Exhibit 10.31


 


MMCDC
SUBORDINATE LOAN NOTE


 


	
  $4,694,500.00

  	
   

  	
  March 30, 2007

  



 


1.             FOR
VALUE RECEIVED, OTTER TAIL AG ENTERPRISES,
LLC, a Minnesota limited liability company (the “Borrower”),  hereby promises to
pay to the order of MMCDC NEW MARKETS FUND
II, LLC, a Delaware limited liability company (the “Lender”),  the principal sum
of Four Million Six Hundred Ninety-four Thousand Five Hundred and No/l00ths
($4,694,500.00) Dollars, or so much thereof as may be advanced to, or for the
benefit of, the Borrower and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein
pursuant to that certain Construction and Term Loan Agreement of even date
herewith by and between the Lender and the Borrower (as it may be amended,
modified, supplemented, extended or restated from time to time, the “Loan Agreement”),  and which remains
unpaid, in lawful money of the United States and immediately available funds.
This MMCDC Subordinate Loan Note (“Note”) is issued pursuant to the
terms and provisions of the Loan Agreement and is entitled to all of the
benefits provided for in the Loan Agreement. All capitalized terms used and not
defined herein shall have the meanings assigned to them in the Loan Agreement.


 


2.             Interest Rate. Subject to the
provisions of the Loan Agreement, including but not limited to Section 2.04
with respect to the Maximum Rate, and this Note, the outstanding principal
balance of this Note from the date of the initial Advance until the Maturity
Date shall bear interest at a monthly rate equal to 2.514% (the “Interest Rate”).


 


3.             Default Interest. In addition to the rights and
remedies set forth in the Loan Agreement and this Note: (a) if the
Borrower fails to make any payment to the Lender within ten (10) days of
the date when due, then at the Lender’s option in each instance, such
obligation or payment shall bear interest from the date due to the date paid at
2% per annum in excess of the Applicable Rate that would otherwise be
applicable to such obligation or payment; (b) upon the occurrence and
during the continuance of an Event of Default beyond any applicable cure
period, if any, at the Lender’s option in each instance, the unpaid balance of
the MMCDC Subordinate Loan shall bear interest from the date of the Event of
Default or such later date as the Lender shall elect at 2% per annum in excess
of the Applicable Rate that would otherwise be in effect with respect to the
MMCDC Subordinate Loan; and (c) after the maturity of the MMCDC
Subordinate Loan, whether by reason of acceleration or otherwise, the unpaid
principal balance of the MMCDC Subordinate Loan (including without limitation,
principal, interest, fees and expenses) shall automatically bear interest at 2%
per annum in excess of the Applicable Rate that would otherwise be in effect
with respect to the MMCDC Subordinate Loan (“Default Rate”).  Interest payable at the Default
Rate shall be payable from time to time on demand or, if not sooner demanded,
on the date of each calendar month on which interest would otherwise be paid
pursuant to this Note.


 


4.             Late Charge. If any payment due under
any Loan Documents is not paid within ten (10) days of the due date
thereof, the Borrower shall, in addition to such amount, pay a late charge
equal to five percent (5%) of the amount of such payment (“Late
Charge”).


 


5.             Payments. Commencing on the first
(1st) day of the first (1st) month following the date of the first Advance, and
continuing on the first (1st) day of each and every succeeding calendar


 

















 


month thereafter, the Borrower shall make monthly interest only
payments to the Lender until the Maturity Date (except as provided below), the
amount of which interest-only-payment shall accrue on the entire unpaid
outstanding principal amount of the MMCDC Subordinate Loan applying the
applicable Interest Rate; provided that on February 8, 2014, Borrower
shall pay (in addition to the interest due) $400,000 to Lender as a principal
payment.


 


6.             Prepayment of MMCDC Subordinate Loan. The
MMCDC Subordinate Loan cannot be prepaid in whole or in part prior to August 1,
2014 except as provided in Section 5. After such date, Borrower may, by
notice to the Lender, prepay the outstanding amount of the MMCDC Subordinate
Loan in whole or in part with accrued interest to the date of such prepayment
on the amount prepaid, without penalty or premium. In the event the MMCDC
Subordinate Loan is prepaid, in whole or in part, prior to August 1, 2014,
whether voluntarily by the Borrower or by reason of acceleration of the MMCDC
Subordinate Loan or otherwise, it shall be an Event of Default under the Loan
Documents. Any prepayment does not otherwise affect the Borrower’s obligation
to pay any fees due under the Loan Agreement.


 


7.             Method of Payment. Except as
otherwise expressly provided herein, all payments of principal, interest, and
other amounts to be made by the Borrower under the Loan Documents shall be made
to AgStar Financial Services, PCA, a federal instrumentality, in its capacity
as the servicer of the MMCDC Subordinate Loan (the “Servicer”)
pursuant to the Loan Servicing and Agency Agreement of even date herewith (“Servicing Agreement”) until otherwise notified in writing by
Lender, in U.S. dollars and in immediately available funds, without set-off,
deduction, or counterclaim, not later than 2:00 P.M. (Minneapolis,
Minnesota time) on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). All payments and prepayments shall, at the
option of the Lender, be applied first to costs of collection, if any, second
to any late charges, third to accrued interest on this Note, and lastly to
principal (and, with respect to prepayments, to installments of principal in the
inverse order of maturity).


 


8.             Payments on a Non-Business Day. Whenever
any payment under any Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of interest and fees, as the case may be.


 


9.             Computations. Interest shall be
calculated based upon a 360-day year and actual days elapsed.


 


10.           Disbursements
of the principal of this Note will be made pursuant to the terms of the Loan
Agreement and the Disbursing Agreement.


 


11.           It
is agreed that time is of the essence of this Note.


 


12.           Upon
the occurrence at any time of an Event of Default and the expiration of any
applicable grace or cure period, or at any time thereafter while an Event of
Default continues not cured, the outstanding principal balance hereof plus
accrued interest hereon plus all other amounts


 


2

















 


due
hereunder shall, at the option of the Lender, be immediately due and payable,
without notice or demand and Lender shall be entitled to exercise all remedies
provided in this Note, the Loan Agreement or any of the Loan Documents.


 


13.           Upon
the continuing occurrence of an Event of Default, the Lender shall have the
right to set off any and all amounts due hereunder by the Borrower to the
Lender against any indebtedness or obligation of the Lender to the Borrower.


 


14.           The
Borrower promises to pay all reasonable costs of collection of this Note,
including, but not limited to, reasonable attorneys’ fees paid or incurred by
the Lender on account of such collection, whether or not suit is filed with
respect thereto and whether or not such costs are paid or incurred, or to be
paid or incurred, prior to or after the entry of judgment.


 


15.           Demand,
presentment, protest and notice of nonpayment and dishonor of this Note are
hereby waived.


 


16.           If
any provision of this Note shall be illegal or unenforceable, such provision
shall be deemed canceled to the same extent as though it never had appeared
herein, but the remaining provisions shall not be affected hereby.


 


17.           All
notices, requests, demands and other communications required or permitted to be
given hereunder will be given in the manner provided in the Loan Agreement.


 


18.           This
Note shall be governed by and construed in accordance with the laws of the
State of Minnesota.


 


19.           The
Borrower hereby irrevocably submits to the jurisdiction of any Minnesota state
court or federal court over any action or proceeding arising out of or relating
to this Note, the Loan Agreement and any instrument, agreement or document
related hereto or thereto, and the Borrower hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such Minnesota state or federal court. The Borrower hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. Nothing in this Note
shall affect the right of the Lender to bring any action or proceeding against
the Borrower or its property in the courts of any other jurisdiction to the
extent permitted by law.


 


20.           All
rights, powers, privileges and immunities herein granted to Lender shall extend
to its successor and assigns and any other legal holder of this Note, with full
right by Lender to assign and/or sell same.


 


3

















 


21.           THIS NOTE INCLUDES AND INCORPORATES HEREIN BY REFERENCE
ALL OF THE TERMS, CONDITIONS, COVENANTS, AGREEMENTS AND PROVISIONS SET FORTH IN THE LOAN
DOCUMENTS.


 


	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  a Minnesota limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jerry
  Larson

  	
   

  
	
   

  	
   

  	
  Jerry Larson, President

  



 


4