Exhibit 10.24


 


INTERCREDITOR
AGREEMENT


 


This INTERCREDITOR AGREEMENT (this “Agreement”)  is entered into as
of March 28, 2007, by and among AGSTAR
FINANCIAL SERVICES, PCA, a federal instrumentality (“AgStar”), MMCDC NEW MARKETS FUND II, LLC, a
Delaware limited liability company (“NMF”),
U.S. BANK, NATIONAL ASSOCIATION, as Trustee for the holders
of the $20,000,000,00 Otter Tail County, Minnesota, Subordinate Exempt Facility
Revenue Bonds (Otter Tail AG Enterprises, LLC Ethanol Plant Project)
Series 2007 (the “Trustee”), and
OTTER TAIL COUNTY, MINNESOTA, a
political subdivision of the State of Minnesota (the “County”).


 


RECITALS


 


A.     Otter
Tail Ag Enterprises, LLC, a Minnesota limited liability company (the “Company”)  is the owner of
certain real property located in Otter Tail County, Minnesota, legally
described in Exhibit A attached
hereto (the “Premises”).


 


B.      Pursuant
to that certain Master Loan Agreement, First Supplement, Second Supplement, and
Third Supplement, each dated as of March 28, 2007 (the “AgStar Loan Agreement”), AgStar
has agreed to make certain loans in the aggregate principal amount of
$39,000,000.00 to the Company for the purpose of acquiring, constructing, and
equipping an  ethanol
production facility (the “Plant”)  on
the Premises (the “AgStar Plant Loan”), and for the
purpose of financing the general corporate and operating expenses of the
Company upon completion of the Plant (the “AgStar
Operating Loan”).



 


C.      The
Company’s obligations to AgStar under the AgStar Loan Documents are evidenced by
a Construction Note, Term Revolving Note, and Revolving Line of Credit Note
(together the “AgStar Notes”), and
are secured by a Mortgage, Security Agreement and Assignment of Rents and
Leases dated as of March 28, 2007 (the “AgStar
Mortgage”), and a Security Agreement dated as
of March 28, 2007 (the “AgStar Security
Agreement”).


 


D.      Pursuant
to that certain NMF Construction and Term Loan Agreement dated as of
March 30, 2007 (the “NMF Loan Agreement”), NMF
has agreed to make certain loans in the


 

















 


aggregate principal amount of $19,175,000.00 to the Company (the “NMF Loan”) for the purpose of acquiring, constructing,
equipping and furnishing the Plant.


 


E.       The
Company’s obligations to NMF under the NMF Loan Documents are evidenced by that
certain MMCDC Senior Loan Note in the original principal amount of
$14,480,500.00 dated as of March 30, 2007, and that certain MMCDC
Subordinate Loan Note in the original principal amount of $4,694,500.00 dated
as of March 30, 2007, and secured by a Mortgage, Security Agreement, and
Assignment of Rents and Leases dated as of March 30, 2007 (the “NMF Mortgage”), and a Pledge and Security Agreement dated as
of March 30, 2007 (the “NMF Security Agreement”).


 


F.       Pursuant
to that certain Trust Indenture (the “Indenture”),
between the County and the Trustee, the County will issue its Subordinate
Exempt Facility Revenue Bonds (Otter Tail Ag Enterprises, LLC Ethanol Plant
Project) Series 2007, in the aggregated principal amount of $20,000,000.00
(the “SW  Facility Bonds”),
the proceeds from the sale of which are to be used to finance the acquisition
and installation of certain equipment comprising a solid waste disposal
facility on the Premises (the “Solid Waste Facility”).
Pursuant to that certain Lease Agreement (the “Lease
Agreement”), the County has proposed to lease the Solid Waste
Facility to the Company, and the Company has agreed to make certain payments to
the Trustee for the benefit of the holders of the SW Facility Bonds.


 


G.      The
Company’s obligations under the SW Facility Bond Documents are evidenced by,
among other things, the Indenture, the Lease Agreement, and secured by a
Mortgage, Security Agreement and Assignment of Rents and Leases (the “SW Facility Mortgage”), and a Guaranty Agreement (the “SW Facility Guaranty”).


 


H.      The County will issue certain General Obligation Abatement
Bonds (the “Abatement Bonds”), the proceeds of
which are to be used to finance certain Project Costs.


 


I.        The Company’s obligations to the County under and are
evidenced by the Abatement Bond Documents.


 


J.        The Parties are entering into this Agreement to set forth the
relative rights and priorities of the Parties under the Financing Documents (as
defined herein).


 


NOW THEREFORE, in
consideration of the premises and the mutual covenants and agreements contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the
Parties hereby agree as follows:


 


1.       Definitions.   All capitalized terms used herein and
defined in the foregoing recitals shall have the meanings ascribed thereto. All
capitalized terms used and not otherwise defined herein shall have the meaning
ascribed to them in Article 9 of the Uniform Commercial Code as enacted in
the State of Minnesota (the “UCC”), or shall
have the meanings set forth below:


 


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“Abatement Bond Debt” shall mean all
Liabilities and indebtedness of every nature of the Company from time to time
owed under the Abatement Bond Documents, including any amendments,
modifications, renewals or extensions thereof, plus, respectively, (a) any
Protective Advances, (b) accrued and unpaid interest and (c) all
fees, costs and expenses, whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and from time to time hereafter owing, due or
payable, whether before or after the filing of a Proceeding under the
Bankruptcy Code, together with any interest accruing thereon after the
commencement of a Proceeding, without regard to whether or not such interest is
an allowed claim.


 


“Abatement Bond Documents” means the
Abatement Bonds and all other agreements, gurantees, mortgages, security
agreements, documents, instruments, and assignments and contracts relating
thereto, as amended, supplemented, restated or otherwise modified from time to
time. The Abatement Bond Documents shall be provided to the Parties as the same
are executed, amended, supplemented, restated or otherwise modified.


 


“Abatement Bond Liabilities” means all
obligations of the Company under, or arising as a result of, the Abatement Bond
Documents.


 


“Agreement” means this Intercreditor
Agreement.


 


“AeStar Debt” shall mean all Liabilities and
indebtedness of every nature of the Company from time to time owed to AgStar
under the AgStar Loan Documents in an amount not exceeding the sum of
$39,000,000.00, including any amendments, modifications, renewals or extensions
thereof, plus, respectively, (a) any Protective Advances, (b) accrued
and unpaid interest and (c) all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from
time to time hereafter owing, due or payable, whether before or after the
filing of a Proceeding under the Bankruptcy Code, together with any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim. AgStar Debt shall be
considered to be outstanding whenever any loan commitment or loan under the
AgStar Loan Documents is outstanding.


 


“AgStar Loan Documents” means the AgStar Loan
Agreement, the AgStar Notes, the AgStar Mortgage, the AgStar Security
Agreement, and all other notes, mortgages, security agreements, documents,
instruments, assignments and contracts, relating thereto, as amended,
supplemented, restated or otherwise modified from time to time. The AgStar Loan
Documents shall be provided to the Parties as the same are executed, amended,
supplemented, restated or otherwise modified.


 


“AgStar Loan Liabilities” means all
obligations of the Company to AgStar under, or arising as a result of, the
AgStar Loan Documents.


 


“Bankruptcy Code” shall mean Title 11 of the
United States Code, as amended from time to time and any successor statute and
all rules and regulations promulgated thereunder.


 


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“Bond” or “Bonds” means the Abatement
Bond and the SW Facility Bonds.


 


“Bond Debt” means the Abatement Bond Debt and
the SW Facility Bond Debt.


 


“Bond Documents” means the Abatement Bond
Documents and the SW Facility Bond Documents.


 


“Bond Liabilities” means all obligations of
the Company under, or arising as a result of, the Bond Documents.


 


“Collateral” means and includes all property
and assets of the Company granted as collateral security for the AgStar Debt,
the NMF Debt, the Bond Debt, or other obligations of the Company under any
Financing Document, in favor of AgStar, NMF, or the holders of the Bonds,
whether real or personal property, whether granted directly or indirectly,
whether granted now or in the future. “Collateral” shall not include any monies
or investments on deposit with the Trustee under the Indenture, including
without limitation, payments made to the Trustee by the Company pursuant to the
Lease Agreement (to the extent the, Trustee is to receive and retain them under
this Agreement), amounts on deposit in the Reserve Fund and the Capitalized
Interest Account established under the Indenture and interest or investment
earnings on amounts held by the Trustee. All such monies and investments held
by the Trustee shall be available to pay any amounts due on the SW Facility
Bonds without regard to any default on the Senior Debt.


 


“Covenant of Non-Removal” means the covenant
set forth in Section 6 hereof.


 


“Distribution” means, with respect to any
indebtedness, obligation or security: (a) any payment or distribution by
any Person of cash, securities or other property, by set-off or otherwise, on
account of such indebtedness, obligation or security, (b) any redemption,
purchase or other acquisition of such indebtedness, obligation or security by
any Person; or (c) the granting of any Lien or security interest to or for
the benefit of the holders of such indebtedness, obligation or security in or
upon any property of any Person.


 


“Enforcement Action” means any action other
than the commencement of any Proceedings required by the Farm Credit Act to
enforce or attempt to enforce any right or remedy available to any Party under
any Financing Document, pursuant to applicable law or otherwise, including any
action to: (a) exercise any right of set-off, (b) commence, continue
or participate in any judicial, arbitral or other proceeding, or any other
collection or enforcement action of any kind, against the Company or any of the
assets of Company (including any Proceeding), seeking, directly or indirectly,
to enforce any rights or remedies, or to enforce any of the obligations
incurred by the Company under or in connection with any Financing Document,
(c) commence or pursue any judicial, arbitral or other proceeding or legal
action of any kind, seeking injunctive or other equitable relief to prohibit,
limit or impair the commencement or pursuit by any Party of any of their
respective rights or remedies under or in connection with any Financing
Document, or otherwise available under applicable law, or (d) under the
provisions of any state or federal law, including, without limitation, the UCC,
or under any contract or agreement,


 


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to enforce, foreclose upon, take possession of or
sell any property or assets of the Company.


 


“Event of Default” means (i) with
respect to the AgStar Loan Liabilities and the AgStar Loan Documents, any Event
of Default thereunder which has occurred, is continuing and has not been cured,
(ii) with respect to the NMF Loan Liabilities and the NMF Loan Documents,
any Event of Default thereunder which has occurred, is continuing and has not
been cured, and (iii) with respect to the Bond Liabilities and Bond Documents,
any event of default thereunder which has occurred, is continuing and has not
been cured.


 


“Financing Document” means the AgStar Loan
Documents, the NMF Loan Documents, and the Bond Documents.


 


“Joint Collateral” means all of the Company’s
(i) real property, including without limitation, the Premises, the Plant
and all other buildings and improvements located thereon, (ii) Equipment,
(iii) Fixtures, (iv) Letter-of-Credit Rights and (v) software,
whether now existing or hereafter acquired, and the proceeds, replacements and
products thereof.


 


“Liabilities” means all obligations of
Company, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, joint or several, now or hereafter existing, or due or
to become due.


 


“Lien” means any consensual mortgage,
security, deed of trust, pledge, security interest or other voluntary lien,
whether now existing or hereafter created, acquired or arising.


 


“Loan Documents” means the AgStar Loan
Documents and the NMF Loan Documents.


 


“Loan Servicing Agreement” means that certain
Loan Servicing and Agency Agreement between AgStar and NMF of even date
herewith.


 


“NMF Debt” shall mean all Liabilities and
indebtedness of every nature of the Company from time to time owed to NMF under
the NMF Loan Documents in an amount not exceeding the sum of $19,175,000,
including any amendments, modifications, renewals or extensions thereof, plus,
respectively, (a) any Protective Advances, (b) accrued and unpaid
interest and (c) all fees, costs and expenses, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and from time to time
hereafter owing, due or payable, whether before or after the filing of a
Proceeding under the Bankruptcy Code, together with any interest accruing
thereon after the commencement of a Proceeding, without regard to whether or
not such interest is an allowed claim. NMF Debt shall be considered to be
outstanding whenever any loan commitment or loan under the NMF Loan Documents
is outstanding.


 


“NMF Loan Documents” means the NMF Loan
Agreement, NMF Notes, NMF Mortgage, NMF Security Agreement, and all other
notes, mortgages, security agreements, documents, instruments, assignments and
contracts, relating thereto, as


 


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amended, restated, supplemented or otherwise
modified from time to time. The NMF Loan Documents shall be provided to the
Parties as the same are executed, amended, supplemented, restated or otherwise
modified.


 


“NMF Loan Liabilities” means all obligations
of the Company to NMF under, or arising as a result of, the NMF Loan Documents.


 


“Parity Indebtedness” all Liabilities of the
Company to AgStar under the AgStar Plant Loan and to NMF under the NMF Loan.


 


“Party” or “Parties” means individually
or together any one or more of AgStar, NMF, the Trustee and the County.


 


“Person” means any natural person,
corporation, general or limited partnership, limited liability company, firm,
trust, association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.


 


“Proceeding” means: (a) any insolvency
or bankruptcy case or proceeding (including any case under the Bankruptcy Code,
as amended from time to time, or any successor statute), or any receivership,
custodianship, liquidation, reorganization or other similar case or proceeding,
relative to Company, (b) any liquidation, dissolution, reorganization or
winding down of Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, (c) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of Company, or
(d) any sale, transfer or other disposition of all or substantially all of
the assets of Company in connection with any of the foregoing.


 


“Project” means the acquisition, construction
and financing of the Premises, the Plant and the Facility.


 


“Protective Advances” means all sums advanced
for the purpose of payment of real estate taxes (including special payments in
lieu of real estate taxes), personal property taxes (including special payments
in lieu of personal property taxes), maintenance costs, insurance premiums,
other items (including capital items) reasonably necessary to protect the
Premises, or any other Collateral from forfeiture, casualty, loss or waste.


 


“Remedial Action” means, subject to the
limitations contained in this Agreement, any one or more of the following
remedies: (i) the acceleration of any indebtedness under any Financing
Document or declaration of the entire amount of any indebtedness under any
Financing Document to be due and payable, (ii) the initiation of any power
of sale or any similar right, (iii) the initiation of bankruptcy or other
insolvency proceedings, (iv) a request for appointment of a receiver;
(v) the initiation of any remedies with respect to rents or other revenues
payable with respect to the Premises, the Plant or the Facility, (vi) the
acceptance of a transfer of the Premises, the Plant or the Facility in lieu of
foreclosure, (vii) the institution of suit for purposes of seeking a
monetary judgment, or (viii) the exercise of any other right or remedy
upon an Event of Default. Nothing


 


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contained in this Agreement shall grant any Party any
rights or remedies not otherwise provided by any of the Financing Documents or
applicable law.


 


“Senior Debt” means the AgStar Debt and/or
the NMF Debt”.


 


“Senior Lenders” means AgStar and NMF.


 


“Senior Obligations” means the AgStar Loan
Liabilities and the NMF Loan Liabilities.


 


“Separate Collateral” means and includes all
of the Company’s (i) Accounts, (ii) Inventory, (iii) Chattel
Paper, (iv) Instruments, (v) Deposit Accounts and (vi) Payment
Intangibles, whether now existing or hereafter acquired, and the proceeds and
products thereof.


 


“Subordinated Debt” means the Bond Debt.


 


“Subordinated Lenders” means the County and
the Trustee.


 


“SW Facility Bond Debt” shall mean all
Liabilities and indebtedness of every nature of the Company from time to time owed
under the SW Facility Bond Documents in an amount not exceeding the sum of
$20,000,000.00, including any amendments, modifications, renewals or extensions
thereof, plus, respectively, (a) any Protective Advances, (b) accrued
and unpaid interest and (c) all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from
time to time hereafter owing, due or payable, whether before or after the
filing of a Proceeding under the Bankruptcy Code, together with any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim.


 


“SW Facility Bond Documents” means the
Indenture, the Lease Agreement, the SW Facility Mortgage, the SW Facility
Guaranty and all other mortgages, security agreements, documents, instruments,
assignments and contracts relating thereto, as amended, supplemented, restated
or otherwise modified from time to time. The SW Facility Bond Documents shall
be provided to the Parties as the same are executed, amended, supplemented,
restated or otherwise modified.


 


“SW Facility Bond Liabilities” means all
obligations of the Company under, or arising as a result of, the SW Facility
Bond Documents.


 


2.      Lien Priority, Subordination.


 


2.1   Lien Priorities.
Notwithstanding the date, manner or order of perfection of the security
interests and Liens granted by the Company to any Party, and notwithstanding
any provisions of the UCC, applicable law, or the Financing Documents or
whether any Party hereto holds possession of all or any part of the Collateral,
the following, as between the Parties shall be the relative priority of the
Liens of the Parties in the Collateral:


 


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2.1.1     Real Property. The mortgage Lien and security interest of
each of the AgStar Mortgage and the NMF Mortgage (hereinafter the “Consolidated Mortgages”)  are
hereby consolidated to constitute a single first mortgage Lien and security
interest on or in the Premises, the Plant and the Facility which shall equally
and ratably secure all holders from time to time of the Parity Indebtedness in
proportion to the amount owed to each as either principal or interest, with the
same force and effect as if AgStar and NMF held a single mortgage Lien on and
security interest in the Premises, the Plant and the Facility to secure all
Parity Indebtedness. The consolidated mortgage Lien and security interest shall
be deemed to contain and be subject to all of the terms and conditions set forth
in the AgStar Mortgage and the NMF Mortgage. To the extent consistent with this
Agreement, inconsistent terms as between such agreements shall be controlled
first by the AgStar Mortgage and then by the NMF Mortgage. The County and the
Trustee shall hold a subordinate mortgage Lien or security interest on or in
the Premises, the Plant and the Facility.


 


2.1.2     Joint Collateral. The Lien and security interest of each
of the AgStar Security Agreement and the NMF Security Agreement (hereinafter
the “Consolidated Security Agreements”) are hereby consolidated to constitute a single
first priority Lien or security interest on or in the Joint Collateral which
shall equally and ratably secure all holders from time to time of the Parity
Indebtedness in proportion to the amount owed to each as either principal or
interest, with the same force and effect as if AgStar and NMF held a single
Lien on and security interest in the Joint Collateral to secure all Parity
Indebtedness. The consolidated Lien and security interest shall be deemed to
contain and be subject to all of the terms and conditions set forth in the
AgStar Security Agreement and the NMF Security Agreement. To the extent
consistent with this Agreement, inconsistent terms as between such agreements
shall be controlled first by the AgStar Security Agreement and then by the NMF
Security Agreement. The County and the Trustee shall hold a subordinate Lien or
security interest on or in the Joint Collateral.


 


2.1.3     Separate Collateral. The Lien of the AgStar Security
Agreement shall constitute a single first priority Lien or security interest on
or in the Separate Collateral which shall secure all holders from time to time
of the AgStar Loan Liabilities as either principal or interest, with the same
force and effect as if AgStar solely held a single Lien on and security
interest in the Separate Collateral, and all proceeds and products thereof,
whether now owned or hereafter existing. No other Person or Party shall hold a
Lien or security interest on or in the Separate Collateral.


 


No Party shall contest the validity, perfection, priority or
enforceability of any Lien or security interest granted to any other Party or
contemplated hereby. Notwithstanding any failure of a Party to perfect its
security interest in the Collateral or any other defect in the security
interests or obligations owing to such Party, the priority and rights as
between the Parties hereto shall be as set forth herein.


 


2.2      Appointment of AgStar as Agent.
Subject to this Agreement, AgStar is hereby appointed the agent of NMF with
respect to enforcing its rights under the Consolidated Mortgages and the
Consolidated Security Agreements with the authority to exercise all rights


 


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related thereto, including administering and managing all proceeds paid
under any title or casualty insurance policy and all condemnation awards and
all sums realized upon taking possession of any of the Joint Collateral
pursuant to foreclosure, upon receipt of a deed in lieu of foreclosure, or
pursuant to any Remedial Action.


 


2.3       Servicing of NMF Debt.  AgStar and NMF hereby covenant and agree,
notwithstanding anything to the contrary contained in this Agreement or in any
other Financing Document, that the NMF Loan shall be serviced by AgStar
pursuant to the terms and provisions of the Loan Servicing Agreement, a true
and correct copy of which is attached hereto as Exhibit B, and is
incorporated herein.


 


2.4       Subordination of Subordinated Debt.  The Subordinated Lenders hereby covenant and
agree, notwithstanding anything to the contrary contained in this Agreement or
in any Financing Document that the payment of any and all of the Subordinated
Debt shall be subordinate and subject in right and time of payment, to the
extent and in the manner hereinafter set forth, to the prior indefeasible
payment in full in cash of the Senior Debt. Each holder of the Senior Debt,
whether now outstanding or hereafter created, incurred, assumed or guaranteed,
shall be deemed to have acquired the Senior Debt in reliance upon the
provisions contained in this Agreement. Notwithstanding the foregoing, prior to
the acceleration or demand for payment of the Senior Debt or the Bond Debt,
each Party shall be entitled to collect all payments of principal, premium, if
any, and interest due and payable to it under its own Financing Documents, and
all related fees, costs and expenses, at the time and in the manner specified
therein.


 


3.           Special Rights of AgStar. The
Parties irrevocably agree to accept performance and compliance (including, but
not limited to cure of any Company defaults under the Financing Document) by
AgStar of and with any term, covenant, agreement, provision, condition or
limitation on the Company’s part to be kept, observed or performed under any of
the Financing Documents with the same force and effect as though kept,
observed, or performed by the Company. Notwithstanding any provision in this
Agreement or any Financing Document, AgStar shall not be required to perform
any such obligations either before or after an Event of Default. The Parties
covenant and agree that they shall promptly send by registered or certified
mail, return receipt requested, to each other Party, a copy of each notice it
may deliver to the Company relating to any default or Event of Default by the
Company of any of its Financing Document or the taking or proposed taking of
any Remedial Action at the same time as and whenever any such notice shall be
given by a Party to the Company, addressed to such Party at the address set
forth herein.


 


4.           Payments Prior to Acceleration or Demand for
Payment. Until receipt of notice of acceleration or demand for
payment of the Senior Debt or Subordinated Debt is given by a Party pursuant to
Section 10, each Party shall be entitled to collect all payments of
principal, premium, if any, and interest due and payable to it under its own
Financing Documents, and all related fees, costs and expenses, at the time and
in the manner specified therein. In the event of receipt of such payments from
the Company by a Party, prior to the acceleration or demand for payment of the
Senior Debt or Bond Debt, such payments shall belong to such Party as its own


 


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property, and such Party shall have no obligation under this Agreement
to hold or remit any part of such payments for the account of any other Party.


 


5.            Payments After Acceleration of Demand for Payment.
In the event of receipt of any payments from the Company by any Party after
notice of acceleration or demand for payment of the Senior Debt or Subordinated
Debt has been given, such payments shall be held in trust by the receiving
Party and shall promptly be transferred to AgStar and thereafter all such
payments so transferred to or received by AgStar shall be applied to the
payment of the Senior Debt and the Subordinated Debt in the manner set forth as
follows:


 


5.1      Application
of Moneys. In the event of the acceleration or demand for payment of the
Senior Debt or Subordinated Debt, all payments, collections and proceeds
derived from or related to the Joint Collateral received or effected by AgStar,
under the AgStar Loan Documents and, as agent for NMF, under the NMF Loan
Documents, shall be applied first to pay or reimburse AgStar and NMF for all of
their reasonable costs and expenses incurred and documented in realizing upon
or effecting such payments, collections, and proceeds, and if such payments,
collections, or proceeds are not sufficient to so pay or reimburse AgStar, then
NMF will remit to AgStar a portion of such deficiency equal to the
proportionate share of the aggregate principal and interest due on the NMF
debt. After payment, reimbursement, or allowance for such costs, expenses,
damages, and liabilities, AgStar will apply the remainder equally and ratably
to the payment of the Senior Debt, and then, after the Senior Debt has been
paid, to the payment of the Subordinated Debt. The County and the Trustee agree
that such amounts shall be divided between them in proportion to the then
outstanding principal amounts of the Abatement Bond Debt and the SW Facility
Bond Debt.


 


5.2      Application
of Proceeds of Collateral. In the event of the acceleration or demand for
payment of the Senior Debt, or of any foreclosure, sale or other realization on
or disposition in liquidation of any of the Collateral, all moneys collected or
received by AgStar constituting identifiable proceeds of any item of the
Collateral in excess of the amounts paid to third parties to discharge prior
Liens, if any, upon such Collateral shall be applied to the payment of all
costs incurred in the collection thereof, including reasonable and documented
expenses and disbursement of AgStar and its counsel and of NMF and its counsel,
and the balance of such monies shall be applied as follows:


 


5.2.1         Joint Collateral. All amounts
received in respect of any of the Joint Collateral shall be applied ratably to
payment of the Senior Debt in that proportion which the unpaid principal amount
of, and accrued interest then due and owing on, the AgStar Plant Loan, on the
date of such application, bears to the unpaid principal amount of, and accrued
interest then due and owing on the NMF Loan on the date of such application.
All amounts received in respect of any of the Joint Collateral in excess of the
amount necessary to effect payment in full of the Senior Debt and the
Subordinate Debt shall be remitted to the Company. The County and the Trustee
agree that such amounts shall be divided between them in proportion to the then
outstanding principal amounts of the Abatement Bond Debt and the SW Facility
Bond Debt.


 


5.2.2         Separate Collateral. All amounts received in respect
of any of the Separate Collateral shall first be applied to payment of the
AgStar Debt to the extent necessary to


 


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effect payment in full of the AgStar Debt. All amounts received in
respect of any of the Separate Collateral in excess of the amount necessary to
effect payment in full of the AgStar Debt shall be remitted to the Company.


 


5.2.3         Purchase of Collateral. If AgStar elects to bid at
any foreclosure sale on any of the Joint Collateral, any bid submitted by it
shall be applied to payment of amounts due on the Parity Indebtedness as
provided herein. If AgStar shall purchase such Joint Collateral, it shall hold
such title in trust for the benefit of the holders of the Parity Indebtedness
and shall exercise commercially reasonable efforts to dispose of such Joint
Collateral so acquired, the proceeds of which disposition shall be applied
pursuant to Section 5.2.1 above. AgStar shall provide prior written notice
to NMF and shall consult with NMF prior to exercising any rights or remedies
hereunder, but in the event that the AgStar and NMF cannot agree, the decision
of AgStar shall govern.


 


5.2.4         Standard of Care. AgStar shall promptly perform and
observe all of its obligations and agreements contained in this Agreement;
provided that, unless otherwise provided herein, AgStar shall be liable
hereunder only for its willful misconduct, gross negligence or bad faith in the
performance of its obligations and duties hereunder, or the reckless disregard
of its obligations and duties hereunder.


 


5.3      Setoff. In the event that any funds of the Company on
deposit with any Party or subject to any control agreement shall be taken or
appropriated by such Party by way of setoff in payment or satisfaction of the
obligations of the Company to such Party under any Financing Documents, such
funds shall be applied as follows:


 


5.3.1         Identifiable Proceeds. To the extent such funds
constitute identifiable proceeds of any item of Collateral, such funds shall be
applied in the manner set forth in Section 5.2 of this Agreement.


 


5.3.2         Other Funds. To the extent such funds do not
constitute identifiable proceeds of any item of Collateral, such funds shall be
applied in the manner set forth in Section 4 of this Agreement.


 


For purposes of this Section 5.3, notwithstanding the order in
which funds of the Company on deposit in an account with a bank are deposited
in such account, funds constituting or deemed to constitute proceeds of the
Separate Collateral shall be deemed to have been withdrawn from such account
before any otherwise identifiable funds have been withdrawn.


 


5.4      Possession of Collateral. In the event any item of
Collateral, a security interest in which is perfected by possession, is
delivered into the possession of a Party, such Party shall deemed to hold such
item of Collateral as custodian for itself and each other Party in order to
perfect its own security interest and the security interest of the other
Parties pursuant to the Financing Documents. If such Party’s security interest
is released under circumstances that do not require any other Party’s security
interest to be released, such Party shall deliver to the other Parties such
items of Collateral in order that the security interest of the other Parties
may continue to be perfected.


 


11

















 


5.5       Liquidation,
Dissolution, Bankruptcy. In the event of any Proceeding:


 


5.5.1           The Senior Debt shall first be indefeasibly paid in full
in cash before any Distribution, whether in cash, securities or other property,
shall be made on account of any Subordinated Debt.


 


5.5.2           Any Distribution, which would otherwise, but for the terms
hereof, be payable or deliverable in respect of any Subordinated Debt shall be
paid or delivered directly to AgStar (to be held and/or applied by AgStar in
accordance with the terms of this Agreement) until all Senior Debt is
indefeasibly paid in full in cash. The parties irrevocably authorize, empower
and direct any debtor, debtor in possession, receiver, trustee, liquidator,
custodian, conservator or other Person having authority, to pay or otherwise
deliver all such Distributions to AgStar.


 


5.5.3           Each Party agrees not to initiate, prosecute or
participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection or priority of the Senior Debt, or any
Liens and security interests securing the same.


 


5.5.4           Each Party agrees to execute, verify, deliver and file any
proofs of claim in respect of the Senior Debt or the Bond Debt requested by any
other Party in connection with any Proceeding involving the Company.


 


5.5.5           The Parity Indebtedness and Senior Debt shall continue to
be treated as Parity Indebtedness and Senior Debt and the provisions of this
Agreement shall continue to govern the relative rights and priorities of the
Parties even if all or part of the Parity Indebtedness and Senior Debt or the
security interests securing the same are set aside, avoided, invalidated or
disallowed in connection with any such Proceeding, and this Agreement shall be
reinstated if at any time any payment of any of the Parity Indebtedness or
Senior Debt is rescinded or must otherwise be returned by any holder thereof or
any representative of such holder.


 


5.6       Insurance
and Condemnation. All proceeds of any property or casualty insurance or
condemnation award relating to the Collateral shall be applied by AgStar in
accordance with the provisions of this Agreement, subject to the priorities
herein set forth, and no other Person or Party shall have the right to
participate in the adjustment of any such insurance claims or condemnation
awards.


 


5.7       Waiver
of Right to Require Marshaling. Each Party hereby expressly waives any
right that it otherwise might have to require any other Party to marshal assets
or to resort to Collateral in any particular order or manner, whether provided
for by common law or statute. No Party shall be required to enforce any
guaranty or any security interest given by any Person other than the Company as
a condition precedent or concurrent to the taking of any Remedial Action.


 


5.8       Subrogation.
No payment or distribution by a Party to any other Party pursuant to the
provisions of this Agreement and no Protective Advance by any of the Parties


 


12

















 


shall entitle such Party to exercise any right of subrogation in
respect thereof prior to the payment in full of the Senior Debt. The
Subordinated Lenders agree that prior to the satisfaction of all of the Senior
Debt they shall not acquire, by subrogation or otherwise, any Lien, estate,
right or other interest in any portion of the Collateral now securing the
Senior Debt or the proceeds therefrom that are or may be prior to, or of equal
priority to, the Subordinated Debt or the liens, rights, estates and interests
created thereby.


 


5.9      Remedial
Action by NMF. So long as this Agreement remains in effect NMF, the County
nor the Trustee shall take no Remedial Action under the NMF Documents or the
Bond Documents without the prior written consent of AgStar, which consent shall
not be unreasonably withheld.


 


5.10     Enforcement
of Remedies. NMF, the County and the Trustee agree to cooperate with AgStar
and take any lawful action, including joining in such proceedings at law or in
equity and executing such documents as AgStar may request and direct, to
enforce the obligations of the Company under the Loan Documents, and in order that
the rents, issues, profits, revenues and other income from the Plant, the
Facility and Premises shall be available to satisfy the Company’s obligations
under the Loan Documents. AgStar agrees to pay, and to indemnify NMF against,
all reasonable costs, fees and expenses (including reasonable attorneys’ fees
and expenses) incurred by NMF in connection with any action taken by it at the
request and direction of AgStar; provided, however, that AgStar shall not be
obligated (i) to pay any costs, fees or expenses which NMF may suffer or
incur by reason of its own grossly negligent or willful failure to perform the
trusts and duties imposed upon it under the NMF Loan Documents, or (ii) to
pay any costs, fees or expenses which NMF may suffer or incur by reason of its
exercise or failure to exercise any power or discretion, other than at AgStar’s
direction or request.


 


5.11     Bond
Debt Payment Restrictions. Notwithstanding the terms of the Bond Documents,
the Trustee and County hereby agree that they will not accept any Distribution
with respect to the Bond Debt if and after AgStar provides notice to the
Trustee and the County, as required by Section 5.3 of this Agreement,
that: (a) the Company is in default, or such payment would result in a
default, with respect to the payment of any applicable Senior Debt and AgStar
has provided the Trustee and the County the notice required by Section 5.1
of this Agreement, or (b) any other Event of Default exists under any
agreement with respect to the Senior Debt, which has not been waived or cured,
until the Senior Debt is indefeasibly paid in full in cash, and for which
AgStar has accelerated payment pursuant to the terms of the Loan Documents. For
purposes of this paragraph, default with respect to payment of any Senior Debt
shall refer to failure of the Company to pay in full when due the principal of
or interest or premium on or any other amount owed under any such Senior Debt,
or any portion thereof, according to its terms. Notwithstanding the foregoing,
payment on the Bond Debt shall not be subject to the prior payment of such
Senior Debt as to all amounts which actually are paid under the Bond Debt if
the Company was not in default, and such payment did not result in a default,
with respect to the payment of any AgStar Debt at the time or times such
payment or payments were made, and shall in no event preclude the Trustee and
the County from using funds in its possession not constituting Collateral to
make payments to the holders of the Bonds.


 


13

















 


5.12     Other Security Interests. No Party shall obtain or
possess any Lien, security interest, encumbrance or claim in the Company’s
assets other than, or in addition to, the Collateral without the prior written
consent of each other Party except for judgment liens that are entered against
the Company following the occurrence of an Event of Default under such Party’s
Financing Documents.


 


5.13     Benefit of Security Interests. This Agreement shall not
give any rights to any Party if and to the extent that its respective security
interest in any item of Collateral in 
which it seeks to claim
an interest or to share such interest, as the case may be, is (i) not then
perfected (provided, however, that no Party shall contest the perfection of any
security interest that is subject to the provisions hereof in favor of another
Party); (ii) voidable under the Bankruptcy Code; (iii) held by a
court of competent jurisdiction to be unenforceable; or (iv) junior to the
security interest of another Party (without regard to the provisions hereof)
and to an intervening interest of a third party.  


 


5.14      Control Agreement. The Company shall grant AgStar a
Deposit Account Control Agreement acceptable to AgStar with respect to any and
all accounts maintained by the Company into which Collateral or the proceeds
thereof are or may be deposited or held. No other Party shall obtain from the
Company additional Deposit Account Control Agreements without the prior written
consent of AgStar.


 


5.15      Bond Funds. Notwithstanding any of the provisions of any
other Financing Documents, any security interest granted by the Company to any
Party shall not extend to any fund or account under the Indenture which fund or
account shall be held for the exclusive use by such Party pursuant to the terms
and conditions of its Bond Documents.


 


6.       Non-Removal of Facility. Notwithstanding any provision of the
Financing Documents, the Parties covenant and agree that so long as this
Agreement remains in effect, no Party shall exercise any right or remedy
contained in any Financing Document in any manner that would result in any
material portion of the Plant or Facility being removed from the Premises;
provided, however, that such restriction shall not limit any Remedial Action so
long as such Remedial Action does not result in the removal of the Plant or
Facility from the Premises.


 


7.       Notice of Default/Termination of Financing.


 


7.1.     Notice of Default/Termination of Financing. Should any
Party terminate its obligations to the Company pursuant to any Financing
Document, or commence any Enforcement Action or acceleration of the Senior Debt
or Bond Debt, it shall provide the other Parties with a copy of any notice of
default and/or acceleration simultaneously with the notice provided to the
Company.


 


7.2      Rights
to Cure.


 


7.2.1     AgStar’s
Rights to Cure. Prior to NMF commencing any Enforcement Action under any
NMF Loan Document, NMF shall provide written notice of the default which would
permit NMF to commence such Enforcement Action to each other Party pursuant to
Section 10 of this Agreement, whether or not NMF is obligated to give
notice thereof


 


14

















 


to Company (a “NMF Default Notice”) and shall permit AgStar an
opportunity to cure such default in accordance with the provisions of this
Section 7.2.1. If the default is a monetary default relating to a
liquidated sum of money, AgStar shall have until ten (10) Business Days after
the later of (i) the giving by NMF of the NMF Default Notice and
(ii) the expiration of Company’s cure period, if any, (an “AgStar Monetary Cure Period”) to cure such monetary default. If
the default is of a non-monetary nature, AgStar shall have the same period of
time as the Company under the NMF Loan Documents to cure such non-monetary
default; provided, however, if such non-monetary default is susceptible of cure
but cannot reasonably be cured within such period and if curative action was
promptly commenced and is being continuously and diligently pursued by AgStar,
AgStar shall be given an additional period of time as is reasonably necessary
for AgStar in the exercise of due diligence to cure such non-monetary default
for so long as (i) AgStar makes or causes to be made timely payment of
Company’s regularly scheduled payments under the NMF Loan Documents,
(ii) such additional period of time does not exceed thirty (30) days,
unless such non-monetary default is of a nature that cannot be cured within
such thirty (30) days, in which case, AgStar shall have such additional time as
is reasonably necessary to cure such non-monetary default, (iii) such
default is not caused by a bankruptcy, insolvency or assignment for the benefit
of creditors of Company and (iv) during such non-monetary cure period,
there is no material impairment to the value, use or operation of the Project.
Any additional cure period granted to AgStar hereunder shall automatically
terminate upon the bankruptcy (or similar insolvency) of the Company.


 


7.2.2    NMF’s
Rights to Cure. Prior to AgStar commencing any Enforcement Action under any
AgStar Loan Document, AgStar shall provide written notice of the default which
would permit AgStar to commence such Enforcement Action to each other Party
pursuant to Section 10 of this Agreement, whether or not AgStar is
obligated to give notice thereof to Company (an “AgStar Default Notice”)
and shall permit NMF an opportunity to cure such default in accordance
with the provisions of this Section 7.2.2. If the default is a monetary
default relating to a liquidated sum of money NMF shall have until ten
(10) Business Days after the later of (i) the giving by AgStar of the
AgStar Default Notice and (ii) the expiration of Company’s cure period, if
any, (an “NMF Monetary Cure Period”) to cure such monetary default. If
the default is of a non-monetary nature, NMF shall have the same period of time
as the Company under the AgStar Loan Documents to cure such non-monetary
default; provided, however, if such non-monetary default is susceptible of cure
but cannot reasonably be cured within such period and if curative action was
promptly commenced and is being continuously and diligently pursued by NMF, NMF
shall be given an additional period of time as is reasonably necessary for NMF
in the exercise of due diligence to cure such non-monetary default for so long
as (i) NMF makes or causes to be made timely payment of Company’s
regularly scheduled payments under the AgStar Loan Documents, (ii) such
additional period of time does not exceed thirty (30) days, unless such
non-monetary default is of a nature that can not be cured within such thirty
(30) days, in which case, NMF shall have such additional time as is reasonably
necessary to cure such non-monetary default, (iii) such default is not
caused by a bankruptcy, insolvency or assignment for the benefit of creditors
of Company and (iv) during such non-monetary cure period, there is no
material impairment to the value, use or operation of the Project. Any
additional cure period granted to NMF hereunder shall automatically terminate
upon the bankruptcy (or similar insolvency) of the Company.


 


15

















 


7.2.3        Subordinated Debt Standstill Provisions. The
Subordinated Lenders shall not, for a period of 60 days after AgStar’s receipt
of the notice required by Section 4, take any Enforcement Action with
respect to the Subordinated Debt. Notwithstanding the foregoing, the
Subordinated Lenders may file proofs of claim against the Company in any
Proceeding. Any Distributions on account of Subordinated Debt obtained by the Subordinated
Lenders following a Proceeding or in violation of this Agreement shall in any
event be held in trust by the Subordinated Lenders for the benefit of the
Senior Lenders and shall be promptly paid or delivered to AgStar for the
benefit of the Senior Lenders in the form received until all Senior Debt is
indefeasibly paid in full in cash.


 


7.3      Estoppel.
Each Party shall, within ten (10) days following a request from any other
Party, provide the requesting Party with a statement setting forth the then current
outstanding principal balance of the obligations owed to it by the Company
under its Financing Documents, the aggregate accrued and unpaid interest
thereunder, and stating whether to the knowledge any default or Event of
Default exists thereunder.


 


7.4      Acceleration
of Loans/Bonds. Prior to a Party accelerating the obligations of the
Company to it under its Financing Documents, such Party shall provide written
notice to the other Parties at least ten (10) Business Days prior to
formally accelerating the same, provided however, that nothing in this
paragraph shall limit the discretion of any Party to accelerate or to exercise
any rights or remedies provided in this Agreement, the Financing Documents, or
applicable law, except as may be otherwise expressly provided in this
Agreement.


 


8.          Representations and Warranties.


 


8.1      By
AgStar. Notwithstanding any of the terms of the AgStar Loan Documents,
AgStar hereby acknowledges (i) that it has received copies of all
Financing Documents and hereby consents to the execution and delivery of the
same by the Company and (ii) agrees that the execution and delivery of the
Financing Documents by the Company shall not constitute a breach or Event of
Default under the AgStar Loan Documents and waives any Event of Default the
execution and delivery of the Financing Documents may have otherwise caused
under the AgStar Loan Documents. AgStar agrees that it shall not contest the
validity, perfection, priority, or enforceability of any Lien, security
interest, encumbrance, or claim granted by the Company to any Party under any
Financing Document.


 


8.1.1       Modification
of AgStar Loan Documents. AgStar shall have the right without the consent
of any other Party to enter into any amendment, deferral, modification,
increase, renewal, replacement consolidation, supplement or waiver
(collectively, an “AgStar Loan Modification”)  of
the AgStar loans or the AgStar Loan Documents provided that no such AgStar Loan
Modification shall (i) increase the interest rate or principal amount of
the AgStar loans, or (ii) extend or shorten the scheduled maturity date of
the AgStar loans (except that AgStar may permit the Company to exercise any
extension options in accordance with the terms and provisions of the AgStar
Loan Documents in effect as of the date hereof), provided, however, in no event
shall AgStar be obligated to obtain any Party’s consent to an AgStar Loan
Modification in the case of a work-out or other surrender, compromise, release,
renewal, or indulgence relating to the AgStar loans following or during the
existence of an Event of Default,


 


16

















 


or (iii) increase any cash reserve or escrow requirements of the
Company. In addition and notwithstanding the foregoing provisions of this
Section 8.1.1, any amounts funded by AgStar under the AgStar Loan
Documents as a result of (x) the making of any Protective Advances or
other advances by AgStar, or (y) interest accruals or accretions and any
compounding thereof (including default interest), shall not be deemed to
contravene this Section 8.1.1.


 


8.1.2       Copies
of AgStar Loan Modifications. AgStar shall deliver to each other Party
copies of any and all modifications, amendments, extensions, consolidations,
restatements, alterations, changes or revisions to any one or more of the
AgStar Loan Documents (including, without limitation, any side letters,
waivers, or consents entered into, executed or delivered by AgStar) within a
reasonable time after any of such applicable instruments have been executed by
the Company and AgStar.


 


8.2      By
NMF.   Notwithstanding any of the
terms of the NMF Loan Documents, NMF hereby acknowledges (i) that it has
received copies of all Financing Documents and hereby consents to the execution
and delivery of the same by the Company and (ii) agrees that the execution
and delivery of the Financing Documents by the Company shall not constitute a
breach or Event of Default under the NMF Loan Documents and waives any Event of
Default the execution and delivery of the Financing Documents may have
otherwise caused under the NMF Loan Documents. NMF agrees that it shall not
contest the validity, perfection, priority, or enforceability of any Lien,
security interest, encumbrance, or claim granted by the Company to any Party
under any Financing Document.


 


8.2.1        Modification
of NMF Loan Documents. NMF shall have the right without the consent of any
other Party to enter into any amendment, deferral, modification, increase,
renewal, replacement consolidation, supplement or waiver (collectively, a “NMF Loan Modification”) of the NMF Loan or the NMF Loan
Documents provided that no such NMF Loan Modification shall (i) increase
the interest rate or principal amount of the NMF Loan, or (ii) extend or
shorten the scheduled maturity date of the NMF Loan (except that NMF may permit
the Company to exercise any extension options in accordance with the terms and
provisions of the NMF Loan Documents in effect as of the date hereof),
provided, however, in no event shall NMF be obligated to obtain any Party’s consent
to a NMF Loan Modification in the case of a work-out or other surrender,
compromise, release, renewal, or indulgence relating to the NMF Loan following
or during the existence of an Event of Default. In addition and notwithstanding
the foregoing provisions of this Section 8.2.1, any amounts funded by NMF
under the NMF Loan Documents as a result of (x) the making of any
Protective Advances or other advances by NMF, or (y) interest accruals or
accretions and any compounding thereof (including default interest), shall not
be deemed to contravene this Section 8.2.1.


 


8.2.2        Copies
of NMF Loan Modifications. NMF shall deliver to AgStar copies of any and
all modifications, amendments, extensions, consolidations, restatements,
alterations, changes or revisions to any one or more of the NMF Loan Documents
(including, without limitation, any side letters, waivers or consents entered
into, executed or delivered by NMF) within a reasonable time after any of such
applicable instruments have been executed by the Company and NMF.


 


17

















 


8.3      By
Trustee. Notwithstanding any of the terms of the Bond Documents, the
Trustee hereby acknowledges (i) that it has received copies of all
Financing Documents and hereby consents to the execution and delivery of the
same by the Company and (ii) agrees that the execution and delivery of the
Financing Documents by the Company shall not constitute a breach or Event of
Default under the SW Facility Bond Documents and waives any Event of Default
the execution and delivery of the Financing Documents may have otherwise caused
under the SW Facility Bond Documents. Trustee agrees that it shall not contest
the validity, perfection, priority, or enforceability of any Lien, security
interest, encumbrance, or claim granted by the Company to any Party under any
Financing Document.


 


8.4      By
County. Notwithstanding any of the terms of the Abatement Bond Documents,
the County hereby acknowledges (i) that it has received copies of all
Financing Documents and hereby consents to the execution and delivery of the
same by the Company and (ii) agrees that the execution and delivery of the
Financing Documents by the Company shall not constitute a breach or Event of
Default under the Abatement Bond Documents and waives any Event of Default the
execution and delivery of the Financing Documents may have otherwise caused
under the Abatement Bond Documents. County agrees that it shall not contest the
validity, perfection, priority, or enforceability of any Lien, security interest,
encumbrance, or claim granted by the Company to any Party under any Financing
Document.


 


8.5      By
the Parties. The Parties agree that the purpose of this Agreement is to
establish priority as to interests otherwise created by independent loan and bond
arrangements between the Parties and the Company and each Party agrees that
this Agreement shall not be utilized by any of them to claim an expansion of
any security interest or Lien granted to them by the Company.


 


9.          Further Assurances.   Each Party will promptly execute and deliver
such further instruments and agreements and do such further acts and things as
may be reasonably requested by any other Party hereto in writing that may be
necessary or desirable to effect fully the purposes of this Agreement.


 


10.        Notices.   All notices or other communications
hereunder shall be sufficiently given and shall be deemed given when mailed by
first class mail, postage prepaid, with proper address as indicated below. Each
Party may, by written notice given to the other Parties, designate any other
address or addresses to which notices or other communications to them shall be
sent when required as contemplated by this Agreement. Until otherwise so
provided by the respective Party, all notices and communications to each of
them shall be addressed as follows:


 


	
   

  	
  If to NMF:

  	
  MMCDC
  New Markets Fund II, LLC

  
	
   

  	
  119
  Graystone Plaza

  
	
   

  	
  P.O. Box
  623

  
	
   

  	
  Detroit
  Lakes, Minnesota 56502

  Attention: Arlen R. Kangas 

  Telephone: (218) 847-3191

  Facsimile:  (218) 844-6345

  



 


18

















 


	
  with a copy to:

  	
  Future
  Unlimited Law PC

  
	
   

  	
  P.O. Box
  2776 

  Yelm, Washington 98597 

  Attention: Ruth Sparrow 

  Telephone: (360) 458-1720 

  Facsimile:  (360) 458-2509

  
	
   

  	
   

  
	
  And to:

  	
  U.S.
  Bancorp Community Development

  
	
   

  	
  Corporation

  
	
   

  	
  1307
  Washington Avenue, Suite 300 

  St. Louis, Missouri 63103 

  Attention: Darren Van Hof 

  Telephone: (314) 335-2650 

  Facsimile: (314) 335-2601

  
	
   

  	
   

  
	
  With a copy to:

  	
  Husch &
  Eppenberger, LLC

  
	
   

  	
  190
  Carondelet Plaza, Suite 600 

  St. Louis, Missouri 63105

  Attention: Edward J. Lieberman

  Telephone: (314) 480-1500 

  Facsimile: (314) 480-1505

  
	
   

  	
   

  
	
  And to:

  	
  Minnesota’s
  Community Development

  
	
   

  	
  Corporation
  

  109 S Grove Ave 

  PO Box 509 

  Park Rapids, MN 56470 

  Attention: Robert Crep 

  Telephone: (218) 732-3677 

  Facsimile: (218) 732-8985

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  Gislason &
  Hunter, LLP

  
	
   

  	
  2700
  S. Broadway 

  New Ulm,MN 56073 

  Attention: C. Thomas Wilson 

  Telephone: (507) 354-3111

  Facsimile: (507) 354-8447

  
	
   

  	
   

  
	
  If to the County:

  	
  Otter
  Tail County

  
	
   

  	
  520
  West Fir Avenue 

  Fergus Falls, MN 56537

  
	
   

  	
   

  
	
  If to Trustee:

  	
  U.S.
  Bank National Association

  
	
   

  	
  as
  trustee for the holders of the $20,000,000 

  Otter Tail County, Minnesota Subordinate

  Exempt Facility Revenue Bonds (Otter Tail

  



 


19

















 


	
   

  	
  Ag
  Enterprises, LLC Ethanol Plant Project)

  
	
   

  	
  Series 2007

  
	
   

  	
  60
  Livingston Avenue

  
	
   

  	
  St.
  Paul, Minnesota 55107

  
	
   

  	
   

  
	
  If to AgStar:

  	
  AgStar
  Financial Services, PCA

  
	
   

  	
  1921
  Premier Drive 

  PO Box 4249

  Mankato, MN 56002-4249

  Attention: Ron Monson

  Telephone: (507) 386-4242

  Facsimile: (507) 344-5088

  
	
   

  	
   

  
	
  With copy to:

  	
  Phillip
  L. Kunkel

  
	
   

  	
  Gray
  Plant Mooty 

  1010 West St. Germain, Suite 600

  St. Cloud, MN 56301 

  Facsimile: (320) 252-4482

  Telephone: (320) 252-4414

  



 


11.       Successors and Assigns. Whenever in this Agreement each of the
Parties is named or referred to, the successors and assigns of such Party shall
be deemed to be included and all covenants, promises and agreements in this
Agreement by and on behalf of the respective Parties hereto shall bind and
inure to the benefit of the respective successors and assigns of such Party,
whether so expressed or not.


 


12.       Relative Rights. Nothing in this Agreement shall
(a) impair, as between NMF and AgStar, the obligations of the Company with
respect to the payment of the AgStar Debt or the NMF Debt in accordance with
their respective terms, or (b) impair, as between any Party, the
obligations of the Company with respect to the payment of the Senior Debt or
the Subordinated Debt in accordance with their respective terms, or
(c) affect the relative rights of AgStar or NMF with respect to any other
creditor of the Company.


 


13.       Conflict. In the event of any conflict between any term, covenant or condition
of this Agreement and any term, covenant or condition of any Financing
Documents, the provisions of this Agreement shall control and govern.


 


14.       Headings. The paragraph headings used in this Agreement are for convenience only
and shall not affect the interpretation of any of the provisions hereof.


 


15.       Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


 


16.       Severability. In the event that any provision of this Agreement is deemed to be
invalid, illegal or unenforceable by reason of the operation of any law or by
reason of the


 


20

















 


interpretation placed thereon by any court or governmental authority,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereto, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.


 


17.       Continuing Agreement. This Agreement is a continuing agreement and
shall remain in full force and effect until the earliest of (a) payment in
full of the Senior Debt; (b) transfer of the Collateral by the
foreclosure, by sale of the Collateral by the exercise of Senior Lender’s legal
and contractual remedies, or by the transfer of the Collateral to AgStar or NMF
by the Company’s deed-in-lieu of foreclosure; or (c) transfer of title to
any Party of the Collateral; provided, however, that any rights or remedies of
either Party hereto arising out of any breach of any provision hereof occurring
prior to such date of termination shall survive such termination.


 


18.       Applicable Law. This Agreement shall be governed by and
shall be construed and enforced in accordance with the internal laws of the
State of Minnesota, without regard to conflicts of law principles.


 


19.       WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS
RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE FINANCING DOCUMENTS. THE PARTIES
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN ITS RELATED FUTURE
DEALINGS. THE PARTIES REPRESENT AND WARRANT THAT EACH HAS HAD THE OPPORTUNITY
TO REVIEW THIS AGREEMENT AND THIS WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.


 


20.       Effectiveness of Agreement. Notwithstanding the execution and delivery
of this Agreement by the County and the Trustee, neither the County or the
Trustee shall be bound by the terms and conditions of this Agreement unless and
until the Abatement Bonds and the Solid Waste Facility Bonds have been sold and
the Bond Documents executed and delivered to the County and Trustee,
respectively.


 


IN WITNESS WHEREOF, NMF, the
Trustee, the County and AgStar have caused this Agreement to be executed as of
the day and year first above written.


 


21
















 


SIGNATURE PAGE TO:


 


INTERCREDITOR AGREEMENT


BY AND BETWEEN


MMCDC NEW MARKETS FUND II, LLC,


U.S. BANK, NATIONAL ASSOCIATION, as Trustee
for the holders of the $20,000,000.00


Otter Tail County, Minnesota, Subordinate
Exempt Facility Revenue Bonds (Otter Tail AG


Enterprises, LLC Ethanol Plant Project) Series 2007


OTTER TAIL COUNTY


AND


AGSTAR FINANCIAL SERVICES, PCA,


 


DATED: AS OF MARCH 28, 2007


 


	
  NMF:

  	
   

  
	
  MMCDC NEW MARKETS FUND II, LLC,

  	
   

  
	
  a
  Delaware limited liability company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Arlen Kangas 

  	
   

  	
   

  	
   

  
	
  By:
  Arlen Kangas 

  	
   

  
	
  Its:
  President

  	
   

  
				



 


22

















 


	
  STATE OF MINNESOTA

  	
  )

  
	
   

  	
  )
  ss.

  
	
  COUNTY OF Becker

  	
  )

  



 


On this 28th day of March, 2007,
before me a Notary Public within and for said County, personally appeared Arlen
Kangas, to me known, who being by me duly sworn, did say that he is the
President of MMCDC New Markets Fund II, LLC, the Delaware limited liability
company named in the foregoing instrument, and that said instrument was signed
on behalf of said company by authority of its board and as the free act and
deed of said company.


 


 


	
  /s/ Nicole A. Kirchner

  	
   

  	
   

  
	
  Notary
  Public

  	
   

  



 


23

















 


SIGNATURE PAGE TO:


 


INTERCREDITOR AGREEMENT


BY AND BETWEEN


MMCDC NEW MARKETS FUND II, LLC,


U.S. BANK NATIONAL ASSOCIATION, as Trustee
for the holders of the $20,000,000.00


Otter Tail County, Minnesota, Subordinate
Exempt Facility Revenue Bonds (Otter Tail AG


Enterprises, LLC Ethanol Plant Project) Series 2007


OTTER TAIL COUNTY


AND


AGSTAR FINANCIAL SERVICES, PCA,


 


DATED: AS OF MARCH 28,2007


 


TRUSTEE:


U.S. BANK NATIONAL ASSOCIATION, as Trustee for the owners of the
$20,000,000.00


Otter
Tail County, Minnesota, Subordinate Exempt Facility Revenue Bonds (Otter Tail
AG


Enterprises,
LLC Ethanol Plant Project)


Series 2007


 


 


	
  /s/
  Jay Paulson 

  	
   

  	
   

  
	
  By:
  

  	
  Jay
  Paulson 

  	
   

  
	
  Its:

  	
  Vice
  President

  	
   

  
				



 


24

















 


	
  STATE
  OF MINNESOTA

  	
  )

  
	
   

  	
  )
  ss.

  
	
  COUNTY
  OF RAMSEY

  	
  )

  



 


On this 28th day of March 2007,
before me a Notary Public within and for said County, personally appeared Jay
Paulson, to me known, who being by me duly sworn, did say that he is the Vice
President of U.S. Bank National Association, the Trustee named in the foregoing
instrument, and that said instrument was signed on behalf of said bank by
authority of its board and as the free act and deed of said bank.


 


 


	
  /s/ Judy A. Galberth

  	
   

  
	
  Notary
  Public

  



 


25

















 


SIGNATURE PAGE TO:


 


INTERCREDITOR AGREEMENT


BY AND BETWEEN 


MMCDC NEW MARKETS FUND II, LLC,


U.S. BANK, NATIONAL ASSOCIATION, as Trustee
for the holders of the $20,000,000.00


Otter Tail County, Minnesota, Subordinate
Exempt Facility Revenue Bonds (Otter Tail AG


Enterprises, LLC Ethanol Plant Project) Series 2007


OTTER TAIL COUNTY


AND


AGSTAR FINANCIAL SERVICES, PCA,


 


DATED: AS OF MARCH 30, 2007


 


	
  COUNTY:

  	 

	
  OTTER TAIL COUNTY, a political subdivision

  	 

	
  of
  the State of Minnesota

  	 

	
   

  	 

	
   

  	 

	
  /s/ Dennis Mosher

  	
   

  	 

	
  By

  	 

	
  Its
  Board Chair

  	 

	
   

  	 

	
   

  	 

	
  /s/
  Larry Krohn

  	
   

  	 

	
  And by

  
	
  Its County Coordinator

  
				



 


26

















 


	
  STATE
  OF MINNESOTA

  	
  )

  
	
   

  	
  )
  ss.

  
	
  COUNTY
  OF OTTER TAIL

  	
  )

  



 


On
this 28th day of March, 2007, before me a Notary Public within and
for said County, personally appeared [ILLEGIBLE] and [ILLEGIBLE], to me known,
who being by me duly sworn, did say that they are the Board Chair and County
Coordinator, respectively, of Otter Tail County, the political subdivision of
the State of Minnesota named in the foregoing instrument, and that said
instrument was signed on behalf of said county by authority of its board and as
the free act and deed of said county.


 


 


	
   

  	
  /s/ Kent Mattson

  	
   

  
	
   

  	
  Notary
  Public

  



 


27

















 


SIGNATURE PAGE TO:


 


INTERCREDITOR AGREEMENT


BY AND BETWEEN


MMCDC NEW MARKETS FUND II, LLC,


U.S. BANK, NATIONAL ASSOCIATION, as Trustee
for the holders of the $20,000,000.00


Otter Tail County, Minnesota, Subordinate
Exempt Facility Revenue Bonds (Otter Tail AG


Enterprises, LLC Ethanol Plant Project) Series 2007


OTTER TAIL COUNTY


AND


AGSTAR FINANCIAL SERVICES, PCA,


 


DATED: AS OF MARCH 28, 2007


 


	
  AGSTAR:

  
	
  AGSTAR
  FINANCIAL SERVICES, PCA,

  
	
  a
  federal instrumentality

  
	
   

  
	
   

  
	
  /s/ Ron Monson

  	
   

  
	
  By: Ron Monson

  
	
  Its: VP

  



 


28

















 


	
  STATE
  OF MINNESOTA

  	
  )

  
	
   

  	
  )
  ss.

  
	
  COUNTY
  OF Steams

  	
  )

  



 


On this 28 day of March, 2007, before me a
Notary Public within and for said County, personally appeared Ron Monson, to me
known, who being by me duly sworn, did say that he is the Vice President of
AgStar Financial Services, PCA, the federal instrumentality named in the
foregoing instrument, and that said instrument was signed on behalf of said
instrumentality by authority of its board and as the free act and deed of said
instrumentality.


 


 


	
  /s/ Patti T. Herber

  	
   

  
	
  Notary
  Public

  



 


29

















 


COMPANY’S
ACKNOWLEDGEMENT


 


The undersigned hereby acknowledges and agrees to the terms and
provisions of this Intercreditor Agreement. By executing this Acknowledgement,
the Company, through the undersigned authorized officer, agrees to be bound by
the provisions of the Intercreditor Agreement insofar as such provisions relate
to the relative rights of the Parties thereto as between such Parties. The
undersigned further agrees that the terms of the Intercreditor Agreement shall
not give the undersigned any substantive rights vis-à-vis any Party and does
not affect the undersigned’s obligations to any Party under any Financing
Document.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC,

  
	
   

  	
  a
  Minnesota limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jerry Larson

  	
   

  
	
   

  	
  By: Jerry Larson

  
	
   

  	
  Its: President

  



 


30

















 


	
  STATE
  OF MINNESOTA

  	
  )

  
	
   

  	
  )
  ss.

  
	
  COUNTY
  OF STEAMS

  	
  )

  



 


On
this 28 day of March, 2007, before me a Notary Public within and for said
County, personally appeared Jerry Larson, to me known, who being by me duly
sworn, did say that he is the President of Otter Tail Ag Enterprises, LLC, the
Minnesota limited liability company named in the foregoing instrument and that
said instrument was signed on behalf of said company by authority of its board
and as the free act and deed of said company.


 


 


	
  /s/ Patti T. Herber

  	
   

  
	
  Notary
  Public

  



 


 


	
  THIS INSTRUMENT
  WAS DRAFTED BY: 

  
	
  GRAY PLANT MOOTY

  
	
  MOOTY &
  BENNETT, P.A.

  
	
  Phillip L. Kunkel

  
	
  1010 West St.
  Germain St.

  
	
  Suite 600

  
	
  St. Cloud, MN
  56301

  



 


31

















 


EXHIBIT A


 


LEGAL
DESCRIPTION OF THE REAL PROPERTY


 


All
that part of the W l/2 of Section 20, Township 133 North, Range 43 West of
the Fifth Principal Meridian, situate in the County of Otter Tail and the State
of Minnesota, lying South of the Railroad Right-of-Way, EXCEPT the following
described tracts of land:


 


1.                                   The tract described as follows: That part of
the SW1/4 of Section 20, Township 133, Range 43, described as follows: Commencing
at the Southwest corner of said Section 20; thence on an assumed bearing
of East along the South line of said Section 20 a distance of 312.35 feet
to the point of beginning of the land to be described; thence North 00°08’29”
East a distance of 318.00 feet; thence on a bearing of East a distance of
180.00 feet; thence South 00°08’29” West a distance of 318.00 feet to said
South line of Section 20; thence on a bearing West along said South line
of Section 20, a distance of 180.00 feet to the point of beginning.


 


2.                                   All that part of the following-described
tract: The El/2 of Wl/2 of Section 20, Township 133, Range 43, except
railroad right of way; which lies Easterly of a line run parallel with and
distant 100.00 feet westerly of the following-described line: Beginning at a
point on the North line of said Section 20, distant 99.15 feet East of the
North Quarter corner thereof; thence run southerly to a point on the South line
of said Section 20, 96.10 feet East of the South Quarter corner thereof,
and there terminating; together with all that part of the above-described tract
adjoining and westerly of the above-described strip and easterly of the
following-described line: From a point on the above-described line, distant
1,077.80 feet North of the South line of said Section 20, run westerly at
right angles with said above-described line for 100.0 feet to the point of
beginning of the line to be described; thence run southwesterly to a point
which is distant 110.0 feet westerly (measured at right angles) from a point on
the above-described line, distant 977.80 feet North of the South line of Section 20
(when measured along the above-described line); thence run southerly and
parallel with said above-described line to the northeasterly boundary line of
the railroad running in a southeasterly and northwesterly direction over and
across the above-described tract; in addition to the existing highway; together
with all right of access, being the right of ingress to and egress from all
that portion of the above-described tract, not acquired herein, to Trunk
Highway No. 392.


 


32

















 


EXHIBIT B


 


LOAN SERVICING AND AGENCY
AGREEMENT


 


33

















 


LOAN
SERVICING AND AGENCY AGREEMENT


 


THIS LOAN SERVICING AND AGENCY
AGREEMENT (this “Agreement”) between AGSTAR FINANCIAL SERVICES, PCA, a federal
instrumentality (the “Servicer”),  and
MMCDC NEW MARKETS FUND II, LLC,  a Delaware limited liability
company (the “Lender”)  is
made and executed as of this 28th day of March, 2007.


 


RECITALS


 


A.    The Lender and the Servicer entered into an
Intercreditor Agreement dated March 28, 2007 (the “Intercreditor Agreement”).


 


B.    The Lender and Servicer
desire to enter into this Agreement to govern the servicing of the Loan, as
defined herein, and the management of relationships with the Company. In the
event of any conflict between the provisions of any the Intercreditor Agreement
and this Agreement as to the Loan, the applicable terms of this Agreement shall
prevail.


 


AGREEMENT


 


IN CONSIDERATION of the foregoing premises and the mutual covenants
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Lender and the
Servicer, the Parties agree as follows:


 


ARTICLE I 


DEFINITIONS


 


Section 1.01.  Certain Defined Terms.
  Unless defined in the Intercreditor
Agreement, the following terms have the respective meanings set forth below for
all purposes of this Agreement, the definitions of such terms are applicable to
the singular as well as to the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms and the words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivisions.


 


“Agreement” means this Loan Servicing and Agency Agreement as
originally executed and as amended or supplemented from time to time in
accordance with the terms hereof.


 


“Collection Account” means the account established by the
Servicer for purposes of receiving payments from the Company pursuant to this
Agreement.


 


“Delinquent Loan” means the Loan for which payments by the
Company due under the Note(s) therefor are ten (10) or more days
contractually delinquent.


 


“Intercreditor Agreement” has the meaning specified in the
Recitals to this Agreement.


 


“Lender” has the meaning specified in the preamble to this
Agreement.


 


34

















 


“Loan” means that certain loan in the aggregate principal amount
of $19,175,000 made by Lender to the Company pursuant to that certain Loan
Agreement dated March 30, 2007.


 


“Monthly P&I” means, with respect to the Loan, the amount of
each monthly installment of principal and interest payable to the holder of
such Loan in accordance with the terms thereof.


 


“Prepayment” means a full or partial voluntary or mandatory
prepayment by the Company of the outstanding principal balance of the Loan and
all accrued and unpaid interest thereon, together with any proceeds of
insurance policies related to such Loan.


 


“Party” or “Parties” means the Lender and/or the
Servicer.


 


“Person” means any natural person, corporation, general or
limited partnership, limited liability company, firm, trust, association,
government, governmental agency or other entity, whether acting in an
individual, fiduciary or other capacity.


 


“Servicer” has the meaning specified in the preamble to this
Agreement.


 


ARTICLE II 


ADMINISTRATION
AND SERVICING OF LOAN


 


Section 2.01.  Duties of Servicer: Cooperation with Servicer.


 


(a)     The
Parties agree that the Servicer will service the Loan as provided in this
Agreement for the benefit of the Lender. To enable the Servicer to perform its
servicing and collection duties hereunder: (i) the Lender agrees to
deliver to Servicer all agreements, documents, instruments and information
reasonably requested by the Servicer, and (ii) the Lender agrees to
cooperate with the Servicer in connection with its performance of such duties
by providing or causing all relevant third parties to provide such information
and copies of agreements, documents and instruments in their possession
relating to the Loan.


 


(b)     The
Servicer shall service the Loan with due care and in accordance with the terms
of this Agreement and shall have full power and authority, acting alone and
subject only to the provisions of this Agreement to do any and all things in
connection with the servicing of the Loan that it may deem necessary or desirable,
subject to applicable consultation and/or notice provisions contained in the
Intercreditor Agreement.


 


(c)     The
Lender shall retain legal title to the Loan and all security for it, subject to
the provisions of the Intercreditor Agreement.


 


(d)     The
Servicer agrees that its servicing of the Loan shall be carried out in
accordance with customary and usual procedures employed by financial
institutions servicing commercial and agricultural loan agreements and, to the
extent more exacting, in accordance


 


35

















 


with
the procedures used by it to service and administer similar loans for itself in
the ordinary course of its business.


 


(e)     The
Servicer shall have no other obligations with respect to the servicing, monitoring
or administration of the Loan, except as expressly set forth in this Agreement,
and affirmatively disclaims all other obligations, duties, or liabilities with
respect to the Loan.


 


Section 2.02.  Servicing Responsibilities.


 


(a)     The
Servicer acknowledges that the Collection Account has been established for the
collection of payments received with respect to the Loan.


 


(b)     The
Servicer shall maintain a loan file and electronic database records for the
Loan consistent with the records which Servicer maintains for loans that it
holds for its own account. In addition to any other customary services which
Servicer may perform, the Servicer shall perform the following servicing and
collection activities:


 


(i)   accept payments on the Loan
made via wire transfer for deposit in the Collection Account established for
such purpose;


 


(ii)  subject to the provisions of
the Intercreditor Agreement, initiate wire transfers of funds to Lender of the
payments and proceeds received by Servicer attributable to the Loan, regardless
of the date of receipt, on the second Business Day following Servicer’s receipt
of collected funds;


 


(iii) in the event the Company
should remit directly to Servicer any payment on the Loan in the form of a
check, draft, money order or other instrument of payment (a “Remittance”) relating to the Loan, the Servicer shall act as
custodian for the Lender as set forth in Section 2.05 by causing such
funds to be deposited into the Collection Account as soon as practicable; and


 


(iv)        take such other action
as may be necessary or appropriate in the discretion of Servicer for the
purpose of collecting and depositing into the Collection Account all sums
received (as to Remittances remitted directly to the Servicer), and to carry
out the duties and obligations imposed upon Servicer pursuant to the terms of
this Section 2.02.


 


(c)     Notwithstanding
the provisions of the foregoing Section 2.2(b), the Servicer may, at its
option (but only to the extent permitted by Intercreditor Agreement, if applicable),
cease collection efforts if the Loan is or shall become a Delinquent Loan,
provided (i) the Servicer shall provide notice thereof to the Lender, and (ii) the
Servicer shall continue to maintain records relating to the Loan and otherwise
continue to carry the Loan on its system unless otherwise instructed by the
Lender.


 


36

















 


Section 2.03.   Collection of Payments and Remittances.


 


(a)      Servicer
shall use its best efforts to obtain on behalf of the Lender the collection of
all payments called for under the terms and provisions of the Loan and shall
use its best efforts to cause the Company to timely make all payments in
respect of the Loan to the Collection Account.


 


(b)     To
the extent applicable, Servicer shall be reimbursed for the services it
provides for the Loan as provided in Section 2.07 of this Agreement.


 


Section 2.04.  Records.


 


(a)     The
Servicer shall retain all data (including, without limitation, computerized
records) relating directly to or maintained in connection with the servicing of
the Loan at the address of the Servicer set forth in Section 6.03 hereof,
or at such other place where the servicing employees of the Servicer are
located, and shall give the Lender or its authorized agents access to all such
information within the direct control of the Servicer at reasonable times upon
request, subject to applicable laws regarding the Company privacy and Servicer’s
information security protocols.


 


(b)     If
the Servicer shall have been terminated in accordance with Section 5.02,
or if this Agreement shall have been terminated pursuant to Section 5.01,
the Servicer shall, promptly upon demand, and in any event no later than 30
Business Days after such demand of the Lender, in the case of Section 5.02,
or of the Lender or the successor to the rights of the Lender, in the case of Section 5.01,
deliver to the Lender (or such other Person designated by the Lender) all data
(including, without limitation, computerized records) necessary for the
servicing of the Loan (it being understood that such data may be delivered in
the form maintained by the Servicer and that the Servicer shall not be required
hereunder to present such data in a format customized for the Lender) and,
within three Business Days after such demand, deliver all monies collected by
it and required to be deposited in the Collection Account. If the Servicer
shall have resigned, the Servicer shall, on the date upon which its resignation
shall be given effect in accordance with Section 4.03, deliver to the Lender,
or such other Person designated by the Lender, all such data. Should Servicer
receive any funds on account of any Loan subject to this Agreement following
the termination of Servicer’s status as servicer for any reason, Servicer shall
immediately contact the Lender and either remit the funds to the Lender, as
instructed by the Lender.


 


(c)     In
addition to delivering such data and monies, the Servicer shall use reasonable
efforts to effect the orderly and efficient transfer of the servicing of the
Loan to the Person which will be assuming responsibility for such servicing,
and shall direct the Company to remit all payment in respect of the Loan to an
account or address designated by the Lender or such new Servicer, as the case
may be.


 


Section 2.05. Servicer to Act as
Custodian for the Lender. 
 To facilitate the servicing of
the Loan by the Servicer, in the event that the Company or other Person on
behalf of a the Company should remit any payment on the Loan directly to the
Servicer instead of to the


 


37

















 


Collection
Account, the Servicer agrees that it shall retain possession, subject to Section 2.02,
of any Remittances received in respect of the Loan that at any time come into
the possession of the Servicer, as custodian and bailee of the Lender. It is
intended that, by the Servicer’s agreement pursuant to this Section, the Lender
shall be deemed to have possession of any such Remittance or funds collected
thereon for purposes of Section 9-313 of the UCC of the state in which the
Remittances were received by the Servicer.


 


Section 2.06.  Indemnification.


 


(a)     The
Servicer agrees to indemnify, defend and hold, the Lender harmless against any
and all claims, losses, penalties, fines, forfeitures, reasonable attorneys
fees and related costs, judgments, and any other costs, fees and expenses that
the Lender may sustain by reason of (i) the willful misconduct, gross
negligence or bad faith of the Servicer in the performance of its obligations
and duties hereunder, or (ii) the reckless disregard by the Servicer of
its obligations and duties hereunder or thereunder.


 


(b)     The
Lender agrees to indemnify, defend and hold the Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, reasonable attorneys’
fees and related costs, judgments, and any other costs, fees and expenses
sustained by the Servicer in connection with its performance of its obligations
and duties hereunder, except those arising out of or attributable to (i) the
willful misconduct, gross negligence or bad faith of the Servicer in the
performance of its obligations and duties hereunder or thereunder, or (ii) the
reckless disregard by the Servicer of its obligations and duties hereunder or
thereunder.


 


Section 2.07.  Servicing Compensation; Other Matters.   In
consideration of the services to be rendered hereunder, the Servicer shall
receive no fee. On the termination of this Agreement by either Party, neither
Party shall be liable to the other for damages or additional compensation of
any kind or character whatsoever resulting solely from such termination.


 


Section 2.08  Agency.   The Lender does hereby designate Servicer as
its agent solely for the purpose of performing the services specified in this
Agreement.


 


Section 2.09  Confidentiality.   Lender and Servicer acknowledge that during
the term of this Agreement, Servicer will be required to access certain
information relating to Lender’s customers (“Information”). Servicer recognizes
that such Information is of a confidential and proprietary nature to Lender.
Servicer agrees to: (1) use at least the same degree of care to maintain
the confidentiality of the Information as it uses in maintaining the
confidentiality of its own confidential and proprietary information; and (2) use
the Information only for the purpose of performing the services agreed to in
this Agreement.


 


Section 2.10  Compliance with State and Federal Laws.   Servicer shall take reasonable steps to ensure
that the Services performed under this Agreement are performed in compliance
with applicable Federal and State laws.


 


38

















 


ARTICLE III


STATEMENTS AND REPORTS


 


Section 3.01.  Servicing and Collection Report. It
is understood and agreed that the Lender shall have no duties vis a vis the
Lender or the Borrower for ongoing credit monitoring, administration, reporting
or servicing of the Loan except as expressly set forth in this Agreement.


 


ARTICLE IV


COVENANTS AND REPRESENTATIONS


 


Section 4.01. Corporate Existence.
The Servicer shall keep in full effect its existence as an instrumentality
under the laws of the United States of America.


 


Section 4.02.  Performance of Obligations.


 


(a)     The
Servicer shall punctually perform and observe all of its obligations and
agreements contained in this Agreement.


 


(b)     The
Servicer shall not take any action, or, to the extent within the Servicer’s
control, permit any action to be taken by others, which would excuse any person
from any of its covenants or obligations under any Note or Mortgage, or under
any other instrument, or which would result in the amendment, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
Note or Mortgage or any such other instrument, without the written consent of
the Lender, except as expressly provided herein.


 


Section 4.03.  Resignation; Assignment.


 


(a)     The
Servicer may resign from the duties and obligations imposed on it hereunder
upon 90 days’ written notice to the Lender.


 


(b)     Except
as contemplated by Section 5.03, the Servicer may not assign this Agreement
or any of its rights, powers, duties or obligations hereunder without the
written consent of the Lender.


 


Section 4.04.  Disclaimer. Anything herein contained
to the contrary notwithstanding, the Parties agree that the Servicer is acting
under this Agreement solely as agent in servicing the Loan, and not as
principal or owner of the Loan. The Servicer makes no warranties or
representations, express or implied, relating to the Loan, including, but
without limitation, as to (i) the validity or genuineness of the Loan, the
documentation evidencing the Loan or the security therefor, or any signatures
and endorsements on such documentation, (ii) compliance of the Loan with
applicable federal and state laws or regulations, or (iii) the validity,
priority or perfection of any liens or encumbrances securing or relating to the
Loan. The duties of Servicer shall be mechanical and administrative in nature.
Except to the extent expressly stated herein regarding Servicer’s receipt of
funds as custodian for Lender, Servicer shall not, by reason of this Agreement,
have a fiduciary relationship with any Person.


 


39

















 


ARTICLE V


TERMINATION


 


Section 5.01. Termination.
Unless otherwise terminated as provided in this Agreement, this Agreement shall
terminate at the time all Notes and other obligations of the Lender made
subject to this Agreement have been paid in full and the Servicer has
completely performed its responsibilities and obligations under this Agreement.
Nothing herein shall affect the Lender’s rights with respect to the Collateral
in connection with the indefeasible payment in full of the Notes and other
obligations of the Lender.


 


Section 5.02. Termination by Lender.
In the event that Servicer fails to perform its obligations hereunder, and such
failure is not cured by Servicer within thirty (30) days following Servicer’s
receipt of Lender’s notice of such failure, the Lender may, upon thirty (30)
days’ written notice to the Servicer, terminate all rights and powers of the
Servicer under this Agreement.


 


Section 5.03. Effect of Resignation
or Termination. Upon the giving effect to the resignation of the
Servicer pursuant to Section 4.03 or termination of the Servicer pursuant
to Section 5.02, all rights, powers, duties and responsibilities of the
Servicer under this Agreement shall vest in and be assumed by the successor
servicer appointed by the Lender. The Servicer agrees that, by such
appointment, the Servicer shall be deemed to have assigned its rights and
duties as servicer hereunder to such successor servicer, and the Lender agrees
that its consent shall not be required to effect such appointment. The Servicer
further agrees to execute and deliver all documents or other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
such vesting and assumption, including, without limitation, directing the
Company to remit payments in respect of the Loan to an account or address
designated by the Lender or such successor servicer, as the case may be;
provided, however, that Lender shall reimburse Servicer for its reasonable
costs and expenses in connection therewith.


 


Section 5.04. No Effect on Other Parties.
Upon giving effect to the resignation of the Servicer pursuant to Section 4.03
or any termination of the rights and powers of the Servicer from time to time
pursuant to Section 5.01 or 5.02, or upon any appointment of a successor
to the Servicer, all the rights, powers, duties and obligations of Lender under
this Agreement shall remain unaffected by such termination or appointment and
shall remain in full force and effect thereafter, except as otherwise expressly
provided in this Agreement.


 


Section 5.05. Rights Cumulative.
All rights and remedies from time to time conferred upon or reserved to the
Servicer or the Lender herein are cumulative, and none is intended to be
exclusive of another or any right or remedy they may have at law or in equity.
No delay or omission in insisting upon the strict observance or performance of
any provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time to time
and as often as deemed expedient.


 


40

















 


ARTICLE VI


MISCELLANEOUS


 


Section 6.01. Attorneys’ Fees.
In the event of any action to enforce or interpret this Agreement, the
prevailing Party shall be entitled to recover reasonable attorneys’ fees and
costs, whether or not such action proceeds to judgment.


 


Section 6.02. Choice of Law and Venue.
This Agreement shall be governed by and shall be construed and enforced in
accordance with the internal laws of the State of Minnesota, without regard to
conflicts of law principles’.


 


Section 6.03. Notice. Any
notice or report required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered
or on the second business day after the day on which it is mailed by first
class, registered or certified mail, postage prepaid, return receipt requested,
if mailed in the addressee’s state, or on the fourth business day after being
so mailed in any state other than he addressee’s state, addressed to the
appropriate Parties at their addresses designated herein or to such other
address as the Party to be notified may have otherwise designated in a notice
given as provided in this Section.


 


	
  The
  Servicer:

  	
   

  	
  AgStar
  Financial Services, PCA

  
	
   

  	
   

  	
  3555
  9th St NW Suite 400

  
	
   

  	
   

  	
  P
  O Box 7438

  
	
   

  	
   

  	
  Rochester, MN 55903-7438

  
	
   

  	
   

  	
  Attention: Ron Monson

  
	
   

  	
   

  	
  Telephone: (507) 386-4242

  
	
   

  	
   

  	
  Facsimile: (507) 344-5088

  
	
   

  	
   

  	
   

  
	
  With
  copies to

  	
   

  	
  Gray
  Plant Mooty

  
	
   

  	
   

  	
  1010
  West St. Germain Street

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Saint
  Cloud, MN 56301

  
	
   

  	
   

  	
  Attention:
  Phillip Kunkel

  
	
   

  	
   

  	
  Telephone:
  (320) 252-4414

  
	
   

  	
   

  	
  Facsimile:
  (320) 252-4482

  
	
   

  	
   

  	
   

  
	
  The
  Lender:

  	
   

  	
  MMCDC
  New Markets Fund II, LLC

  
	
   

  	
   

  	
  119
  Graystone Plaza

  
	
   

  	
   

  	
  P.O. Box
  623

  
	
   

  	
   

  	
  Detroit
  Lakes, Minnesota 56502

  
	
   

  	
   

  	
  Attention:
  Arlen R. Kangas

  
	
   

  	
   

  	
  Telephone:
  (218) 847-3191

  
	
   

  	
   

  	
  Facsimile:
  (218) 844-6345

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Future
  Unlimited Law PC

  
	
   

  	
   

  	
  P.O. Box
  2776

  
	
   

  	
   

  	
  Yelm,
  Washington 98597

  



 


41

















 


	
   

  	
   

  	
  Attention:
  Ruth Sparrow

  
	
   

  	
   

  	
  Telephone:
  (360) 458-1720

  
	
   

  	
   

  	
  Facsimile:
  (360) 458-2509

  
	
   

  	
   

  	
   

  
	
  And
  to:

  	
   

  	
  U.S.
  Bancorp Community Development

  
	
   

  	
   

  	
  Corporation

  
	
   

  	
   

  	
  1307
  Washington Avenue, Suite 300

  
	
   

  	
   

  	
  St.
  Louis, Missouri 63103

  
	
   

  	
   

  	
  Attention:
  Darren Van’t Hof

  
	
   

  	
   

  	
  Telephone:
  (314) 335-2650

  
	
   

  	
   

  	
  Facsimile:
  (314) 335-2601

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Husch &
  Eppenberger, LLC

  
	
   

  	
   

  	
  190
  Carondelet Plaza, Suite 600

  
	
   

  	
   

  	
  St.
  Louis, Missouri 63105

  
	
   

  	
   

  	
  Attention:
  Edward J. Lieberman

  
	
   

  	
   

  	
  Telephone:
  (314) 480-1500

  
	
   

  	
   

  	
  Facsimile:
  (314) 480-1505

  



 


Section 6.04.   Books and Records. The Servicer agrees
that, on reasonable prior notice, it will permit any representative of the
Lender, during the Servicer’s normal business hours, to examine all the books
of account, records, reports other papers of the Servicer relating to the Loan
to make copies and extracts therefrom, at the sole cost to the Lender, and to
discuss the affairs, finances and accounts relating to the Loan and with its
officers, employees and independent accountants (and by this provision the
Servicer hereby authorizes said accountants to discuss with such
representatives such affairs, finances and accounts), all at such reasonable
time and as often as may be reasonably requested, subject to applicable the
Company confidentiality laws and Servicer’s information security protocols.


 


Section 6.05.   Modification.
This Agreement may only be modified in a writing signed by both the Lender and
the Servicer.


 


Section 6.06.   Binding
Effect.


 


(a)     This
Agreement shall inure to the benefit of and be binding upon the Parties hereto
and their respective successors and permitted assigns.


 


(b)     The
Servicer shall be entitled to rely on any right or power granted to it
hereunder.


 


Section 6.07.  Nonwaiver. No delay or omission to
exercise any right, power or remedy accruing to any Party upon any breach of
any other Party under this Agreement shall impair any such right, power or
remedy or such non-breaching Party, nor shall it be construed to be a waiver of
any such right, power or remedy for any present or future breach. Any waiver,
of any kind under this Agreement, or any waiver on the part of any Party of any
provision or condition of this Agreement, must be in writing and shall be
effective and only to the extent approved by the


 


42

















 


Servicer
or as otherwise specifically set forth in this Agreement. All remedies under
this Agreement or by law or otherwise afforded to any Party shall be cumulative
and not in the alternative.


 


Section 6.08.  Miscellaneous.


 


(a)     Headings. All headings are inserted
for convenience only and shall not affect any construction or interpretation of
this Agreement.


 


(b)    Counterparts, etc. This Agreement
may be executed in one or more counterparts all of which together shall
constitute one original document.


 


(c)     Entire Agreement. This Agreement
shall constitute the entire Agreement between the Parties and shall supersede
any and all prior oral or written representations, conditions, warranties,
understandings, proposals or agreements between the Parties regarding the
services to be provided hereunder.


 


(d)    Severability. Any invalidity, in
whole or in part, of any provision of this Agreement, shall not affect the
validity of any other provision of this Agreement.


 


(e)     Force Majuere. Servicer shall be
excused by Lender for delays in performing and failures to perform this
Agreement to the extent that any such delay or failure results from any cause
beyond the reasonable control of Servicer, including, solely by way of example
and without limitation, delays caused by Lender, acts of God, strikes, and
other labor disputes, civil disorder, catastrophes of nature, fire, explosion,
natural or man-made floods or any severe weather, war, failure of a
communications or computer system, nuclear attack, embargoes, actions or
inactions of governmental authorities affecting Servicer. Servicer agrees to
make reasonable efforts to prevent such occurrences from affecting the
execution of this Agreement.


 


(f)     Nonexclusive Agency. Servicer shall
not be prevented from entering into similar such agreements with other
entities.


 


 


[REST OF PAGE INTENTIONALLY BLANK]


 


43

















 


IN WITNESS WHEREOF, each of
the Parties hereto have caused this Loan Servicing and Agency Agreement to be
duly executed on its behalf by officers hereunto duly authorized, all as of the
date and year first written above.


 


	
  LENDER:

  
	
   

  
	
  MMCDC
  NEW MARKETS FUND II, LLC,

  
	
  a
  Delaware limited liability company

  
	
   

  
	
  /s/ Arlen Kangas

  	
   

  
	
  By: Midwest Minnesota Community Development Corporation 

  
	
  Its: Managing Member

  
	
   

  
	
  SERVICER:

  
	
   

  
	
  AGSTAR
  FINANCIAL SERVICES, PCA, a federal instrumentality

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  
						



 


44

















 


IN WITNESS WHEREOF, each of
the Parties hereto have caused this Loan Servicing and Agency Agreement to be
duly executed on its behalf by officers hereunto duly authorized, all as of the
date and year first written above.


 


	
  LENDER:

  
	
   

  
	
  MMCDC NEW MARKETS FUND II, LLC,

  
	
  a
  Delaware limited liability company

  
	
   

  
	
   

  	
   

  
	
  By: Midwest Minnesota Community Development Corporation

  
	
  Its: Managing Member

  
	
   

  
	
  SERVICER:

  
	
   

  
	
  AGSTAR FINANCIAL SERVICES, PCA, a federal instrumentality

  
	
   

  
	
  /s/ Ron Monson

  	
   

  
	
  By: Ron Monson

  
	
  Its: Vice President

  
			



 


45

















 


APPENDIX A


 


LOAN


 


Loan Description:


 


The Loan to be made subject to this Loan Servicing and Agency Agreement
are described as:


 


the Company’s Name: Otter Tail Ag Enterprises, LLC, a Minnesota limited
liability company


the Company’s Address:


 


	
  Loan
  Number:

  	
   

  	
   

  
	
  Date
  of Note:

  	
   

  	
   

  
	
  Principal
  Amount: $19,175,000.00

  
					



 


46