as follows:  

 

Owner Name:   SUPERIOR ETHANOL, L.L.C.

SSN/TIN:   20-3361532

 

The Company authorizes and appoints the following to act on behalf of all owners, to vote the Class D stock, and to accept, receive and receipt for any dividends declared on the stock:  

 

Wayne Hoovestol, voter

 

SECTION 6.

Security.   The Company’s obligations under this agreement, all Supplements (whenever executed), and all instruments and documents contemplated hereby or thereby, shall be secured by a statutory first lien on all equity which the Company may now own or hereafter acquire in Farm Credit.  In addition, the Company agrees to grant to Farm Credit, by means of such instruments and documents as Agent shall reasonably require, a first lien (subject only to exceptions approved in writing by Agent) on all personal property of the Company, and on all real property of the Company, whether now existing or hereafter acquired.  As additional security for those obligations:  (i) the Company agrees to grant to Farm Credit, by means of such instruments and documents as Agent shall reasonably require, a first priority lien on such of its other assets, whether now existing or hereafter acquired, as Agent may from time to time require; and (ii) the Company agrees to grant to Farm Credit, by means of such instruments and documents as Agent shall require, a first priority lien on all realty which the Company may from time to time acquire after the date hereof.    Farm Credit may at its discretion assign collateral to the Agent under the Agency Agreement.  

 

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

SECTION 7.

Conditions Precedent.

 

(A)

Conditions to Initial Supplement.   Farm Credit’s obligation to extend credit under the initial Supplement hereto is subject to the conditions precedent that Agent receive, in form and substance satisfactory to Agent, each of the following:

 

(i)

This Agreement, Etc.   A duly executed copy of this Agreement and all instruments and documents contemplated hereby.

 

(ii)

Security Agreement.   A security agreement granting to Farm Credit a first lien (subject only to exceptions approved in writing by Agent) on all personal property of the Company, whether now owned or hereafter acquired.  

 

(iii)

Mortgage/Deed of Trust.   A mortgage or deed of trust granting to Farm Credit a first lien (subject only to exceptions approved in writing by Agent) on the Company’s Property (as that term is defined in the applicable Supplements) located near Superior, Iowa.

 

(iv)

Title Commitment/Policy.  A commitment from a title insurance company acceptable to Agent to issue an ALTA lender’s policy of title insurance in the face amount of $50,000,000.00 insuring the Company’s Mortgage or Deed of Trust to Farm Credit as a first priority lien on the property encumbered thereby, subject only to exceptions approved in writing by Agent.  The Company agrees to pay the cost of such commitment and the related policy, together with such endorsements as may be reasonably requested by Agent, and also agrees that if, for any reason, a final policy is not issued by the date that is ninety (90) days after the date of this agreement or such later date as may be agreeable to Agent, then an "Event of Default" shall be deemed to have occurred under this agreement.

 

(v)

Opinion of Counsel.   An opinion of the Company’s counsel (in form and substance acceptable to Agent) confirming due authorization and execution of the loan documents.  

 

(vi)

Environmental Audit.  A written report of an environmental audit pertaining to the Company’s real property located near Superior, Iowa, produced by an independent national or regional environmental consulting firm or such other evidence satisfactory to Agent, which report or evidence shall show to Agent’s satisfaction that all appropriate inquiry was made and that the past or present use or condition of the property poses neither material health or safety hazards nor potential financial exposure that Agent in its sole discretion, finds unacceptable.  

 

(vii)

 Insurance.   Certificates from the insurance carrier for the general contractor or contractors (and if the Company is not adequately insured therein, from the Company’s insurance carrier) evidencing workers’ compensation and liability insurance (including contractual liability) carried during the course of construction, with liability limits for death of or injury to persons and for damages to property in amounts acceptable to Agent or such other limits if any are established under the construction contract(s).  Without limiting the provision in Section 9(D) herein or the foregoing, the Company agrees to obtain Builder’s Risk casualty insurance covering fire and other casualty with extended coverage including vandalism and malicious mischief.  

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

(viii)

Evidence of Capital .  Such evidence as Agent may require that the Company has obtained equity capital, or acceptable binding commitments thereof including non-repayable grants, in an amount no less than $48,000,000.00, all with terms and conditions acceptable to Agent.  

 

(ix)

Appraisal.  An appraisal of the Property by a licensed, independent appraiser satisfactory to Agent, such appraisal to include a value for the proposed ethanol facility and rail spur to be located on the Company’s real property located near Superior, Iowa.  

 

 

(x)

Survey.   An ALTA quality survey of the Property by a licensed surveyor satisfactory to Agent verifying no encroachments by any Improvements on the Property onto adjoining property, or such other information as may be required by Agent.     

 

(xi)

Process/Yield Guarantee.  An acceptable Process/Yield Guarantee from the design engineer and contractor, acceptable to Agent, as well as a minimum one-year warranty on all work performed.  

 

(xii)

Engineering and Construction Contracts.  Copies of all engineering and construction contracts with payment retainage and fixed-price provisions acceptable to Agent.

 

(xiii)

Utilities; Access.  A certificate from the Company or the Company’s engineer, or other evidence satisfactory to Agent, as to the methods of access to and egress from the Property and the availability of water supply, electricity, natural gas, and other utilities, and for the disposal of wastewater, all in locations and capacities sufficient to meet the reasonable requirements of the Property and the Improvements and otherwise satisfactory to Agent.  

 

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

(xiv)

Project Budget and Schedule, Contracts and Plans.   Project budget, schedule, contracts and plans as follows:  (i) a budget setting forth the total estimated direct costs for construction (including real property acquisition, site preparation, railroad siding, sales taxes related to construction, contingencies and capital interest, but excluding working capital) not to exceed an aggregate total of $87,750,000.00 for the Improvements, and indirect costs, (including costs to organize and obtain financing, and for preproduction expenses, but excluding working capital) not to exceed an aggregate total of $2,900,000.00, including line item cost breakdowns for all direct costs by trade, job, and subcontractor, and a schedule of all sources of funds to pay such costs (the “Project Budget”); (ii) a schedule setting forth, by trade, job, and subcontractor, the estimated dates of commencement and completion of construction of the Improvements (the “Project Schedule”); (iii) a schedule of the amounts and times of advances anticipated to be requisitioned by the Company from time to time during the term of construction of the Improvements (the “Disbursement Schedule”); (iv) a list of all subcontractors and materialmen who have been, or, to the extent then determined by the Company, will be supplying labor, materials or goods for the Improvements; (v) two sets of the Plans with a certification from the Company and from the Company’s architect or engineer, or with other evidence satisfactory to Agent as to the following matters:  (a) that the Improvements can be completed by, December 31, 2007, (the “Completion Date”); (b) that the Project Budget, Project Schedule, Disbursement Schedule and the Plans satisfactorily provide for the construction of the Improvements; and (c) that the Improvements upon completion will comply with all Laws (as defined in Section 9(B) hereof), including, without limitation, all Laws relating to the environment, and all approvals, consents, permits and licenses required under such Laws (the “Project Approvals”) which have been obtained or are to be obtained by the Company relating in any way to the acquisition, construction or the contemplated operation of the Improvements (including, without limitation, those relating to zoning, building, use and occupancy, fire prevention and health); and (vi) a list of the Project Approvals indicating those Project Approvals obtained and to be obtained (and a schedule for obtaining such Project Approvals).  

 

(xv)

Escrow Agreement.   An escrow agreement for distribution of loan funds acceptable to Agent specifically providing for a Title/Abstract Company to distribute all funds.  Costs of said agreement are to be paid by the Company.   

 

(B)

Conditions to Each Supplement.   Farm Credit’s obligation to extend credit under each Supplement, including the initial Supplement, is subject to the conditions precedent that Agent receive, in form and content satisfactory to Agent, each of the following:

 

(i)

Supplement.   A duly executed copy of the Supplement and all instruments and documents contemplated thereby.

 

(ii)

Evidence of Authority.   Such certified board resolutions, evidence of incumbency, and other evidence that Agent may require that the Supplement, all instruments and documents executed in connection therewith, and, in the case of initial Supplement hereto, this agreement and all instruments and documents executed in connection herewith, have been duly authorized and executed.

 

(iii)

Fees and Other Charges.  All fees and other charges provided for herein or in the Supplement.

 

(iv)

Evidence of Perfection, Etc.   Such evidence as Agent may require that Farm Credit has a duly perfected first priority lien on all security for the Company’s obligations, and that the Company is in compliance with Section 9(D) hereof.

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

 

(C)

Conditions to Each Loan.   Farm Credit’s obligation under each Supplement to make any loan to the Company thereunder is subject to the condition that no “Event of Default” (as defined in Section 12 hereof) or event which with the giving of notice and/or the passage of time would become an Event of Default hereunder (a “Potential Default”), shall have occurred and be continuing.

 

SECTION 8.

Representations and Warranties.

 

(A)

This Agreement.   The Company represents and warrants to Farm Credit and Agent that as of the date of this Agreement:

 

(i)

Compliance.   The Company and, to the extent contemplated hereunder, each “Subsidiary” (as defined below), is in compliance with all of the terms of this agreement, and no Event of Default or Potential Default exists hereunder.

 

(ii)

Subsidiaries.  The Company has no "Subsidiary(ies)" (as defined below).  For purposes hereof, a “Subsidiary” shall mean a corporation of which shares of stock having ordinary voting power to elect a majority of the board of directors or other managers of such corporation are owned, directly or indirectly, by the Company.

 

(B)

Each Supplement.   The execution by the Company of each Supplement hereto shall constitute a representation and warranty to Agent that:

 

(i)

Applications.   Each representation and warranty and all information set forth in any application or other documents submitted in connection with, or to induce Farm Credit to enter into, such Supplement, is correct in all material respects as of the date of the Supplement.

 

(ii)

Conflicting Agreements, Etc.   This agreement, the Supplements, and all security and other instruments and documents relating hereto and thereto (collectively, at any time, the “Loan Documents”), do not conflict with, or require the consent of any party to, any other agreement to which the Company is a party or by which it or its property may be bound or affected, and do not conflict with any provision of the Company’s operating agreement and articles of organization.

 

(iii)

Compliance.   The Company and, to the extent contemplated hereunder, each Subsidiary, is in compliance with all of the terms of the Loan Documents (including, without limitation, Section 9(A) of this agreement on eligibility to borrow from Farm Credit).

 

(iv)

Binding Agreement.   The Loan Documents create legal, valid, and binding obligations of the Company which are enforceable in accordance with their terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors’ rights generally.

 

SECTION 9.

Affirmative Covenants.   Unless otherwise agreed to in writing by Agent while this agreement is in effect, the Company agrees to, and with respect to Subsections 9(B) through 9(G) hereof, agrees to cause each Subsidiary to:

 

(A)

Eligibility.   Maintain its status as an entity eligible to borrow from Farm Credit pursuant to the terms of the Farm Credit Act of 1971, as amended, 12 USC 2001, et seq.  

 

Master Loan Agreement RI0470

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SUPERIOR ETHANOL, L.L.C.

Shenandoah, Iowa

 

 

 

 

(B)

Company Existence, Licenses, Etc.   (i) Preserve and keep in full force and effect its existence and good standing in the jurisdiction of its formation; (ii) qualify and remain qualified to transact business in all jurisdictions where such qualification is required; and (iii) obtain and maintain all licenses, certificates, permits, authorizations, approvals, and the like which are material to the conduct of its business or required by law, rule, regulation, ordinance, code, order, and the like (collectively, “Laws”).

 

(C)

Compliance with Laws.  Comply in all material respects with all applicable Laws, including, without limitation, all Laws relating to environmental protection.  In addition, the Company agrees to cause all persons occupying or present on any of its properties, and to cause each Subsidiary to cause all persons occupying or present on any of its properties, to comply in all material respects with all environmental protection Laws.

 

(D)

Insurance.   Maintain insurance with insurance companies or associations reasonably acceptable to Agent in such amounts and covering such risks as are usually carried by companies engaged in the same or similar business and similarly situated, and make such increases in the type or amount of coverage as Agent may reasonably request.  All such policies insuring any collateral for the Company’s obligations to Farm Credit shall have mortgagee or lender loss payable clauses or endorsements in form and content acceptable to Agent.  At Agent’s request, all policies (or such other proof of compliance with this Subsection as may be satisfactory to Agent) shall be delivered to Agent.

 

(E)

Property Maintenance.   Maintain all of its property that is necessary to or useful in the proper conduct of its business in good working condition, ordinary wear and tear excepted.

 

(F)

Books and Records.   Keep adequate records and books of account in which complete entrie