Exhibit 10.4
Loan No. RI0340T02C
CONSTRUCTION AND REVOLVING TERM LOAN SUPPLEMENT
     THIS SUPPLEMENT to the Master Loan Agreement dated November 20, 2006, (the
“MLA”), is entered into as of December 24, 2008 between FARM CREDIT SERVICES OF
AMERICA, FLCA (“Farm Credit”) and ABE FAIRMONT, LLC, Fairmont, Nebraska (the
“Company”), and amends and restates the Supplement dated February 17, 2006 and
numbered RI0340T02, as amended.
     SECTION 1. The Construction and Revolving Term Loan Commitment. On the
terms and conditions set forth in the MLA and this Supplement, Farm Credit
agrees to make 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, $25,000,000.00 less the amounts scheduled to be repaid during the
period set forth below in Section 6 (the “Commitment”). Requests for advances
which are for the purpose of paying the costs to construct the ethanol plant
described below shall be accompanied by documentation evidencing such costs.
Within the limits of the Commitment, the Company may borrow, repay and reborrow.
     The Company may, in its sole discretion, elect to permanently reduce the
amount of the Commitment by giving Agent (as that term is defined in the MLA)
ten (10) days prior written notice. Said election shall be made only if the
Company is not in default at the time of the election and will remain in
compliance with all financial covenants after such reduction. Any such reduction
shall be treated as an early, voluntary reduction of the Commitment amount and
shall not delay or reduce the amount of any scheduled Commitment reduction under
Section 6 hereof (which reductions shall continue in the increments and on the
dates determined in accordance with Section 6), but rather shall result in an
earlier expiration of the Commitment and final maturity of the loans.
     SECTION 2. Purpose and Transfer. 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 to provide working capital to the Company. In addition, the
purpose of the Commitment is to consolidate under this Supplement the Company’s
existing indebtedness to CoBank under the Construction and Revolving Term Loan
Supplement dated November 20, 2006 and numbered RI0475T02, as amended (the
“Existing Agreement”). The Company agrees that on the date when all conditions
precedent to Agent’s obligation to extend credit hereunder have been satisfied:
(A) the principal balance outstanding under the Existing Agreement shall be
transferred to and charged against the Commitment; (B) all accrued obligations
of the Company under the Existing Agreement for the payment of interest or other
charges shall be transferred to and become part of the Company’s obligations
under this Supplement as if fully set forth herein; and (C) the Existing
Agreement and the promissory note set forth in or executed in connection
therewith shall be deemed replaced and superseded, but the indebtedness
evidenced by such note shall not be deemed to have been paid off, by this
Supplement and the MLA. In addition, in the event any balances bearing interest
at a fixed rate are outstanding on the date such loans are being transferred
hereto, then such balances shall continue to be subject to such rates for the
remaining agreed upon fixed rate periods but shall otherwise be subject to the
terms hereof. The Company agrees to utilize the proceeds of the Commitment for
these purposes only.
     SECTION 3. Term. The term of the Commitment shall be from the date hereof,
up to and including December 1, 2016, or such later date as Agent may, in its
sole discretion, authorize in writing.

 

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     SECTION 4. Reserved.
     SECTION 5. Interest and Fees.
          (A) Interest. The Company agrees to pay interest on the unpaid
principal balance of the loans in accordance with one or more of the following
interest rate options, as selected by the Company:
               (1) One-Month LIBOR Index Rate. At a rate (rounded upward to the
nearest 1/100th and adjusted for reserves required on “Eurocurrency Liabilities”
[as hereinafter defined] for banks subject to “FRB Regulation D” [as hereinafter
defined] or required by any other federal law or regulation) per annum equal at
all times to 340 basis points above the annual rate quoted by the British
Bankers Association (the “BBA”) at 11:00 a.m. London time for the offering of
one (1)-month U.S. dollars deposits, as published by Bloomberg or another major
information vender listed on BBA’s official website on the first U.S. Banking
Day (as hereinafter defined) in each week with such rate to change weekly on
such day. The rate shall be reset automatically, without the necessity of notice
being provided to the Company or any other party, on the first U.S. Banking Day
of each succeeding week, and each change in the rate shall be applicable to all
balances subject to this option. Information about the then-current rate shall
be made available upon telephonic request. For purposes hereof: (1) “U.S.
Banking Day” shall mean a day on which CoBank is open for business and banks are
open for business in New York, New York; (2) “Eurocurrency Liabilities” shall
have the meaning as set forth in “FRB Regulation D”; and (3) “FRB Regulation D”
shall mean Regulation D as promulgated by the Board of Governors of the Federal
Reserve System, 12 CFR Part 204, as amended.
               (2) 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 30 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
five.
               (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 five; 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

 

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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.
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) Commitment Fee. In consideration of the Commitment, the Company
agrees to pay to Agent a commitment fee on the average daily unused portion of
the Commitment (as permanently reduced by the Company, if applicable, under
Section 1 above) at a rate of 5/8 of 1% per annum (calculated on a 360 day
basis), payable monthly in arrears by the 20th day following each month. Such
fee shall be payable for each month (or portion thereof) occurring during the
original or any extended term of the Commitment.
     SECTION 6. Promissory Note. The Company promises to repay on the dates set
forth below, the outstanding principal, if any, that is in excess of the listed
amounts:

          Payment Date   Reducing Commitment Amount
December 1, 2014
  $ 20,000,000.00  
June 1, 2015
  $ 15,000,000.00  
December 1, 2015
  $ 10,000,000.00  
June 1, 2016
  $ 5,000,000.00  
December 1, 2016
  $ 0.00  

     Provided, however, that if Construction and Term Loan Supplement
No. RI0340T01C dated December 24, 2008, has been repaid prior to its maturity
date of May 20,2014, then repayment for this loan shall begin on the first day
of the month that is six months after the first day of the month following the
repayment of RI0340T01C, and reductions in principal as noted above shall occur
every six months

 

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      Construction and Term Loan Supplement RI0340T02C   - 4 - ABE Fairmont, LLC
    Fairmont, Nebraska    

thereafter. 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. In addition to the broken funding surcharge
provision of the MLA, prepayment of any outstanding principal balance due to
refinancing, or refinancing of any unadvanced Commitment, up to and including
July 1, 2009, will result in a 3% prepayment charge in addition to any broken
funding surcharges which may be applicable, based on the amounts prepaid and on
the total amount of the Commitments in effect at such time.
     SECTION 8. Security. The Company’s obligations hereunder and, to the extent
related hereto, the MLA, shall be secured as provided in the Security Section of
the MLA, including without limitation as a future advance under any existing
mortgage or deed of trust.
     SECTION 9. Reserved.
     SECTION 10. Representations and Warranties. In addition to the
representations and warranties contained in the MLA, the Company represents and
warrants as follows:
     Environmental Compliance. Without limiting the provisions of the MLA, all
property owned or leased by the Company, including, without limitation, the
Property and the Improvements, and all operations conducted by it are in
compliance in all material respects with all Laws and all Project Approvals
relating to environmental protection, the failure to comply with which could
have a material adverse effect on the condition, financial or otherwise,
operations, properties, or business of the Company, or on the ability of the
Company to perform its obligations under the loan documents, except as the
Company has disclosed to Agent in writing.
     SECTION 11. Reserved.
     SECTION 12. Reserved.
     SECTION 13. Reserved.
     SECTION 14. Other Rights of Agent. The Company shall indemnify and hold
Farm Credit and Agent harmless from and against all liability, cost or damage
arising out of this Agreement or any other loan document or the transactions
contemplated hereby and thereby, including, without limitation, (i) any alleged
or actual violation of any Law or Project Approval relating to the Property or
the Improvements and (ii) any condition of the Property or the Improvements
whether relating to the quality of construction or otherwise and whether Agent
elects to complete construction upon an Event of Default or discontinues or
suspends construction pursuant to this Section 14. Agent may commence, appear in
or defend any such action or proceeding or any other action or proceeding
purporting to affect the rights, duties or liabilities of the parties hereunder,
or the Improvements, or the Property, or the payment of the Commitment, and the
Company agrees to pay all of Agent’s costs and expenses, including its
reasonable attorneys’ fees, in any such actions. The obligations of the Company
under this Subsection 14(E) shall survive the termination of this Agreement. As
to any action or inaction taken by Agent hereunder, Agent shall not be liable
for any error of judgment or mistake of fact or law, absent gross negligence or
willful

 

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misconduct on its part. The Company’s obligation to indemnify and hold Agent
harmless hereunder will exclude any liability, cost, or damage related to
Agent’s breach of this Agreement or for Agent’s gross negligence or willful
misconduct.
     SECTION 15. Reserved.
     SECTION 16. Reserved.
     SECTION 17. Reserved.
     SECTION 18. Reserved.
     SECTION 19. Remedies Upon Default. In addition to the remedies set forth in
the MLA, upon the occurrence of and during the continuance of each and every
Event of Default Agent may (but shall not be obligated to) take over and
complete construction of the Improvements in accordance with plans and
specifications approved by Agent with such changes as Agent may, in its sole
discretion, deem appropriate, all at the risk, cost, and expense of the Company.
Agent may assume or reject any contracts entered into by the Company in
connection with the Improvements, and may enter into additional or different
contracts for services, labor, and materials required, in the judgment of Agent,
to complete the construction of the Improvements and may pay, compromise, and
settle all claims in connection with the construction of the Improvements. All
sums, including reasonable attorneys’ fees, charges, or fees for supervision and
inspection of the construction, and for any other necessary purpose in the
discretion of Agent, expended by Agent in completing the construction of the
Improvements (whether aggregating more or less than the amount of this
Commitment) shall be deemed advances made by Agent to the Company under this
Commitment, and the Company shall be liable to Agent for the repayment of such
sums, together with interest on such amounts from the date of their expenditure
at the default rate specified above. Agent may, in its sole discretion, at any
time, abandon work on the construction of the Improvements after having
commenced such work, and may recommence such work at any time, it being
understood that nothing in this Section shall impose any obligation on Agent to
either complete or not to complete the construction of the Improvements. For the
purposes of carrying out the provisions of this Section, the Company irrevocably
appoints Agent, its attorney-in-fact, with full power of substitution, to
execute and deliver all such documents, pay and receive such funds, and take
such action as may be necessary, in the judgment of Agent, to complete the
construction of the Improvements.
     IN WITNESS WHEREOF, the parties have caused this Supplement to be executed
by their duly authorized officers as of the date shown above.

                      FARM CREDIT SERVICES   ABE FAIRMONT, LLC OF AMERICA, FLCA
       By ADVANCED BIOENERGY, LLC,              its sole member
 
                   
By:
  /s/ Shane Frahm   By:   /s/ Richard Peterson        
 
                   
 
                   
Title:
  Vice President   Title:   CEO/CFO