Exhibit 10.1


 


CONSTRUCTION
LOAN AGREEMENT


 


	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call/Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
  $10,000,000.00

  	
   

  	
  04-28-2009

  	
   

  	
  01-05-2010

  	
   

  	
  15525078252

  	
   

  	
  1A2/101

  	
   

  	
   

  	
   

  	
  Krugcg

  	
   

  	
   

  



 


References in the boxes above are for Lender’s use only and do not limit
the applicability of this document to any particular loan or item. 

Any item above containing “***”  has
been omitted due to text length limitations.


 


	
  Borrower:

  	
   

  	
  TOWER TECH SYSTEMS INC

  	
   

  	
  Lender:

  	
   

  	
  GREAT WESTERN BANK

  
	
   

  	
   

  	
  101 S 16TH ST PO BOX 1957

  	
   

  	
   

  	
   

  	
  Sioux Falls

  
	
   

  	
   

  	
  MANITOWOC, Wl 54221-1957

  	
   

  	
   

  	
   

  	
  200 E 10th Street 

  Sioux Falls, SD 57104

  



 


THIS CONSTRUCTION LOAN AGREEMENT dated April 28, 2009,
is made and executed between TOWER TECH SYSTEMS INC (“Borrower”) and GREAT
WESTERN BANK (“Lender”) on the following terms and conditions. Borrower has
applied to Lender for one or more loans for purposes of constructing the
Improvements on the Real Property described below. Lender is willing to lend
the loan amount to Borrower solely under the terms and conditions specified in
this Agreement and in the Related Documents, to each of which Borrower agrees. Borrower
understands and agrees that: (A) in granting, renewing, or extending any
Loan, Lender is relying upon Borrower’s representations, warranties, and
agreements as set forth in this Agreement, and (B) all such Loans shall be
and remain subject to the terms and conditions of this Agreement.


 


TERM. This
Agreement shall be effective as of April 28, 2009, and shall continue in
full force and effect until such time as all of Borrower’s Loans in favor of
Lender have been paid in full, including principal, interest, costs, expenses,
attorneys’ fees, and other fees and charges, or until such time as the parties
may agree in writing to terminate this Agreement.


 


ADVANCE AUTHORITY. The following person or persons are authorized to request advances and
authorize payments under the line of credit until Lender receives from
Borrower, at Lender’s address shown above, written notice of revocation of such
authority: STEVE HUNTINGTON, CHIEF FINANCIAL
OFFICER of TOWER TECH SYSTEMS INC.


 


LOAN. The Loan shall be in an amount not to exceed
the principal sum of U.S. $10,000,000.00 and
shall bear interest on so much of the principal sum as shall be advanced
pursuant to the terms of this Agreement and the Related Documents. The Loan
shall bear interest on each Advance from the date of the Advance in accordance
with the terms of the Note. Borrower shall use the Loan Funds solely for the
payment of: (A) the costs of constructing the Improvements and equipping the
Project in accordance with the Construction Contract; (B) other costs and
expenses incurred or to be incurred in connection with the construction of the
Improvements as Lender in its sole discretion shall approve; and (C) if permitted
by Lender, interest due under the Note, including all expenses and all loan and
commitment fees described in this Agreement. The Loan amount shall be subject at
all times to all maximum limits and conditions set forth in this Agreement or
in any of the Related Documents, including without limitation, any limits relating
to loan to value ratios and acquisition and Project costs.


 


PROJECT DESCRIPTION. The word “Project” as used in this Agreement
means the construction and completion of all Improvements contemplated by this
Agreement, including without limitation the erection of the building or
structure on the Real Property identified to this Agreement by Borrower and Lender,
installation of equipment and fixtures, landscaping, and all other work
necessary to make the Project usable and complete for the intended purposes.
The Project includes the following work: 


 


CONSTRUCTION & PERMANENT FINANCE
FOR MANUFACTURING FACILITY IN BRANDON, SD (LOT 3, BLOCK 1, CORSON DEVELOPMENT
PARK ADDN LEGALLY KNOWN AS 1820 N TOWER TECH AVE, BRANDON, SD).


 


The
word “Property” as used in this Agreement means the Real Property together with
all Improvements, all equipment, fixtures, and other articles of personal
property now or subsequently attached or affixed to the Real Property, together
with all accessions, parts, and additions to, all replacements of, and all
substitutions for any of such property, and all proceeds (including insurance
proceeds and refunds of premiums) from any sale or other disposition of such
property. The real estate described below
constitutes the Real Property as used in this Agreement.


 


The real estate legally described as:


LOT 3 IN BLOCK 1 OF CORSON DEVELOPMENT PARK ADDITION TO THE CITY OF
BRANDON, MINNEHAHA COUNTY, SOUTH DAKOTA, ACCORDING TO THE RECORDED PLAT
THEREOF. 


Its address is commonly known as:


Real Property located at 1820 N TOWER TECH AVE, BRANDON, SD 57005.


 


FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower shall assume
and pay upon demand all out-of-pocket expenses
incurred by Lender in connection with the preparation of loan
documents and the making of the Loan, including without limitation the
following: (A) all closing costs, loan fees, and disbursements; (B) all
expenses of Lender’s legal counsel; and (C) all title examination fees, title
insurance premiums, appraisal fees, survey costs, required fees, and filing and
recording fees.


 


NO CONSTRUCTION PRIOR TO RECORDING OF SECURITY DOCUMENT. Borrower will not permit any work or materials
to be furnished in connection with the Project until (A) Borrower has
signed the Related Documents; (B) Lender’s mortgage or deed of trust and
other Security Interests in the Property have been duly recorded and perfected;
(C) Lender has been provided evidence, satisfactory to Lender, that
Borrower has obtained all insurance required under this Agreement or any
Related Documents and that Lender’s liens on the Property and Improvements are
valid perfected first liens, subject only to such exceptions, if any,
acceptable to Lender.


 


REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:


 


Organization. Borrower is a corporation for profit which is,
and at all times shall be, duly organized, validly existing, and in good
standing under and by virtue of the laws of the State of Wisconsin. Borrower is
duly authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental licenses
and approvals for each state in which Borrower is doing business. Specifically,
Borrower is, and at all times shall be, duly qualified as a foreign corporation
in all states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full power and
authority to own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower maintains its
principal office at 101 S 16TH ST PO BOX 1957, MANITOWOC, Wl 54221-1957. Unless
Borrower has designated otherwise in writing, this is the principal office at
which Borrower keeps its books and records including its records concerning the
Collateral. Borrower will notify Lender prior to any change in the location of
Borrower’s state of organization or any change in Borrower’s name. Borrower
shall do all things necessary to preserve and to keep in full force and effect
its  existence, rights and
privileges, and shall comply with all regulations, rules, ordinances, statutes,
orders and decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower’s business activities.


 


Assumed Business Names. Borrower has filed or recorded all documents
or filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list of
all assumed business names under which Borrower does  business: None.


 


Authorization. Borrower’s execution, delivery, and
performance of this Agreement and all the Related Documents have been duly
authorized by all necessary action by Borrower and do not conflict with, result
in a violation of, or constitute a default under (1) any provision of (a) Borrower’s
articles of incorporation or organization, or bylaws, or (b) any agreement
or other instrument binding upon Borrower or (2) any law, governmental regulation,
court decree, or order applicable to Borrower or to Borrower’s properties.


 


Financial Information. Each of Borrower’s financial statements
supplied to Lender truly and completely disclosed Borrower’s financial
condition as of the date of the statement, and there has been no material
adverse change in Borrower’s financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.


 


Legal Effect. This Agreement constitutes, and any instrument
or agreement Borrower is required to give under this Agreement when delivered
will constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.


 


Properties. Except as contemplated by this Agreement or as
previously disclosed in Borrower’s financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of Borrower’s
properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such  properties. All of Borrower’s properties are titled
in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years.


 


Hazardous Substances. Except as disclosed to and acknowledged by
Lender in writing, Borrower represents and warrants that: (1) During the
period of Borrower’s ownership of the Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance by any person on, under, about or from any
of the Collateral. (2) Borrower has no knowledge of,  or reason to believe that there has been (a) any
breach or violation of any Environmental Laws; (b) any use, generation,
manufacture, storage,  treatment,
disposal, release or threatened release of any Hazardous Substance on, under,
about or from the Collateral by any prior owners or occupants of any of the
Collateral; or (c) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral shall use,
generate, manufacture, store, treat, 


 

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


dispose of or release any Hazardous Substance on,
under, about or from any of the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all Environmental
Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to
make such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower’s expense and for
Lender’s purposes only and shall not be construed to create any responsibility
or liability on the part of Lender to Borrower or to any other person. The
representations and warranties contained herein are based on Borrower’s due
diligence in investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future claims against
Lender for indemnity or contribution in the event Borrower becomes liable for
cleanup or other costs under any such laws, and (2) agrees to indemnify, defend,
and hold harmless Lender against any and all claims, losses, liabilities,
damages, penalties, and expenses which Lender may directly or indirectly
sustain or suffer resulting from a breach of this section of the Agreement or
as a consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the
Collateral. The provisions of this section of the Agreement, including the
obligation to indemnify and defend, shall survive the payment of the
Indebtedness and the termination, expiration or satisfaction of this Agreement
and shall not be affected by Lender’s acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.


 


Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred
which may materially adversely affect Borrower’s financial condition or
properties, other than litigation, claims, or other events, if any, that have
been disclosed to and acknowledged by Lender in writing.


 


Taxes. To the best of Borrower’s knowledge, all of
Borrower’s tax returns and reports that are or were required to be filed, have
been filed, and all taxes, assessments and other governmental charges have been
paid in full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate reserves
have been provided.


 


Lien Priority. Unless otherwise previously disclosed to
Lender in writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security Interests on
or affecting any of the Collateral directly or indirectly securing repayment of
Borrower’s Loan and Note, that would be prior or that may in any way be
superior to Lender’s Security Interests and rights in and to such Collateral.


 


Binding Effect. This Agreement, the Note, all Security
Agreements (if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.


 


Title to Property. Borrower has, or on the date of first
disbursement of Loan proceeds will have, good and marketable title to the
Collateral free and clear of all defects, liens, and encumbrances, excepting
only liens for taxes, assessments, or governmental charges or levies not yet delinquent
or payable without penalty or interest, and such liens and encumbrances as may
be approved in writing by the Lender. The Collateral is contiguous to publicly
dedicated streets, roads, or highways providing access to the Collateral.


 


Project Costs. The Project costs are true and accurate
estimates of the costs necessary to complete the Improvements in a good and workmanlike
manner according to the Plans and Specifications presented by Borrower to
Lender, and Borrower shall take all steps necessary to prevent the actual cost
of the Improvements from exceeding the Project costs.


 


Utility Services. All utility services appropriate to the use of
the Project after completion of construction are available at the boundaries of
the Collateral.


 


Assessment of Property. The Collateral is and will continue to be
assessed and taxed as an independent parcel by all governmental authorities.


 


Compliance with Governing
Authorities. Borrower
has examined and is familiar with all the easements, covenants, conditions,
restrictions, reservations, building laws, regulations, zoning ordinances, and
federal, state, and local requirements affecting the Project. The Project will
at all times and in all respects conform to and comply with the requirements of
such easements, covenants, conditions, restrictions, reservations, building
laws, regulations, zoning ordinances, and federal, state, and local
requirements.


 


Survival of Representations and
Warranties. Borrower
understands and agrees that in extending Loan Advances, Lender is relying on
all representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by Borrower to
Lender under this Agreement or the Related Documents. Borrower further agrees
that regardless of any investigation made by Lender, all such representations,
warranties and covenants will survive the extension of Loan Advances and
delivery to Lender of the Related Documents, shall be continuing in nature,
shall be deemed made and redated by Borrower at the time each Loan Advance is
made, and shall remain in full force and effect until such time as Borrower’s
Indebtedness shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.


 


CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to
the fulfillment to Lender’s satisfaction of all of the conditions set forth in
this Agreement and in the Related Documents.


 


Approval of Contractors,
Subcontractors, and Materialmen. Lender shall have approved a list of all contractors employed in
connection with  the construction
of the Improvements, showing the name, address, and telephone number of each
contractor, a general description of the nature of the work to be done, the
labor and materials to be supplied, the names of materialmen, if known, and the
approximate dollar value of the labor, work, or materials with respect to each
contractor or materialman. Lender shall have the right to communicate with any
person to verify the facts disclosed by the list or by any application for any
Advance, or for any other purpose.


 


Plans, Specifications, and Permits. Lender shall have received and accepted a
complete set of written Plans and Specifications setting forth all Improvements
for the Project, and Borrower shall have furnished to Lender copies of all
permits and requisite approvals of any governmental body necessary for the
construction and use of the Project.


 


Architect’s and Construction
Contracts. Borrower
shall have furnished in form and substance satisfactory to Lender an executed
copy of the Architect’s Contract and an executed copy of the Construction
Contract.


 


Budget and Schedule of Estimated
Advances. Lender shall
have approved detailed budget and cash flow projections of total Project costs
and a schedule of the estimated amount and time of disbursements of each
Advance.


 


Borrower’s Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly authorizing
the consummation of the Project and duly authorizing the execution and delivery
of this Agreement, the Note and the Related Documents. In addition, Borrower
shall have provided such other resolutions, authorizations, documents and
instruments as Lender or its counsel, in their sole discretion, may require.


 


Bond. If requested by Lender, Borrower shall have
furnished a performance and payment bond in an amount equal to 100% of the
amount of the Construction Contract, as well as a materialmen’s and mechanics’
payment bond, with such riders and supplements as Lender may require, each in
form and substance satisfactory to Lender, naming the General Contractor as
principal and Lender as an additional obligee.


 


Appraisal. If required by Lender, an appraisal shall be
prepared for the Property, at Borrower’s expense, which in form and substance
shall be satisfactory to Lender, in Lender’s sole discretion, including
applicable regulatory requirements.


 


Plans and Specifications. If requested by Lender, Borrower shall have
assigned to Lender on Lender’s forms the Plans and Specifications for the Project.


 


Environmental Report. If requested by Lender, Borrower shall have
furnished to Lender, at Borrower’s expense, an environmental report and  certificate on the Property in form and
substance satisfactory to Lender, prepared by an engineer or other expert
satisfactory to Lender stating that the Property complies with all applicable
provisions and requirements of the “Hazardous Substances” paragraph set forth
in this Agreement.


 


Soil Report. If requested by Lender, Borrower shall have
furnished to Lender, at Borrower’s expenses, a soil report for the Property in
form and substance satisfactory to Lender, prepared by a registered engineer
satisfactory to Lender stating that the Property is free from soil or other
geological conditions that would preclude its use or development as
contemplated without extra expense for precautionary, corrective or remedial  measures.


 


Survey. If requested by Lender, Borrower shall have
furnished to Lender a survey of recent date, prepared and certified by a
qualified surveyor and providing that the Improvements, if constructed in
accordance with the Plans and Specifications, shall lie wholly within the
boundaries of the Collateral without encroachment or violation of any zoning
ordinances, building codes or regulations, or setback requirements, together
with such other information as Lender in its sole discretion may require.


 


Zoning. Borrower shall have furnished evidence
satisfactory to Lender that the Collateral is duly and validly zoned for the
construction, maintenance, and operation of the Project.


 


Title
Insurance. Borrower
shall have provided to Lender an ALTA Lender’s extended coverage policy of
title insurance with such endorsements as Lender may require, issued by a title
insurance company acceptable to Lender and in a form, amount, and content
satisfactory to Lender, insuring or agreeing to insure that Lender’s security
agreement or other security document on the Property is or will be upon
recordation a valid first lien on the Property free and clear of all defects,
liens, encumbrances, and exceptions except those as specifically accepted by
Lender in writing. If requested by Lender, Borrower shall provide to Lender, at
Borrower’s expense, a foundation endorsement to the title policy upon the completion
of each foundation for the Improvements, showing no encroachments, and upon
completion an endorsement which insures the


 


2

















 


CONSTRUCTION LOAN AGREEMENT


(Continued)


 


lien-free completion of the Improvements.


 


Insurance. Unless waived by Lender in writing, Borrower
shall have delivered to Lender the following insurance policies or evidence thereof:
(a) an all risks course of construction insurance policy (builder’s risk), with
extended coverage covering the Improvements issued in an amount and by a
company acceptable to Lender, containing a loss payable or other endorsement
satisfactory to Lender insuring Lender as mortgagee, together with such other
endorsements as may be required by Lender, including stipulations that
coverages will not be cancelled or diminished without at least ten (10) days
prior written notice to Lender; (b) owners and General Contractor general
liability insurance, public liability and workmen’s compensation insurance; (c) flood
insurance if required by Lender or applicable law; and (d) all other
insurance required by this Agreement or by the Related Documents.


 


Workers’ Compensation Coverage. Provide to Lender proof of the General
Contractor’s compliance with all applicable workers’ compensation laws and
regulations with regard to all work performed on the Project.


 


Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.


 


Satisfactory Construction. All work usually done at the stage of
construction for which disbursement is requested shall have been done in a good
and workmanlike manner and all materials and fixtures usually furnished and
installed at that stage of construction shall have been furnished and
installed, all in compliance with the Plans and Specifications. Borrower shall
also have furnished to Lender such proofs as Lender may require to establish
the progress of the work, compliance with applicable laws, freedom of the
Property from liens, and the basis for the requested disbursement.


 


Certification. Borrower shall have furnished to Lender a
certification by an engineer, architect, or other qualified inspector
acceptable to Lender that the construction of the Improvements has complied and
will continue to comply with all applicable statutes, ordinances, codes,
regulations, and similar requirements.


 


Lien Waivers. Borrower shall have obtained and attached to
each application for an Advance, including the Advance to cover final payment
to the General Contractor, executed acknowledgments of payments of all sums due
and releases of mechanic’s and materialmen’s liens, satisfactory to Lender,
from any party having lien rights, which acknowledgments of payment and
releases of liens shall cover all work, labor, equipment, materials done,
supplied, performed, or furnished prior to such application for an Advance.


 


No Event of Default. There shall not exist at the time of any
Advance a condition which would constitute an Event of Default under this
Agreement or under any Related Document.


 


DISBURSEMENT OF LOAN FUNDS. The following provisions relate to the
disbursement of funds from the Loan Fund.


 


Application for Advances. Each application shall be stated on a standard
AIA payment request form or other form approved by Lender, executed by
Borrower, and supported by such evidence as Lender shall reasonably require. Borrower
shall apply only for disbursement with respect to work actually done by the
General Contractor and for materials and equipment actually incorporated into
the Project. Each application for an Advance shall be deemed a certification of
Borrower that as of the date of such application, all representations and
warranties contained in the Agreement are true and correct, and that Borrower
is in compliance with all of the provisions of this Agreement.


 


Payments. At the sole option of Lender, Advances may be
paid in the joint names of Borrower and the General Contractor,
subcontractor(s), or supplier(s) in payment of sums due under the
Construction Contract. At its sole option, Lender may directly pay the General Contractor
and any subcontractors or other parties the sums due under the Construction
Contract. Borrower appoints Lender as its attorney-in-fact to make such
payments. This power shall be deemed coupled with an interest, shall be
irrevocable, and shall survive an Event of Default under this Agreement.


 


Projected Cost Overruns. If Lender at any time determines in its sole
discretion that the amount in the Loan Fund is insufficient, or will be insufficient,
to complete fully and to pay for the Project, then within ten (10) days after
receipt of a written request from Lender, Borrower shall deposit in the Loan
Fund an amount equal to the deficiency as determined by Lender. The judgment
and determination of Lender under this section shall be final and conclusive.
Any such amounts deposited by Borrower shall be disbursed prior to any Loan
proceeds.


 


Final Payment to General Contractor.
Upon completion of the
Project and fulfillment of the Construction Contract to the satisfaction of
Lender and provided sufficient Loan Funds are available, Lender shall make an
Advance to cover the final payment due to the General Contractor upon delivery
to Lender of endorsements to the ALTA title insurance policy following the
posting of the completion notice, as provided under applicable law. Construction
shall not be deemed complete for purposes of final disbursement unless and
until Lender shall have received all of the  following:


 


(1)  Evidence
satisfactory to Lender that all work under the Construction Contract requiring
inspection by any governmental authority with jurisdiction has been duly
inspected and approved by such authority, that a certificate of occupancy has
been issued, and that all parties performing work have been paid, or will be
paid, for such work;


 


(2)  A
certification by an engineer, architect, or other qualified inspector
acceptable to Lender that the Improvements have been completed substantially in
accordance with the Plans and Specifications and the Construction Contract,
that direct connection has been made to all utilities set forth in the Plans
and Specifications, and that the Project is ready for occupancy; and


 


(3)  Acceptance
of the completed improvements by Lender and Borrower.


 


Construction Default. If Borrower fails in any respect to comply
with the provisions of this Agreement or if construction ceases before
completion regardless of the reason, Lender, at its option, may refuse to make
further Advances, may accelerate the indebtedness under the terms of the Note,
and without thereby impairing any of its rights, powers, or privileges, may
enter into possession of the construction site and perform or cause to be
performed any and all work and labor necessary to complete the improvements,
substantially in accordance with the Plans and Specifications.


 


Damage or Destruction. If any of the Collateral or Improvements is
damaged or destroyed by casualty of any nature, within sixty (60) days
thereafter Borrower shall restore the Collateral and Improvements to the
condition in which they were before such damage or destruction with funds other
than those in the Loan Fund. Lender shall not be obligated to make
disbursements under this Agreement until such restoration has been
accomplished.


 


Adequate
Security. When any
event occurs that Lender determines may endanger completion of the Project or
the fulfillment of any condition or covenant in this Agreement, Lender may
require Borrower to furnish, within ten (10) days after delivery of a
written request, adequate security to eliminate, reduce, or indemnify Lender
against, such danger. In addition, upon such occurrence, Lender in its sole
discretion may advance funds or agree to undertake to advance funds to any
party to eliminate, reduce, or indemnify Lender against, such danger or to
complete the Project. All sums paid by Lender pursuant to such agreements or
undertakings shall be for Borrower’s account and shall be without prejudice to
Borrower’s rights, if any, to receive such funds from the party to whom paid. All
sums expended by Lender in the exercise of its option to complete the Project
or protect Lender’s interests shall be payable to Lender on demand together
with interest from the date of the Advance at the rate applicable to the Loan. In
addition, any Advance of funds under this Agreement, including without
limitation direct disbursements to the General Contractor or other parties in
payment of sums due under the Construction Contract, shall be deemed to have
been expended by or on behalf of Borrower and to have been secured by Lender’s
Mortgage, if any, on the Collateral.


 


CESSATION OF ADVANCES. If Lender has made any commitment to make any
Loan to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies,
becomes incompetent or becomes insolvent, files a petition in bankruptcy or
similar proceedings, or is adjudged a bankrupt; (C) there occurs a
material adverse change in Borrower’s financial condition, in the financial
condition of any Guarantor, or in the value of any Collateral securing any Loan;
or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify
or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or
(E) Lender in good faith deems itself insecure, even though no Event of
Default shall have occurred.


 


LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not
constitute or be interpreted as either (A) an approval or  acceptance by Lender of the work done through
the date of the Advance, or (B) a representation or indemnity by Lender to
any party against any deficiency or defect in the work or against any breach of
any contract. Inspections and approvals of the Plans and Specifications, the
Improvements, the workmanship and materials used in the Improvements, and the
exercise of any other right of inspection, approval, or inquiry granted to
Lender in this Agreement are acknowledged to be solely for the protection of
Lender’s interests, and under no circumstances shall they be construed to
impose any responsibility or liability of any nature whatsoever on Lender to
any party. Neither Borrower nor any contractor, subcontractor, materialman,
laborer, or any other person shall rely, or have any right to rely, upon Lender’s
determination of the appropriateness of any Advance. No disbursement or
approval by Lender shall constitute a representation by Lender as to the nature
of the Project, its construction, or its intended use for Borrower or for any
other person, nor shall it constitute an indemnity by Lender to Borrower or to
any other person against any deficiency or defects in the Project or against
any breach of any contract.


 


AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender
that, so long as this Agreement remains in effect, Borrower will:


 


Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all
material adverse changes in Borrower’s financial condition, and (2) all
existing and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor


 


3

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


which could materially affect the financial condition
of Borrower or the financial condition of any Guarantor.


 


Financial Records. Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower’s books and records at all reasonable times.


 


Financial Statements. Furnish Lender with the following:


 


Annual Statements. As soon as available, but in no event later
than one-hundred-twenty (120) days after the end of each fiscal year, Borrower’s
balance sheet and income statement for the year ended, compiled by a certified
public accountant satisfactory to Lender.


 


Interim Statements. As soon as available, but in no event later
than 45 days after the end of each fiscal quarter, Borrower’s balance sheet and
profit and loss statement for the period ended, prepared by Borrower.


 


Tax Returns. As soon as available, but in no event later
than thirty (30) days after the applicable filing date for the tax reporting
period ended, Federal and other governmental tax returns, prepared by a
certified public accountant satisfactory to Lender.


 


All financial reports required to be provided under
this Agreement shall be prepared in accordance with GAAP, applied on a
consistent basis, and certified by Borrower as being true and correct.


 


Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables,  inventory schedules,
budgets, forecasts, tax returns, and other reports with respect to Borrower’s
financial condition and business operations as Lender may request from time to
time.


 


Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.


 


Insurance. Maintain fire and other risk insurance, hall,
federal crop insurance, public liability insurance, and such other insurance as
Lender may require with respect to Borrower’s properties and operations, in
form, amounts, coverages and with insurance companies acceptable to Lender.
Borrower, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Borrower or
any other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such lender’s loss payable or other endorsements as Lender
may require.


 


Insurance Reports. Furnish to Lender, upon request of Lender,
reports on each existing insurance policy showing such information as Lender
may reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property
values on the basis of which insurance has been obtained, and the manner of
determining those values; and (6) the expiration date of the policy. In
addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender determine,
as applicable, the actual cash value or replacement cost of any Collateral. The
cost of such appraisal shall be paid by Borrower.


 


Guaranties. Prior to disbursement of any Loan proceeds,
furnish executed guaranties of the Loans in favor of Lender, executed by the
guarantor named below, on Lender’s forms, and in the amount and under the
conditions set forth in those guaranties.


 


	
  Name of Guarantor

  	
   

  	
  Amount

  	
   

  
	
  BROADWIND
  ENERGY, INC

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  
					



 


Loan Fees, Charges and Expenses. Whether or not the Project is completed,
Borrower also shall pay upon demand all out-of-pocket expenses incurred by
Lender in connection with the preparation of loan documents and the making of
the Loan, including, without limitation, all closing costs, fees, and
disbursements, all expenses of Lender’s legal counsel, and all title
examination fees, title insurance premiums, appraisal fees, survey costs,
required fees, and filing and recording fees.


 


Loan Proceeds. Use the Loan Funds solely for payment of bills
and expenses directly related to the Project.


 


Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the date
on which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower’s properties, income, or profits.
Provided however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (1) the legality
of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower
shall have established on Borrower’s books adequate reserves with respect to
such contested assessment, tax, charge, levy, lien, or claim in accordance with
GAAP.


 


Performance. Perform and comply, in a timely manner, with
all terms, conditions, and provisions set forth in this Agreement, in the
Related Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any default
in connection with any agreement.


 


Inspection. Permit employees or agents of Lender at any
reasonable time to inspect any and all Collateral for the Loan or Loans and
Borrower’s other properties and to examine or audit Borrower’s books, accounts,
and records and to make copies and memoranda of Borrower’s books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer software
programs for the generation of such records) in the possession of a third
party, Borrower, upon request of Lender, shall notify such party to permit
Lender free access to such records at all reasonable times and to provide
Lender with copies of any records it may request, all at Borrower’s expense.


 


Compliance Certificates. Unless waived in writing by Lender, provide
Lender at least annually, with a certificate executed by Borrower’s chief financial
officer, or other officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and correct
as of the date of the certificate and further certifying that, as of the date
of the certificate, no Event of Default exists under this Agreement.


 


Construction of the Project. Commence construction of the Project no later
than April 28, 2009, and cause the Improvements to be constructed and equipped
in a diligent and orderly manner and in strict accordance with the Plans and
Specifications approved by Lender, the Construction Contract, and all
applicable laws, ordinances, codes, regulations, and rights of adjoining or
concurrent property owners. Borrower agrees to complete the Project for
purposes of final payment to the General Contractor on or before January 5,
2010, regardless of the reason for any delay.


 


Defects. Upon demand of Lender, promptly correct any
defect in the Improvements or any departure from the Plans and Specifications
not approved by Lender in writing before further work shall be done upon the
portion of the Improvements affected.


 


Project
Claims and Litigation. Promptly
inform Lender of (1) all material adverse changes in the financial condition of
the General Contractor; (2) any litigation and claims, actual or threatened,
affecting the Project or the General Contractor, which could materially affect
the successful completion of the Project or the ability of the General
Contractor to complete the Project as agreed; and (3) any condition or event
which constitutes a breach or default under any of the Related Documents or any
contract related to the Project.


 


Payment of Claims and Removal of
Liens. (1) Cause all
claims for labor done and materials and services furnished in connection with
the Improvements to be fully paid and discharged in a timely manner, (2) diligently
file or procure the filing of a valid notice of completion of the Improvements,
or such comparable document as may be permitted under applicable lien laws, (3) diligently
file or procure the filing of a notice of cessation, or such comparable
document as may be permitted under applicable lien laws, upon the happening of
cessation of labor on the Improvements for a continuous period of thirty (30)
days or more, and (4) take all reasonable steps necessary to remove all claims
of liens against the Collateral, the Improvements or any part of the Collateral
or Improvements, or any rights or interests appurtenant to the Collateral or Improvements.
Upon Lender’s request, Borrower shall make such demands or claims upon or
against laborers, materialmen, subcontractors, or other persons who have
furnished or claim to have furnished labor, services, or materials in
connection with the Improvements, which demands or claims shall under the laws
of the State of South Dakota require diligent assertions of lien claims upon
penalty of loss or waiver thereof. Borrower shall, within ten (10) days
after the filing of any claim of lien that is disputed or contested by
Borrower, provide Lender with a surety bond issued by a surety acceptable to
Lender sufficient to release the claim of lien or deposit with Lender an amount
satisfactory to Lender for the possibility that the contest will be
unsuccessful. If Borrower fails to remove any lien on the Collateral or
Improvements or provide a bond or deposit pursuant to this provision, Lender
may pay such lien, or may contest the validity of the lien, and Borrower shall
pay all costs and expenses of such contest, including Lender’s reasonable
attorneys’ fees.


 


Taxes and Claims. Pay and discharge when due all of Borrower’s
indebtedness, obligations, and claims that, if unpaid, might become a lien or charge
upon the Collateral or Improvements; provided, however, that Borrower shall not
be required to pay and discharge any such indebtedness, obligation, or claim so
long as (1) its legality shall be contested in good faith by appropriate
proceedings, (2) the indebtedness, obligation, or claim does not become a lien
or charge upon the Collateral or Improvements, and (3) Borrower shall have
established on its books adequate reserves with respect to the amount contested
in accordance with GAAP. If the indebtedness, obligation, or claim does become
a lien or charge upon the Collateral or Improvements, Borrower shall remove the
lien or charge as provided in the preceding paragraph.


 


Environmental Studies. Promptly conduct and complete, at Borrower’s
expense, all such investigations, studies, samplings and testings as may


 


4

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


be requested by Lender or any governmental authority
relative to any substance, or any waste or by-product of any substance defined
as toxic or a hazardous substance under applicable federal, state, or local
law, rule, regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.


 


Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as Lender or
its attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests in the Collateral and Improvements.


 


LENDER’S EXPENDITURES. If  any action or proceeding is commenced that would materially affect
Lender’s interest in the Collateral or if Borrower fails to comply with any
provision of this Agreement or any Related Documents, including but not limited
to Borrower’s failure to discharge or pay when due any amounts Borrower is
required to discharge or pay under this Agreement or any Related Documents,
Lender on Borrower’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or
paying all taxes, liens, security interests, encumbrances and other claims, at
any time levied or placed on any Collateral and paying all costs for insuring, maintaining
and preserving any Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the Note
from the date incurred or paid by Lender to the date of repayment by Borrower. All
such expenses will become a part of the Indebtedness and, at Lender’s option,
will (A) be payable on demand; (B) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (1) the term of any applicable insurance policy; or (2) the
remaining term of the Note; or (C) be treated as a balloon payment which will
be due and payable at the Note’s maturity.


 


NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall not, without the prior
written consent of Lender:


 


Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money, including
capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a
security interest in, or encumber any of Borrower’s assets (except as allowed
as Permitted Liens), or (3) sell with recourse any of Borrower’s accounts,
except to Lender.


 


Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged, (2) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business, or (3) pay any dividends on Borrower’s stock
(other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends, if
Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue
Code of 1986, as amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the shareholders
to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from their status as
Shareholders of a Subchapter S Corporation because of their ownership of shares
of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares
or alter or amend Borrower’s capital structure.


 


Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or
assets to any other person, enterprise or entity, (2) purchase, create or
acquire any interest in any other enterprise or entity, or (3) incur any
obligation as surety or guarantor other than in the ordinary course of
business.


 


Modification of Contract. Make or permit to be made any modification of
the Construction Contract.


 


Liens. Create or allow to be created any lien or
charge upon the Collateral or the Improvements.


 


Agreements. Borrower will not enter into any agreement containing
any provisions which would be violated or breached by the performance of Borrower’s
obligations under this Agreement or in connection herewith.


 


GENERAL PROJECT PROVISIONS. The following provisions relate to the
construction and completion of the Project:


 


Change Orders. All requests for changes in the Plans and
Specifications, other than minor changes involving no extra cost, must be in
writing, signed by Borrower and the architect, and delivered to Lender for its
approval. Borrower will not permit the performance of any work pursuant to any
change order or modification of the Construction Contract or any subcontract
without the written approval of Lender. Borrower will obtain any required
permits or authorizations from governmental authorities having jurisdiction
before approving or requesting a new change order.


 


Purchase of Materials; Conditional
Sales Contracts. No
materials, equipment, fixtures, or articles of personal property placed in or
incorporated into the Project shall be purchased or installed under any
Security Agreement or other agreement whereby the seller reserves or purports
to reserve title or the right of removal or repossession, or the right to
consider such items as personal property after their incorporation into the
Project, unless otherwise authorized by Lender in writing.


 


Lender’s Right of Entry and
Inspection. Lender and
its agents shall have at all times the right of entry and free access to the
Property and the right to inspect all work done, labor performed, and materials
furnished with respect to the Project. Lender shall have unrestricted access to
and the right to copy all records, accounting books, contracts, subcontracts,
bills, statements, vouchers, and supporting documents of Borrower relating in
any way to the Project.


 


Lender’s Right to Stop Work. If Lender in good faith determines that any
work or materials do not conform to the approved Plans and  Specifications or sound building
practices, or otherwise depart from any of the requirements of this Agreement,
Lender may require the work to be stopped and withhold disbursements 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 Improvements on or before the Completion Date.
Lender is under no duty to supervise or inspect the construction or examine any
books and records. Any inspection or examination by Lender is for the sole
purpose of protecting Lender’s security and preserving Lender’s rights under
this Agreement. No default of Borrower will be waived by any inspection by
Lender. In no event will any inspection by Lender be a representation that
there has been or will be compliance with the Plans and Specifications  or that the construction is free from
defective materials or workmanship.


 


Indemnity. Borrower shall indemnify, defend, and hold
Lender harmless from any and all claims asserted against Lender or the Property
by any person, entity, or governmental body, or arising out of or in connection
with the Property, Improvements, or Project. Lender shall be entitled to appear
in any proceedings to defend itself against such claims, and all costs and
expenses attorneys’ fees incurred by Lender in connection with such defense
shall be paid by Borrower to Lender. Lender shall, in its sole discretion, be
entitled to settle or compromise any asserted claims against it, and such
settlement shall be binding upon Borrower for purposes of this indemnification.
All amounts paid by Lender under this paragraph shall be secured by Lender’s
security agreement or Mortgage, if any, on the Property, shall be deemed an
additional principal Advance under the Loan, payable upon demand, and shall
bear interest at the rate applicable to the Loan.


 


Publicity. Lender may display a sign at the construction
site informing the public that Lender is the construction lender for the
Project. Lender may obtain other publicity in connection with the Project
through press releases and participation in ground-breaking and opening
ceremonies and similar events.


 


Actions. Lender shall have the right to commence,
appear in, or defend any action or proceeding purporting to affect the rights,
duties, or liabilities of the parties to this Agreement, or the disbursement of
funds from the Loan Fund. In connection with this right, Lender may incur and
pay reasonable costs, expenses and attorneys’ fees. Borrower covenants to pay
to Lender on demand all such expenses, together with interest from the date
Lender incurs the expense at the rate specified in the Note, and Lender is
authorized to disburse funds from the Loan Fund for such purposes.


 


RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of
setoff in all Borrower’s accounts with Lender (whether checking, savings, or
some other account). This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the future. However, this
does not include any IRA or Keogh accounts, or any trust accounts for which
setoff would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts. 


 


DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:


 


Payment Default. Borrower fails to make any payment when due
under the Loan.


 


Other Defaults. Borrower fails to comply with or to perform
any other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower.


 


False Statements. Any warranty, representation or statement made
or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement
or the Related Documents is false or misleading in any material respect, either
now or at the time made or furnished or becomes false or misleading at any time
thereafter.


 


Insolvency. The dissolution or termination of Borrower’s
existence as a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any  proceeding under any bankruptcy or
insolvency laws by or against Borrower.


 


Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any


 


5

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


collateral document to create a valid and perfected
security interest or lien) at any time and for any reason.


 


Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the Loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower
as to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice
of the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.


 


Breach of Construction Contract. The Improvements are not constructed in
accordance with the Plans and Specifications or in accordance with the terms of
the Construction Contract.


 


Cessation of Construction. Prior to the completion of construction of the
Improvements and equipping of the Project, the construction of the Improvements
or the equipping of the Project is abandoned or work thereon ceases for a
period of more than ten (10) days for any reason, or the Improvements are
not completed for purposes of final payment to the General Contractor prior to January 5,
2010, regardless of the reason for the delay.


 


Transfer of Property. Sale, transfer, hypothecation, assignment, or
conveyance of the Property or the Improvements or any portion thereof or
interest therein by Borrower or any Borrower without Lender’s prior written
consent.


 


Condemnation. All or any material portion of the Collateral
is condemned, seized, or appropriated without compensation, and Borrower does
not within thirty (30) days after such condemnation, seizure, or appropriation,
initiate and diligently prosecute appropriate action to contest in good faith
the validity of such condemnation, seizure, or appropriation.


 


Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness.


 


Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.


 


Adverse Change. A material adverse change occurs in Borrower’s
financial condition, or Lender believes the prospect of payment or performance
of the Loan is impaired.


 


Right to Cure. If any default, other than a default on
Indebtedness, is curable and if Borrower or Grantor, as the case may be, has
not been given a notice of a similar default within the preceding twelve (12)
months, it may be cured if Borrower or Grantor, as the case may be, after
receiving written notice from Lender demanding cure of such default: (1) cure
the default within fifteen (15) days; or (2) if the cure requires more
than fifteen (15) days, immediately initiate steps which Lender deems in Lender’s
sole discretion to be sufficient to cure the default and thereafter continue
and complete all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.


 


EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of Default
and at any time thereafter, Lender may, at its option, but without any
obligation to do so, and in addition to any other right Lender without notice
to Borrower may have, do any one or more of the following without notice to
Borrower: (a) Cancel this Agreement; (b) Institute appropriate
proceedings to enforce the performance of this Agreement; (c) Withhold
further disbursement of Loan Funds; (d) Expend funds necessary to remedy
the default; (e) Take possession of the Property and continue construction
of the Project; (f) Accelerate maturity of the Note and/or Indebtedness
and demand payment of all sums due under the Note and/or Indebtedness; (g) Bring
an action on the Note and/or Indebtedness; (h) Foreclose Lender’s security
agreement or Mortgage, if any, on the Property in any manner available under
law; and (i) Exercise any other right or remedy which it has under the
Note or Related Documents, or which is otherwise available at law or in equity
or by statute.


 


COMPLETION OF IMPROVEMENTS BY LENDER. If Lender takes possession of the Collateral,
it may take any and all actions necessary in its judgment to complete
construction of the Improvements, including but not limited to making changes
in the Plans and Specifications, work, or materials and entering into,
modifying or terminating any contractual arrangements, subject to Lender’s
right at any time to discontinue any work without liability. If Lender elects
to complete the Improvements, it will not assume any liability to Borrower or
to any other person for completing the Improvements or for the manner or
quality of construction of the Improvements, and Borrower expressly waives any
such liability. Borrower irrevocably appoints Lender as its attorney-in-fact,
with full power of substitution, to complete the Improvements, at Lender’s
option, either in Borrower’s name or in its own name. In any event, all sums
expended by Lender in completing the construction of the Improvements will be
considered to have been disbursed to Borrower and will be secured by the
Collateral for the Loan. Any such sums that cause the principal amount of the
Loan to exceed the face amount of the Note will be considered to be an
additional Loan to Borrower, bearing interest at the Note rate and being
secured by the Collateral.  For these
purposes, Borrower assigns to Lender all of its right, title and interest in
and to the Project Documents; however Lender will not have any obligation under
the Project Documents unless Lender expressly hereafter agrees to assume such
obligations in writing. Lender will have the right to exercise any rights of
Borrower under the Project Documents upon the occurrence of an Event of
Default. Except as may be prohibited by applicable law, all of Lender’s rights
and remedies, whether evidenced by this Agreement or by any other writing,
shall be cumulative and may be exercised singularly or concurrently.


 


ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the
following additional documents:


 


Corporate Resolution. Borrower has provided or will provide Lender
with a certified copy of resolutions properly adopted by Borrower’s Board of
Directors, and certified by Borrower’s corporate secretary, assistant
secretary, or other authorized officer, under which Borrower’s Board of Directors
authorized one or more designated officers or employees to execute this
Agreement, the Note and any and all Security Agreements directly or indirectly
securing repayment of the same, and to consummate the borrowings and other
transactions as contemplated under this Agreement, and to consent to the remedies
following any default by Borrower as provided in this Agreement and in any
Security Agreements.


 


Opinion of Counsel. When required by Lender, Borrower has provided
or will provide Lender with an opinion of Borrower’s counsel certifying to and
that: (1) Borrower’s Note, any Security Agreements and this Agreement
constitute valid and binding obligations on Borrower’s part that are enforceable
in accordance with their respective terms; (2) Borrower is validly existing and
in good standing; (3) Borrower has authority to enter into this Agreement
and to consummate the transactions contemplated under this Agreement; and (4) such
other matters as may have been requested by Lender or by Lender’s counsel.


 


MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:


 


Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.


 


Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of
Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s
legal expenses, incurred in connection with the enforcement of this Agreement. Lender
may hire or pay someone else to help enforce this Agreement, and Borrower shall
pay the costs and expenses of such enforcement. Costs and expenses include
Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit,
including attorneys’ fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Borrower also shall pay
all court costs and such additional fees as may be directed by the court.


 


Authority to File Notices. Borrower appoints and designates Lender as its
attorney-in-fact to file for the record any notice that Lender deems necessary
to protect its interest under this Agreement. This power shall be deemed
coupled with an interest and shall be irrevocable while any  sum or performance remains due and owing
under any of the Related Documents.


 


Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the  provisions of this Agreement.


 


Governing Law. This Agreement will
be governed by federal law applicable to Lender and, to the extent not
preempted by federal law, the laws of the State of South Dakota without regard
to its conflicts of law provisions. This Agreement has been accepted by Lender
in the State of South Dakota.


 


Choice of Venue. If there is a lawsuit, Borrower agrees upon
Lender’s request to submit to the jurisdiction of the courts of Minnehaha
County, State of South Dakota.


 


Indemnification of Lender. Borrower agrees to indemnify, to defend and to
save and hold Lender harmless from any and all claims, suits,  obligations, damages, losses, costs and
expenses (including, without limitation, Lender’s attorneys’ fees, as well as
Lender’s architect’s and engineering fees), demands, liabilities, penalties,
fines and forfeitures of any nature whatsoever that may be asserted against or
incurred by Lender, its officers, directors, employees, and agents arising out
of, relating to, or in any manner occasioned by this Agreement and the exercise
of the rights and remedies granted Lender under this. The foregoing indemnity
provisions shall survive the cancellation of this Agreement as to all matters
arising or accruing prior to such cancellation and the foregoing indemnity
shall survive in the event that Lender elects to exercise any of the remedies
as provided under this Agreement following default hereunder.


 


Consent to Loan Participation. Borrower agrees and consents to Lender’s sale
or transfer, whether now or later, of one or more participation interests in
the Loan to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever,  to any one or more purchasers, or
potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy Borrower may have with respect to such matters. Borrower
additionally


 


6

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the
Loan and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower’s obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have against
Lender.


 


No Waiver by Lender. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and signed
by Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any
other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender’s rights or of any of Borrower’s or any
Grantor’s obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.


 


Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the offending
provision shall be considered modified so that it becomes legal, valid and
enforceable. If the offending provision cannot be so modified, it shall be
considered deleted from this Agreement. Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other
provision of this Agreement.


 


Successors and Assigns. All covenants and agreements by or on behalf
of Borrower contained in this Agreement or any Related Documents shall bind
Borrower’s successors and assigns and shall inure to the benefit of Lender and
its successors and assigns. Borrower shall not, however, have the right to
assign Borrower’s rights under this Agreement or any interest therein, without
the prior written consent of Lender.


 


Survival of Representations and
Warranties. Borrower
understands and agrees that in extending Loan Advances, Lender is relying on
all representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by Borrower to Lender
under this Agreement or the Related Documents. Borrower further agrees that
regardless of any investigation made by Lender, all such representations,
warranties and covenants will survive the extension of Loan Advances and
delivery to Lender of the Related Documents, shall be continuing in nature,
shall be deemed made and redacted by Borrower at the time each Loan Advance is
made, and shall remain in full force and effect until such time as Borrower’s
Indebtedness shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.


 


Time is of the Essence. Time is of the essence in the performance of
this Agreement.


 


DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money
of the United States of America. Words and terms used in the singular shall
include the plural, and the plural shall include the singular, as the context
may require. Words and terms not otherwise defined, in this Agreement shall
have the meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:


 


Advance. The word “Advance” means a disbursement of
Loan funds made, or to be made, to Borrower or on Borrower’s behalf on a line
of credit or multiple advance basis under the terms and conditions of this
Agreement.


 


Agreement. The word “Agreement” means this Construction
Loan Agreement, as this Construction Loan Agreement may be amended or modified from
time to time, together with all exhibits and schedules attached to this
Construction Loan Agreement from time to time.


 


Architect’s Contract. The words “Architect’s Contract” mean the
architect’s contract between Borrower and the architect for the Project.


 


Borrower. The word “Borrower” means TOWER TECH SYSTEMS
INC and includes all co-signers and co-makers signing the Note and all their
successors and assigns.


 


Collateral. The word “Collateral” means all property and
assets granted as collateral security for a Loan, whether real or personal
property, whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract, or
otherwise.


 


Completion Date. The words “Completion Date” mean January 5,
2010.


 


Construction Contract. The words “Construction Contract” mean the
contract between Borrower and the general contractor for the Project, and any
subcontracts with subcontractors, materialmen, laborers, or any other person or
entity for performance of work on the Project or the delivery of materials to
the Project.


 


Environmental Laws. The words “Environmental Laws” mean any and
all state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the
Superfund Amendments and Reauthorization Act of 1986, Pub.  L. No. 99-499 (“SARA”), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
or other applicable state or federal laws, rules, or regulations adopted
pursuant thereto.


 


Event of Default. The words “Event of Default” mean any of the
events of default set forth in this Agreement in the default section of this
Agreement.


 


GAAP. The word “GAAP” means generally accepted
accounting principles.


 


Grantor. The word “Grantor” means each and all of the
persons or entities granting a Security Interest in any Collateral for the
Loan, including without limitation all Borrowers granting such a Security
Interest.


 


Guarantor. The word “Guarantor” means any guarantor,
surety, or accommodation party of any or all of the Loan and any guarantor
under a completion guaranty agreement.


 


Guaranty. The word “Guaranty” means the guaranty from
Guarantor to Lender, including without limitation a guaranty of all or part of
the Note.


 


Hazardous Substances. The words “Hazardous Substances” mean
materials that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. The words “Hazardous
Substances” are used in their very broadest sense and include without
limitation any and all hazardous or toxic substances, materials or waste as
defined by or listed under the Environmental Laws. The term “Hazardous Substances”
also includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.


 


Improvements. The word “Improvements” means all existing and
future buildings, structures, facilities, fixtures, additions, and similar construction  on the Collateral.


 


Indebtedness. The word “Indebtedness” means the indebtedness
evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Borrower
is responsible under this Agreement or under any of the Related Documents.


 


Lender. The word “Lender” means GREAT WESTERN BANK,
its successors and assigns.


 


Loan. The word “Loan” means the loan or loans made
to Borrower under this Agreement and the Related Documents as described.


 


Loan Fund. The words “Loan Fund” mean the undisbursed
proceeds of the Loan under this Agreement together with any equity funds or
other deposits required from Borrower under this Agreement.


 


Note. The word “Note” means the promissory note
dated April 28, 2009, in the original
principal amount of $10,000,000.00 from Borrower to Lender, together
with all renewals of, extensions of, modifications of, refinancing of,
consolidations of, and substitutions for the promissory note or agreement.


 


Permitted Liens. The words “Permitted Liens” mean (1) liens
and security interests securing Indebtedness owed by Borrower to Lender; (2) liens
for taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics,  warehousemen, or carriers, or other like liens
arising in the ordinary course of business and securing obligations which are
not yet delinquent; (4)  purchase
money liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under the
paragraph of this Agreement


 


7

















 


CONSTRUCTION LOAN AGREEMENT

(Continued)


 


titled “Indebtedness and Liens”; (5) liens and
security interests which, as of the date of this Agreement, have been disclosed
to and approved by the Lender in writing; and (6) those liens and security
interests which in the aggregate constitute an immaterial and insignificant
monetary amount with respect to the net value of Borrower’s assets.


 


Plans and Specifications. The words “Plans and Specifications” mean the
plans and specifications for the Project which have been submitted to and
initialed by Lender, together with such changes and additions as may be
approved by Lender in writing.


 


Project. The word “Project” means the construction
project as described in the “Project Description” section of this Agreement.


 


Project Documents. The words “Project Documents” mean the Plans
and Specifications, all studies, data and drawings relating to the Project,
whether prepared by or for Borrower, the Construction Contract, the Architect’s
Contract, and all other contracts and agreements relating to the Project or the
construction of the Improvements.


 


Property. The word “Property” means the property as
described in the “Project Description” section of this Agreement.


 


Real Property. The words “Real Property” mean the real
property, interests and rights, as further described in the “Project
Description” section of this Agreement.


 


Related Documents. The words “Related Documents” mean all
promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds,
collateral mortgages, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Loan.


 


Security Agreement. The words “Security Agreement” mean and
include without limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.


 


Security Interest. The words “Security Interest” mean, without
limitation, any and all types of collateral security, present and future,
whether in the form of a lien, charge, encumbrance, mortgage, deed of trust,
security deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest
whatsoever whether created by law, contract, or otherwise.


 


BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF
THIS CONSTRUCTION LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS
CONSTRUCTION LOAN AGREEMENT IS DATED APRIL 28, 2009.


 


	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TOWER TECH SYSTEMS INC

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steve Huntington

  	
   

  
	
   

  	
  STEVE HUNTINGTON, CHIEF FINANCIAL OFFICER of TOWER TECH
  SYSTEMS INC

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GREAT WESTERN BANK

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Gerald E. Kruger

  	
   

  
	
   

  	
  Authorized Signer

  	
   

  



 


LASER PRO Lending, Ver,
5,43,00,003 Copr. Harland Financial Solutions, Inc. 1997, 2009. All Rights
Reserved. -SD o:\officers\apps\CFI\LPL\C41.FC TR-14464 PR-34


 


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