MASTER LOAN AGREEMENT

Exhibit 10.41

 

MLA No. RI0487A

 

MASTER LOAN AGREEMENT

 

THIS MASTER LOAN AGREEMENT is entered into as of August 31, 2007, between FARM CREDIT SERVICES OF MID-AMERICA, FLCA (“FLCA”), FARM CREDIT SERVICES OF MID-AMERICA, PCA (“PCA”) and ETHANOL GRAIN PROCESSORS, LLC, Rives, Tennessee (the “Company”).

 

BACKGROUND

 

FLCA, PCA and the Company are parties to a Master Loan Agreement dated January 18, 2007 (the “Existing Agreement”). Hereinafter, the term “Farm Credit” shall mean FLCA, PCA or both, as applicable in the context. Pursuant to the terms of the Existing Agreement, the parties entered into one or more Supplements thereto. Farm Credit and the Company now desire to amend and restate the Existing Agreement and to apply such new agreement to the Existing Supplements, as well as any new Supplements that may be issued thereunder. For that reason and for valuable consideration (the receipt and sufficiency of which are hereby acknowledged), Farm Credit and the Company hereby agree that the Existing Agreement shall be amended and restated to read 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. As of the date hereof, the following Supplements are outstanding hereunder and shall be governed by the terms and conditions hereof: (a) the Statused Revolving Credit Supplement dated August 31, 2007, and numbered RI0487S01A; (b) the Construction and Term Loan Supplement dated August 31, 2007, and numbered RI0487TOlA; and (c) the Construction and Revolving Term Loan Supplement dated August 31, 2007, and numbered RI0487T02A.

 

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 (including all security therefore) to CoBank, ACB (“CoBank”) (up to and including a 100% interest). Pursuant to an Administrative Agency Agreement dated January 18, 2007, (“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. In addition, the Company agrees that this Master Loan Agreement, all Supplements hereto, as well as all related security and other documents shall inure to the benefit of CoBank as participant and to any other participants and subparticipants of Farm Credit and/or CoBank: and their respective participants and subparticipants as their interests may appear.

 

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 CoBank 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.

 

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) stock in Farm Credit Services of Mid-America, ACA (“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 ACA at the time of acquisition. ACA 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: Ethanol Grain Processors, LLC   SSN/TIN: 20-1834045

 

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:

 

Jim Patterson , voter

 

Upon repayment of a loan, retirement of the stock shall occur only at the discretion of ACAs board of directors, and then only if ACA meets capital adequacy standards established under Section 4.3A of the Farm Credit Act. Should ACA’s capital become impaired, so the book value of the stock is less than par value or face amount, the stock may be retired for an amount equal to book value. The Company shall be obligated to repay the full amount of any loan, including the amount attributable to the purchase of stock, regardless of whether ACA’s capital is impaired.

 

Company further agrees that a security interest is granted to ACA in all such stock now owned and hereafter acquired, however designated or classified, and all equity reserve and allocated surplus in ACA, its successors and assigns, to secure the loans.

 

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 and Permitted Liens, as hereinafter defined) 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.

 

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 content satisfactory to Agent, each of the following:

 

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(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 and Permitted Liens) 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 and Permitted Liens) on the Company’s owned Property (as that term is defined in the applicable Supplements) located near Rives, Tennessee.

 

(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 $100,000,000.00 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)

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, capitalized interest and contingencies, but excluding working capital) not to exceed an aggregate total of $152,500,000.00 for the Improvements (as that term is defined in the applicable Supplements), 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 October 31, 2008, (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 in all material respects 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).

 

(vi)

Evidence of Capital and Other Debt. Such evidence as Agent may require that the Company has obtained equity capital, including non-repayable grants in an amount up to and including $1,200,000.00, or acceptable binding commitments thereof, in an amount totaling no less than $70,000,000.00 with terms and conditions acceptable to Agent.

 

(vii)

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 to be located on the Company’s real property located near Rives, Tennessee.

 

(viii)

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.

 

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(ix)

Environmental Audit. Such environmental audit or report pertaining to the Company’s real property located near Rives, Tennessee, as Agent may require.

 

(x)

Flood Insurance. A flood zone determination on all real property security and evidence of flood insurance if such determination requires flood insurance.

 

(xi)

Opinion of Counsel. An opinion of the Company’s counsel (in form and substance reasonably acceptable to Agent) confirming that all loan and security documents have been duly authorized and executed and constitute binding obligations of the Company enforceable according to their terms.

 

(xii)

Engineering and Construction Contracts. Copies of all engineering and construction contracts with warranty provisions acceptable to Agent.

 

(xiii)

Process/Yield Guarantee. 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.

 

(xiv)

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.

 

(xv)

Earthquake and Business Interruption Insurance: Certificates from the insurance carriers) evidencing coverage and amounts acceptable to Agent.

 

(xvi)

Utilities; Access. A certificate from the Company or the Company’s engineer, a report from Agent’s inspection 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.

 

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

 

(xviii) Risk Management Policies. Risk management policies and programs/strategies acceptable to Agent pertaining to grain procurement and marketing of ethanol and related byproducts and distiller’s grain, ethanol and carbon dioxide marketing plans and retention of marketing organizations.

 

(xix) Contracts. All applicable contracts acceptable to Agent including management, risk management, ethanol marketing, DDGS marketing, hedging account and com procurement contracts.

 

(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, certificates of incumbency, and other evidence that Agent may reasonably 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.

 

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(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.

 

(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, provided, however, that in the case of a Potential Default under Subsection (B), (C), (D), or (E) of Section 9 of this agreement, the foregoing condition shall only apply if the Potential Default would have a materially adverse effect on the Company’s ability to meet it’s obligations under this agreement

 

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, articles of organization, or other organizational documents.

 

(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 i