FIRST SUPPLEMENT
TO THE
MASTER CREDIT AGREEMENT
(Construction and Term Loan Facility)
THIS FIRST SUPPLEMENT TO THE MASTER CREDIT AGREEMENT ("First Supplement")
is made and entered into as of February 14, 2007, by and between NEDAK ETHANOL,
LLC, a Nebraska limited liability company, and FARM CREDIT SERVICES OF GRAND
FORKS, FLCA, a federal land credit association organized under the Farm Credit
Act of 1971, as amended. This First 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:
A. Borrower has requested and Lender has approved a $42,500,000 multiple
advance credit facility for the purpose of financing a portion of Project Costs
related to the construction of Borrower's ethanol production plant (such credit
facility hereafter referred to as the "Construction and Term Loan Facility").
B. Upon satisfaction of certain conditions, Advances made under the
Construction and Term Loan Facility will be converted to a term loan and repaid
in accordance with the terms of this First Supplement and the other Loan
Documents.
AGREEMENT:
1. Definitions. Capitalized terms used and not otherwise defined in this
First Supplement have the meanings attributed to them below or in the Master
Agreement. Definitions in this First Supplement control over inconsistent
definitions in the Master Agreement, but only to the extent the defined terms
apply to Loans under this First Supplement. Definitions set forth in the Master
Agreement control for all other purposes. As used in this First Supplement, the
following terms have the following meanings:
"Annual Rate" has the meaning set forth in Section 8.
"Commitment Amount" means an aggregate principal amount not to exceed the
lesser of (i) $42,500,000, and (ii) 50% of the Project Costs.
"Construction and Term Loan" means the sum of all Advances made pursuant to
this First Supplement.
"Construction and Term Loan Amortization Period" means the period beginning
on the Loan Conversion Date and continuing through the Construction and Term
Loan Maturity Date.
"Construction and Term Loan Documents" means this First Supplement, the
Disbursing Agreement, the Construction and Term Loan Note, and all other draw
requests, agreements, documents, certificates, and instruments related to the
Construction and Term Loan Facility.
"Construction and Term Loan Maturity Date" means the earlier of (a) 120
months from the Loan Conversion Date which shall not be later than March 1,
2018, and (b) the date on which the Obligations have been declared or have
automatically become due and payable, whether by acceleration or otherwise.
"Construction and Term Loan Note" means the Construction and Term Loan Note
made by Borrower payable to the order of Lender, dated the date hereof, in the
initial aggregate principal amount of $42,500,000 in substantially the form of
Exhibit 3A attached hereto. On the Loan Conversion Date, the outstanding
principal balance of the Construction and Term Loan Note shall be reduced by
$10,000,000 as a result of the $10,000,000 Revolving Note (pursuant to the
Second Supplement of even date herewith).
"Construction Agreement" means the Engineering, Procurement and
Construction Services Fixed Price Contract between Borrower and Delta-T
Corporation dated effective August 9, 2006, 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 Title Company, and in the event such Person
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).
"Fixed Interest Rate Adjustment Date" has the meaning set forth in Section
8(a)(3).
"Funding Period" means the period from the date of this First Supplement to
the earliest of (a) the Required Completion Date, (b) the date the Commitment
Amount is fully drawn, and (c) the date all Obligations outstanding under the
Master 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. BBI International will be the Inspecting
Engineer initially, and in the event BBI International ceases to perform the
functions of Inspecting Engineer, Lender will select a replacement Inspecting
Engineer to perform the duties described in the previous sentence.
"LIBOR" means the one month London interbank rate reported on the tenth
(10th) 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 first day of the first month following the
Required Completion Date which date shall not be later than March 1, 2008.
"Margin" means three and forty hundredths percentage points (3.40%) (340
basis points), as the same may be adjusted pursuant to Section 8 hereof.
"Prepayment Date" means the date on which Borrower has notified Lender of
its intention to prepay or which Lender receives a principal payment on the
Construction and Term Loan prior to its scheduled due date, whether by
acceleration or otherwise.
"Prepayment Price" means:
(a) In the event the Construction and Term Loan is paid, in whole or in
part, at any time during the Funding Period or within 36 months from
the Loan Conversion Date, whether voluntarily or involuntarily
(including any payment effected by Lender's exercise of any right to
accelerate), Borrower agrees to pay to Lender a prepayment fee in the
amount five percent (5.0%) on the amount prepaid. Borrower agrees that
this fee is paid for the right to prepay and that is does not
constitute liquidated damages or a penalty.
(b) In the event the Construction and Term Loan is paid, in whole or in
part, at any time after 36 months from the Loan Conversion Date but
before 48 months from the Loan Conversion Date, whether voluntarily or
involuntarily (including any payment effected by Lender's exercise of
any right to accelerate), Borrower agrees to pay to Lender a
prepayment fee in the amount one percent (1.0%) on the amount prepaid.
Borrower agrees that this fee is paid for the right to prepay and that
is does not constitute liquidated damages or a penalty.
(c) In addition to the fees set forth in subsections (a) and (b) in this
definition of Prepayment Price, if Borrower has made an interest
election to fix the interest rate pursuant to Section 8(a) hereof,
then any prepayment of the Construction and Term Loan, whether made
voluntarily or involuntarily (including any prepayment effected by
Lender's exercise of any right to accelerate), shall be accompanied
by, and Borrower shall pay to Lender the amount of any actual breakage
fees imposed upon Lender by Lender's funding source.
"Project" means all tangible and intangible real and personal property now
existing or hereafter acquired, constructed or installed, that comprises the dry
milling ethanol plant to be constructed near Atkinson, Nebraska, which, upon
completion of the construction, will be capable of producing, not less than 44
million gallons of fuel grade ethanol per year, together with related byproducts
of modified wet, 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 the date of Substantial Completion, which
shall occur on or before February 15, 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 Construction
Agreement, 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; (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).
"Title Company" means LandAmerica Title Services.
2. Effect of First Supplement. This First Supplement, along with the Master
Agreement and the other Construction and Term Loan Documents, sets forth the
terms of the Construction and Term Loan Facility and Construction and Term Loan.
3. Conditions Precedent. Lender will have no obligation to make an Advance
under this First 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 an origination fee equal to
$531,250 (1.25% of $42,500,000), $80,000 of which has been previously
paid pursuant to the fee letter dated August 7, 2007, leaving a
balance of $451,250, 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 First
Supplement and the Construction and Term Loan Note duly executed and
delivered by Borrower;
(c) Lender has received the Disbursing Agreement (which shall include an
attachment containing Borrower's estimated schedule for the incurrence
of Project Costs and the disbursement of Loan proceeds to pay for such
Project Costs) duly executed and delivered by Borrower and Disbursing
Agent;
(d) Lender has received Borrower's counterparts of the Master Agreement
and all Amendment 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), (2) and (3) below is equal to at least
$42,500,000:
(1) amounts on deposit in the Equity Deposit Account (including
proceeds received from any grants);
(2) Indebtedness permitted under Section 6.01 of the Master Agreement
which is fully, unconditionally, and irrevocably committed; and
(3) amounts previously expended on Project Costs.
(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) unless waived or otherwise agreed by Lender in its sole reasonable
discretion, Lender has received each of the following in form,
substance, and detail satisfactory to Lender in all respects:
(1) three copies of a survey and maps or plats of the Real Estate
certified to the Lender and the Title Company in a manner
reasonably satisfactory to each of Lender and the Title Company,
dated a date reasonably satisfactory to each of Lender and the
Title Company by an independent professional licensed land
surveyor, which maps or plats and the surveys on which they are
based are sufficient to delete any standard printed survey
exception contained in the applicable title insurance policy;
(2) Federal Emergency Management Agency Standard Flood Hazard
Determination Certificates certifying, among other things, that
none of the Real Estate is located within a flood hazard area;
(3) appraisals of all Real Estate (including two copies of an "as
built" appraisal related to the Project);
(4) Phase I Environmental Site Assessment Reports on all of the Real
Estate, along with such further environmental review and audit
reports as Lender requests (which may include Phase II reports),
and letters by the firms preparing such environmental reports
authorizing Lender to rely on such reports;
(5) 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) at the time required under Schedule
3.15 of the Master Agreement, 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; and
(6) a certificate, substantially in the form of Exhibit 3(i)(6),
dated the Closing Date and signed by an appropriate Responsible
Officer, confirming the solvency of Borrower before and after
giving effect to all transactions contemplated by the Loan
Documents, together with (A) the Projections and (B) the Pro
Forma Balance Sheet for Borrower as of the Closing Date.
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 Master
Agreement, the other Construction and Term Loan Documents, and the other Loan
Documents. The aggregate principal amount outstanding under the Construction and
Term Loan may not exceed the Commitment Amount at any time. Borrower may not
borrow during the continuance of a Default or Event of Default.
5. Procedure for Advances.
(a) Draw Request. During the Funding Period, Borrower may not more than
once per month (unless otherwise agreed by Lender) 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.
(Grand Forks, 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
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 Disbursing Agreement will provide for a
retainage holdback equal to 10% of each Draw Request until such time
as construction of the Project (as measured by the schedule set forth
in the Construction Agreement) is 50% completed. The proceeds of all
Advances under this First 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 in excess of $100,000 (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 Commitment
Amount will not be
sufficient to fully complete the Project in accordance with the
Construction Plans, whether such deficiency is the result of changes
in the Construction Plans or otherwise, Borrower will deposit in an
escrow fund to be established with Lender an amount equal to the
amount of the deficiency as determined by Lender. Borrower will
deposit such funds within three days. No further Advances will be
disbursed until those funds are deposited by Borrower in the escrow
fund.
(f) Additional Security. Borrower irrevocably assigns to Lender and grants
to Lender a security interest in, as additional security for the
performance of the Obligations, its interest in all funds held by the
Disbursing Agent pursuant hereto or the Disbursing Agreement, whether
or not disbursed, all funds deposited by Borrower with Lender, all
reserves, including deferred payments, deposits, refunds, cost
savings, and payments of any kind relating to the construction of the
Project and, to the extent assignable, all governmental permits
obtained for the lawful construction of the Project.
(g) Suspension of Construction. If Lender determines that any work or
materials do not materially conform to the Construction Plans or
applicable law, or otherwise departs from any of the requirements of
this First Supplement or any other Loan Document, Lender may require
the work to be stopped and withhold disbursement of Advances until the
matter is corrected. In such event, Borrower will promptly correct the
work to Lender's satisfaction. No such action by Lender will affect
Borrower's obligation to complete the Project on or before the
Required Completion Date.
6. Conditions to Each Advance. The obligation of Lender to make any Advance
is subject to the satisfaction of the following conditions:
(a) Lender has received a timely Draw Request and, unless waived by Lender
in its sole discretion, such Draw Request has been approved by the
Inspecting Engineer;
(b) at the time of and immediately after giving effect to such Advance, no
Default or Event of Default exists;
(c) all representations and warranties of Borrower set forth in the Loan
Documents are true and correct in all material respects on and as of
the date of such Advance before and after giving effect thereto,
except for such representations and warranties that relate solely to
an earlier period;
(d) since the date of the most recent financial statements of Borrower
described in Section 4.01(a) of the Master Agreement, there has been
no change which has had or could reasonably be expected to result in a
Material Adverse Effect; and
(e) each of the conditions for an Advance set forth in the Disbursing
Agreement has been satisfied.
7. Deliveries Prior to Loan Conversion. As soon as possible, but in any
event prior to the Loan Conversion Date, Borrower will provide the following to
Lender:
(a) a certificate by an appropriate Responsible Officer, certifying as to
occurrence of each item listed in the definition of Substantial
Completion, along with such supporting evidence as Lender may require
(e.g., proof of required insurance coverage, Permits and licenses);
(b) copies of all Material Contracts not previously delivered to Lender,
along with fully executed Collateral Assignments of such Material
Contracts;
(c) to the extent specifically requested by Lender, copies of all
warranties from suppliers covering materials, equipment and appliances
included within the Improvements;
(d) three copies of an "as-built" survey of the Project which conforms
with Lender's and Title Company's requirements; and
(e) such other documents, instruments, and certificates as Lender may
reasonably request.
8. Interest Rate. Interest on the unpaid principal amount of Construction
and Term Loans made during the Funding Period (and thereafter unless and until a
fixed rate is elected in accordance with Section 8(a) below) will accrue on a
variable interest rate equal to LIBOR plus the Margin. On the Loan Conversion
Date or any time within five (5) years after the Loan Conversion Date, Borrower
may elect to fix the interest rate as follows (the LIBOR plus Margin rate and
the fixed rate below being referred to as the "Annual Rate"):
(a) a fixed rate for a locked-in period of five years, subject to the
following:
(1) the fixed rate period (five years) may not extend beyond the
Construction and Term Loan Maturity Date;
(2) Borrower must provide at least five (5) Business Days' advance
written notice to Lender; and
(3) the interest rate fixed hereunder will be equal to the sum of (i)
340 basis points (3.40%) and (ii) the yield of the 5-year rate
with the Federal Home Loan Bank of Des Moines, Iowa ("Fixed
Interest Rate Adjustment Date");
(4) the interest rate will be subject to adjustment by Lender on the
fifth-year anniversary of the date of initially fixing the rate
(the "Repricing Date"), at a rate equal to the sum of (i) 340
basis points (3.40%) and (ii) the yield of the 5-year rate (or
such shorter term product corresponding to the then remaining
term of the Construction and Term Loan) with the Federal Home
Loan Bank of Des Moines, Iowa; provided however, if no such
shorter term product exists at the time, then the interest rate
shall be equal to LIBOR plus the Margin.
Lender will give Borrower notice of the interest rate which will be applicable
to the remaining principal balance of the Construction and Term Loan subject to
said five-year lock-in period within 15 days after receipt of Borrower's
interest election notice.
The Margin applicable to the Construction and Term Loan during the Construction
and Term Loan Amortization Period will be reduced by (x) twenty-five basis
points (0.25%) per annum at such time as Borrower has reached and maintained an
Owners' Equity Ratio of 65%, and (y) an additional twenty-five basis points
(0.25%) per annum at such time as Borrower has reached and maintained an Owners'
Equity Ratio of 70%. Such reductions will be applied from the date of receipt of
Borrower's audited financial statements pursuant to Section 4.01 of the Master
Agreement. For purposes of this paragraph, Borrower's Owner's Equity Ratio will
be based on audited financial statements after taking into account such
adjustments as necessary to reflect reductions resulting from any Permitted
Distribution. Subsequent to any Margin reduction pursuant to this Section 8, the
Margin applicable to the Construction and Term Loans during the Construction and
Term Loan Amortization Period will be increased by (x) 25 basis points (0.25%)
per annum if Borrower's Owners' Equity Ratio falls below 70% as of any quarterly
period following application of any reduction in the Margin pursuant to this
paragraph, and (y) an additional 25 basis points (0.25%) per annum (for a total
increase of 50 basis points) if Borrower's Owners' Equity Ratio falls below 65%
as of any such quarterly period.
9. Loan Payments.
(a) During Construction. During the Funding Period, Borrower will pay in
arrears, not later than the first day of each month, accrued and
unpaid interest at LIBOR plus the Margin based on the daily balance of
the Construction and Term Loan outstanding during the related monthly
period.
(b) During Amortization. During the Construction and Term Loan
Amortization Period, Borrower will pay in arrears on the first day of
each month through and including the Construction and Term Loan
Maturity Date, level monthly payments of principal plus accrued
interest at the Annual Rate so that the principal amount is fully
amortized over 120 months. Lender will determine the amount of such
monthly payments on the Loan Conversion Date and, if no fixed Annual
Rate is in effect pursuant to Section 8(a), each time there is a
change in LIBOR. Such determination by Lender of the amortized payment
amount will be binding and conclusive, absent manifest error. All
remaining principal, accrued and unpaid interest, and other
Obligations related to the Construction and Term Loan outstanding on
the Construction and Term Loan are due and payable on the Construction
and Term Loan Maturity Date.
(c) Bio Energy Payments During Construction and Term Loan Amortization
Period. During the Construction and Term Loan Amortization Period,
Borrower shall, upon receipt by Borrower of any USDA Bio Energy
program payments other payments and benefits received by Borrower in
respect of incentives provided by the State of Nebraska or any other
Governmental Authority (other than Nebraska Tax Rebate as defined in
the Second Supplement), within fifteen (15) days after the receipt of
such payment, submit an amount equal to 100% of such payment to
Lender (each a "Bio Energy Payment"). Bio Energy Payments required
under this Section 9(c) shall be in addition to all other payments
required under this First Supplement. Bio Energy Payments shall be
applied in the inverse order of the maturities of scheduled principal
payments, so as to not affect or reduce the GAAP-based current portion
of Borrower's long-term debt.
(d) Cash Flow Sweep. In addition to all other payments required under this
First Supplement, Borrower shall make special principal payments to
Lender in an amount of 40% of Borrower's Net Available Cash for each
fiscal year (each a "Special Principal Payment"). Special Principal
Payments required under this Section 9(d) shall be due and payable at
the time Borrower submits its audited annual report to Lender as
required under Section 4.01(a) of the Master Agreement. Special
Principal Payments shall be applied in the inverse order of the
maturities of scheduled principal payments, so as to not affect or
reduce the GAAP-based current portion of Borrower's long-term debt.
Borrower shall not be required to make any Special Principal Payments
so long as Borrower achieves and maintains an Owner's Equity Ratio of
50% (as reported on audited fiscal year-end financial statements);
provided, Borrower's obligation to make Special Principal Payments
pursuant to this Section 9(d) will be reinstated if Borrower's Owner's
Equity Ratio falls below 50% at any quarterly reporting period.
10. Prepayment Fees.
Borrower may not prepay any portion of the Construction and Term Loan
(other than Bio Energy Payments and Special Principal Payments) (i) during the
Funding Period, and (ii) for a period of three (3) years after the Required
Completion Date. In addition, Borrower acknowledges that an additional one-year
prepayment lockout may apply at the time of the interest rate adjustment
described in Section 8(a)(3) above in the event Borrower has made an interest
election under Section 8(a). If any amount of the Construction and Term Loan is
prepaid during this time (excluding Bio Energy Payments and Special Principal
Payments), whether voluntarily or involuntarily (including any prepayment
effected by Lender's exercise of any right to accelerate), Borrower agrees to
pay the Prepayment Price. Subject to the provisions contained in the Master
Agreement, Borrower may prepay all or a portion of the Construction and Term
Loan from the period three (3) years after the Required Completion Date until
the Construction and Term Loan Maturity Date, provided, however, that if
Borrower prepays all or a portion of the Construction and Term Loan prior to the
date four (4) years after the Required Completion Date, whether voluntarily or
involuntarily (including any prepayment effected by Lender's exercise of any
right to accelerate), Borrower agrees to pay the Prepayment Price. Borrower
agrees that the Prepayment Price is paid as a fee for the right to prepay and
not liquidated damages or a penalty. The Commitment Amount will be permanently
reduced by the amount of any prepayments made during the Funding Period.
11. Reliance. Borrower will not rely on reports relating to the Project
generated for the benefit of Lender for any purpose whatsoever. Borrower is
responsible for making its own inspections of the Project during the course of
construction and will satisfy itself that the work performed and the materials
furnished conform with its contracts. By making Advances after inspection of the
Project, Lender will not be deemed to have waived any Default or Event of
Default, or the right to require the correction of construction defects or to
have acknowledged that the construction (as to quality or value of work
performed or material furnished) conforms with the Construction Plans.
12. Inspections. Borrower is responsible for making inspections during the
course of construction and will determine to its own satisfaction that the work
done or materials supplied by the contractors to whom payment is to be made out
of each Draw Request has been properly done or supplied in accordance with the
applicable contracts with such contractors. If any work done or materials
supplied by a contractor are not satisfactory to Borrower, Borrower will
immediately notify Lender in writing of such fact. It is expressly understood
and agreed that Lender or its authorized representative may conduct such
inspections of the Real Estate and improvements thereon as it may deem
appropriate for the protection of Lender's interest, and, specifically, the
Inspecting Engineer may, at the option of Lender and at the expense of Borrower,
conduct such periodic inspections, prepare such written progress reports during
the period of construction and prepare such written reports upon completion of
the Project as Lender may request. Any inspections made by Lender or its
representative will be made, and all certificates issued by Lender's
representative will be issued, solely for the benefit and protection of Lender,
and Borrower will not rely thereon.
13. Construction. Borrower will not become a party to any contract for the
performance of any work related to the Project or for the supplying of any
labor, materials or services for the construction of improvements that would
have the effect of increasing the costs of the Project more than $100,000 (in
the aggregate with previous such cost increases) above those set forth in the
Sworn Construction Cost Statement, except in such amounts and upon such terms
and with such parties as are approved in writing by Lender. No approval by
Lender of any contract or change order will make Lender responsible for the
adequacy, form or content of such contract or change order. Borrower will
expeditiously complete and fully pay for the development and construction of the
Project in a good and workmanlike manner and in accordance with the contracts,
subcontracts and Construction Plans submitted to Lender and in compliance with
all applicable requirements of all Governmental Authorities, and any covenants,
conditions, restrictions and reservations applicable thereto, so that
Substantial Completion occurs on or before the Required Completion Date.
Borrower assumes full responsibility for the compliance of the Construction
Plans and the Project with all requirements of all Governmental Authorities and
with sound building and engineering practices, and notwithstanding any approvals
by Lender, Lender has no obligation or responsibility whatsoever for the
Construction Plans or any other matter incident to the Project or construction
related to the Project. Borrower will correct or cause to be corrected (a) any
defect in improvements related to the Project, (b) any departure from the
Construction Plans or any requirements of any Governmental Authorities, and (c)
any encroachment by any part of any structure located on the Real Estate on any
building line, easement, property line or restricted area. Borrower will cause
all roads necessary for the efficient operation of the plant contemplated by the
Project to be completed and dedicated (if dedication thereof is required by any
Governmental Authority), the bearing capacity of the soil on the Real Estate to
be made sufficient to support all improvements thereon, and sufficient local
utilities to be made available to the Project and installed at costs (if any)
set out in the Sworn Construction Cost Statement, on or before the Required
Completion Date. No work may be performed pursuant to any change order or
pending change order to the Construction Plans prior to delivery thereof to
Lender.
14. Additional Remedies Upon Event of Default During Construction. Upon the
occurrence of an Event of Default prior to the Required Completion Date, and at
any time thereafter during the continuance of such event, Lender may, in
addition to all other available remedies, enter upon Borrower's property and
proceed either in its own name or in the name of Borrower (which authority is
coupled with an interest and is irrevocable by Borrower) to complete the Project
or cause the Project to be completed, at the cost and expense of Borrower. If
Lender elects to complete or cause the Project to be completed, it may do so
according to the Construction Plans or according to such changes, alterations or
modifications in and to the Construction Plans as Lender deems appropriate.
Lender may enforce or cancel all contracts of Borrower relating to construction
and enter into other contracts which Lender deems advisable in its sole
judgment. Borrower will forthwith turn over and duly assign to Lender, as Lender
may from time to time require, contracts relating to construction and
installation of improvements related to the Project, the Construction Plans,
blueprints, shop drawings, bonds, building permits, bills and statements of
accounts pertaining to the Project, whether paid or not, and any other
instruments or records in the possession of Borrower pertaining to the Project.
Borrower will pay to Lender, on demand, any amount or amounts expended by Lender
in so completing construction of the Project, together with any costs, charges,
or expenses incident thereto or resulting therefrom. In the event that a
proceeding is instituted against Borrower for recovery and reimbursement of any
amount expended by Lender in connection with the completion of construction of
the Project, a statement of such expenditures, verified by the affidavit of an
officer of Lender, will be prima facie evidence of the amounts so expended and
of the propriety of and necessity for such expenditures, and the burden of
proving to the contrary will be upon Borrower. Lender may apply the undisbursed
amount of the Commitment Amount to bring about the completion of construction of
the Project and to pay the costs thereof; and if such funds are insufficient, in
Lender's sole judgment, to complete construction of the Project, Borrower agrees
to promptly deliver and pay to Lender amounts as Lender may from time to time
demand for the purpose of completing construction of the Project or of paying
any liability, charge or expense which may have been incurred or assumed by
Lender under or in performance of this First Supplement or any other Loan
Document. It is expressly understood and agreed that in no event will Lender be
obligated or liable in any way to complete the Project or to pay for any Project
Costs.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have caused this First Supplement to be
duly executed by their respective authorized officers as of the day and year
first written above.
BORROWER:
NEDAK ETHANOL, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and General Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Board Chairman
LENDER:
FARM CREDIT SERVICES OF GRAND FORKS, FLCA
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[SIGNATURE PAGE FOR FIRST SUPPLEMENT TO
MASTER CREDIT AGREEMENT]
EXHIBIT 3A
Construction and Term Loan Note
$42,500,000 Grand Forks, North Dakota
February 14, 2007
FOR VALUE RECEIVED, the undersigned, NEDAK ETHANOL, LLC, a Nebraska limited
liability company ("Borrower"), hereby promises to pay to the order of FARM
CREDIT SERVICES OF GRAND FORKS, FLCA (together with any subsequent holder
hereof, "Lender") or its successors and assigns, at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, (a) on the Construction and
Term Loan Maturity Date (as defined in the Master Credit Agreement between
Borrower and Lender dated as of February 14, 2007 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement")), and the First Supplement to the Master Credit Agreement
(Construction and Term Loan) between Borrower and Lender, dated the same date,
the principal sum of Forty-Two Million Five Hundred Thousand and No/100 Dollars
($42,500,000.00) or so much of the unpaid principal amount of the Construction
and Term Loan (as defined in the Credit Agreement) as has advanced by Lender to
Borrower pursuant to the Credit Agreement, and (b) on each date specified in the
Credit Agreement prior to the Construction and Term Loan Maturity Date, the
principal amount of the Construction and Term Loan payable to Lender on such
date as specified therein, in lawful money of the United States of America in
immediately available funds, and to pay interest on the unpaid principal amount
thereof from time to time outstanding, in like funds, at said office, at the
rate or rates per annum and payable on such dates as provided in the Credit
Agreement. Borrower also promises to pay Default Interest (as defined in the
Credit Agreement), on demand, on the terms and conditions set forth in the
Credit Agreement. In addition, should legal action or an attorney-at-law be
utilized to collect any amount due hereunder, Borrower further promises to pay
all costs of collection, including the reasonable attorneys' fees of Lender.
All borrowings evidenced by this Construction and Term Loan Note and all
payments and prepayments of the principal hereof and the date thereof shall be
recorded by Lender in its internal records; provided, that the failure of Lender
to make such a notation or any error in such notation will not affect the
obligations of Borrower to make the payments of principal and interest in
accordance with the terms of this Construction and Term Loan Note and the Credit
Agreement.
This Construction and Term Loan Note is issued in connection with, and is
entitled to the benefits of, the Credit Agreement which, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, all upon the terms and conditions therein
specified.
THIS CONSTRUCTION AND TERM LOAN NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NORTH DAKOTA AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
NEDAK ETHANOL, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and General Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Board Chairman
EXHIBIT 3B
Form of
Draw Request
Farm Credit Services of Grand Forks, FLCA
2424 32nd Avenue South, ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇▇▇/▇▇. ▇▇▇▇▇▇▇▇:
Reference is made to the Master Credit Agreement and First Supplement thereto,
each dated February 14, 2007 (as may have been amended and in effect on the date
hereof, the "Credit Agreement"), between the undersigned, as Borrower and Farm
Credit Services of Grand Forks, FLCA, as Lender. Terms defined in the Credit
Agreement are used herein with the same meanings. This notice constitutes a Draw
Request, and Borrower hereby requests an Advance under the Credit Agreement, and
in that connection Borrower specifies the following information with respect to
the Construction Borrowing requested hereby:
(A) Principal amount of the requested Advance(1): ___________________
(B) Date of the requested Advance (which is a Business Day) ____________
Attached hereto are each of the documents requested by Lender in support of
satisfaction of the requirements specified in the Disbursing Agreement.
The Borrower hereby represents and warrants that the conditions for an
Advance specified in the Credit Agreement have been satisfied.
Very truly yours,
NEDAK ETHANOL, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-------------------------------
(1) Not less than $100,000.
