Document:

Exhibit 10.21

 

FIRST
SUPPLEMENT

TO THE
MASTER LOAN AGREEMENT

(CONSTRUCTION
AND TERM LOAN)

 

THIS FIRST SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this “First Supplement”),  dated as of March 28,
2007, is between AGSTAR FINANCIAL SERVICES,
PCA (the “Lender”) and OTTER TAIL AG ENTERPRISES, LLC, a Minnesota limited liability
company (the “Borrower”), and
supplements and incorporates all of the provisions of that certain Master Loan
Agreement, dated as of even date herewith, between the Lender and the Borrower
(as the same may be amended, modified, supplemented, extended or restated from
time to time, the “MLA”).

 

1.             Definitions. As used in
this First Supplement, the following terms shall have the following meanings.
Capitalized terms used and not otherwise defined in this First Supplement shall
have the meanings attributed to such terms in the MLA. Terms not defined in
either this Supplement or the MLA shall have the meanings attributed to such
terms in the Uniform Commercial Code, as enacted in the State of Minnesota and
as amended from time to time.

 

“Amortization Date” shall have the meaning specified in Section 8(c).

 

“Construction Advance” means any Advance for the payment of
Project Costs made under Section 7.

 

“Construction Letters of Credit” shall have the meaning
specified in Section 6(b).

 

“Construction Letter of Credit Liabilities” means, at any time,
the aggregate maximum amount available to be drawn under all outstanding
Construction Letters of Credit (in each case, determined without regard to
whether any conditions to drawing could then be met) and all unreimbursed
drawings under Construction Letters of Credit.

 

“Construction Loan Commitment” shall have the meaning specified
in Section 2.

 

“Draw Request” means a request for a Construction Advance prior
to the Conversion Date, submitted by the Borrower to the Lender and the
Disbursing Agent, in accordance with the terms and conditions of the Disbursing
Agreement.

 

“Permitted Prepayment” shall have the meaning specified in Section 8(c).

 

“Quarterly Payment Date” shall have the meaning specified in Section 5.

 

“Sworn Construction Statement” means sworn construction
statements, sworn to by the Borrower and the Contractors, and of a form and
substance acceptable to the Lender, a sample of which is attached hereto as Exhibit A.

 

2.             The Construction Loan. On the terms
and conditions set forth in the MLA and this First Supplement, Lender agrees to
make a Construction Loan to the Borrower (the “Construction
Loan”), by means of multiple
advances in an amount not to exceed

 

 

$35,000,000.00 (the “Construction Loan
Commitment”). Under the Construction Loan, amounts borrowed and
repaid or prepaid may not be re-borrowed.

 

3.             Purpose. Advances under
the Construction Loan may be used to fund the payment of Project Costs, including
closing costs and fees associated with the Construction Loan. The Borrower
agrees that the proceeds of the Construction Loan are to be used only for the
purposes set forth in this Section 3 and as permitted in the MLA.

 

4.             Construction Loan Interest Rate. Subject to the
provisions of Section 2.08 of the MLA and Sections 9 and 12 of this First
Supplement, the Construction Loan shall bear interest at a rate equal to the
LIBOR Rate plus 315 basis points. The computation of interest, amortization,
maturity and other terms and conditions of the Construction Loan shall be as
provided in the Construction Note, provided, however, in no event shall the
applicable rate exceed the Maximum Rate.

 

5.             Construction Loan Payments. The Borrower
will pay interest on the Construction Loan (i) quarterly in arrears on the
first day of each January, April, July and October (each such dated a
“Quarterly Payment Date”), commencing
on the first Quarterly Payment Date following the date on which the first
Advance is made on the Construction Loan, and continuing on each Quarterly
Payment Date thereafter until the Conversion Date. If any Quarterly Payment
Date is not a Business Day, then the interest payment then due shall be paid on
the next Business Day and shall continue to accrue interest until paid. On the
Conversion Date, all outstanding accrued interest shall be paid in full.

 

6.             Construction Loan Term. The
Construction Loan shall run for a period beginning on the Closing Date and
ending on the Conversion Date. On the Conversion Date, the amount of the then
unpaid principal balance of the Construction Loan and any and all other amounts
due and owing hereunder or under any other Construction Loan Document relating
to this Construction Loan shall be converted into a Term Loan pursuant to the
terms of the MLA and this First Supplement and a Term Revolving. Loan pursuant
to the Second Supplement to the MLA.

 

7.           Disbursement
of Construction Loan.

 

(a)             Disbursing Account. Disbursements
of the Construction Loan will be made by the Lender in the manner provided in
the Disbursing Agreement. Subject to Section 13(c) below, all
disbursements will be made by wire transferring such funds to the Disbursing
Account established pursuant to the Disbursing Agreement in the amount of each
Draw Request which is approved pursuant to the Disbursing Agreement. All
Construction Loan funds will be considered to have been advanced to and
received by the Borrower upon, and interest on such funds will be payable by
the Borrower from and after, their deposit in such deposit account.

 

(b)             Letter of Credit Commitment to Issue. The Borrower
may request Advances by the Lender, and the Lender, subject to the terms and
conditions of the MLA and this First Supplement, may, in its sole discretion,
issue letters of credit under the Construction Loan for any Borrower’s account
(such letters of credit, being hereinafter referred to collectively as the “Construction Letters of Credit”); provided, however, that:

 

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(i)               the aggregate amount of outstanding
Construction Letter of Credit Liabilities under the Construction Loan shall not
at any time exceed the amount of $3,000,000.00;

 

(ii)              the sum of the outstanding Construction Letters of
Credit plus the outstanding Construction Advances shall not at any time exceed
the Construction Loan;

 

(iii)             the expiration date of a Construction Letter of
Credit advanced under the Construction Loan shall be no latter than the
Conversion Date.

 

Any Construction Letter of Credit issued under this Section 7 is
subject to the provisions of Section 2.06 of the MLA.

 

(c)         Lender’s Application of Loan
Proceeds. Notwithstanding the
provisions of Section 6(a), above, the Lender may elect, upon ten (10) days’
notice to the Borrower, to use the Construction Loan funds to pay, as and when
due, any Construction Loan fees owing to Lender, interest on the Construction
Loan, release charges under prior mortgages on the Property, and reasonable
legal fees and disbursements of the Lender’s attorneys which are payable by the
Borrower, unless Borrower causes such amount(s) to be paid within said ten
(10) days. Such payments may be made, at the option of the Lender, by
debiting or charging the Construction Loan funds in the amount of such
payments.

 

(d)        Cost Information. All disbursements will be based upon a detailed
breakdown of the Project Costs as set forth in the Sworn Construction Statement
attached as Exhibit A to the MLA. In the event that the Borrower becomes
aware of any change in the approved Project Costs, which would increase the
total cost in excess of $50,000.00 above the amount shown on the attached Sworn
Construction Statement, the Borrower shall immediately notify the Lender in
writing and promptly submit to the Lender for its approval a revised Sworn
Construction Statement. No further disbursements need be made by the Disbursing
Agent unless and until the revised Sworn Construction Statement is approved.
The Lender reserves the right to approve or disapprove any revised Sworn
Construction Statement in its reasonable discretion.

 

(e)         Loan in Balance, Deposit of
Funds by Borrower. The Borrower
shall keep the Loan in balance as provided in this Section. If the Lender at
any time reasonably determines that the amount of the undisbursed Construction
Loan proceeds will not be sufficient to fully pay for all costs required to
complete the construction of the Project in accordance with the approved Plans
and Specifications and for all Project Costs to be incurred by the Borrower,
whether such deficiency is attributable to changes in the work of construction
or in the Plans and Specifications or to any other cause, the Lender may make
written demand on the Borrower to deposit in an escrow fund to be established
with the Lender an amount equal to the amount of the shortage reasonably
determined by the Lender. The Borrower shall then deposit the required funds
with the Lender within ten (10) days after the date of the Lender’s
written demand. No further disbursements shall be made by the Disbursing Agent
until those funds are deposited by the Borrower in the escrow fund. Whenever
the Lender has any such funds on deposit in such

 

3

 

escrow fund, it shall make all future advances for Project Costs from
the escrow fund before making any further advances under the Loan.

 

(f)            Additional Security. The Borrower
irrevocably assigns to the Lender and grants to the Lender a security interest
in, as additional security for the performance of the Borrower’s obligations
under this the MLA and this First Supplement and the Related Documents, its
interest in all funds held by the Disbursing Agent, whether or not disbursed,
all funds deposited by the Borrower with the Lender under this First
Supplement, all governmental permits obtained for the lawful construction of
the Project, and all reserves, deferred payments, deposits, refunds, cost
savings, and payments of any kind relating to the construction of the Project.
Upon any default of the Borrower that is continuing, the Lender may use any of
the foregoing for any purpose for which the Borrower could have used them under
this First Supplement or with respect to the construction or financing of the
Project. The Lender will also have all other rights and remedies as to any of
the foregoing which are provided under applicable law or in equity.

 

(g)           Conditions Precedent to Construction Advances. The Lender’s
obligation to make Construction Advances under the Construction Note shall be
subject to the terms, conditions and covenants set forth in the MLA and this
First Supplement, including, without limitation, the following further
conditions precedent:

 

(i)                                           Representations
and Warranties. The representations and warranties set forth in
the MLA and this First Supplement are true and correct in all material respects
as of the date of the request for any Advance, except as disclosed in writing
to the Lender, to the same extent and with the same effect as if made at and as
of the date thereof;

 

(ii)                                        Draw Request. The Borrower
has submitted to the Lender and the Disbursing Agent a Draw Request for each
such Construction Advance, which such Draw Request shall comply with the
requirements contained in this the MLA, this Supplement and the Disbursing
Agreement;

 

(iii)                                     Compliance With Disbursing
Agreement. All of the terms and conditions of the Disbursing
Agreement have been satisfied with respect to each such Construction Advance;

 

(iv)                                    Sworn Construction Statement. The Borrower
shall furnish to the Lender an updated Sworn Construction Statement setting
forth the Contractor(s) providing services or materials with respect to
specific portions of the construction of the Project and setting forth the
amounts actually incurred and paid, or to be incurred, in completing
construction of the Project. Such updated Sworn Construction Statement shall be
sworn to by the Borrower and the Contractors to be a true, complete and
accurate account of all costs actually incurred and an accurate estimate of all
costs to be incurred in the future;

 

(v)                                       No Defaults. The Borrower
is not in default under the terms of the MLA, the Related Documents or any
other agreement to which the Borrower is a party and which relates to the
construction of the Project;

 

4

 

(vi)                                    Loan in Balance. The Loan is
in balance, as required by the provisions of Section 6(e), above;

 

(vii)                                 Government Action. No license,
permit, permission or authority necessary for the construction of the Project
has been revoked or challenged by or before any Governmental Authority;

 

(h)           Suspension of Construction. If the Lender
in reasonably good faith determines that any work or materials do not conform
to the approved Plans and Specifications or sound building practice, or
otherwise departs from any of the requirements of the MLA and this Supplement,
the Lender may require the work to be stopped and withhold disbursements until
the matter is corrected. In such event, the Borrower will promptly correct the
work to the Lender’s reasonable satisfaction. Provided Lender’s actions were
reasonable, in good faith, and the work or materials did not conform to the
approved Plans and Specifications or sound building practice, no such action by
the Lender will affect the Borrower’s obligation to complete the Project on or
before the Completion Date.

 

(i)            Inspections. The Borrower
and the Inspecting Engineer shall be responsible for making inspections of the
Project during the course of construction and shall determine to their own
satisfaction that the work done or materials supplied by the Contractors to
whom payment is to be made out of each Advance has been properly done or
supplied in accordance with the applicable contracts with such Contractors. If
any work done or materials supplied by a Contractor are not reasonably satisfactory
to the Borrower or the Inspecting Engineer, the Borrower will immediately
notify the Lender in writing of such fact. It is expressly understood and
agreed that the Lender or its authorized representative may conduct such
inspections of the Project as it may deem necessary for the protection of the
Lender’s interest, and, specifically, an architectural or engineering firm
acceptable to the Lender may, at the option of the Lender and at the expense of
the Borrower, conduct such periodic inspections of the Project, prepare such
written progress reports during the period of construction, prepare such
written reports upon completion of the Project and sign such Draw Requests, as
the Lender may reasonably request, provided that no inspection shall unreasonably
delay progress on the Project. Any inspections which may be made of the Project
by the Lender or its representative will be made, and all certificates issued
by the Lender’s representative will be issued, solely for the benefit and
protection of the Lender, and that Borrower will not rely thereon. The Lender
is under no duty to supervise or inspect construction or examine any books and
records. Any inspection or examination by the Lender is for the sole purpose of
protecting the Lender’s security and preserving the Lender’s rights under the
MLA and this First Supplement. No default of the Borrower will be waived by any
inspection by the Lender. In no event will any inspection by the Lender be a
representation that there has been or will be compliance with the Plans or
Specifications or that the construction is free from defective materials or
workmanship.

 

(j)            No
Waiver. Any waiver by the Lender of
any condition of disbursement must be expressly made in writing. The making of
a disbursement prior to fulfillment of one or more conditions thereof shall not
be construed as a waiver of such conditions, and the Lender reserves the right
to require their fulfillment prior to making any subsequent disbursements.

 

5

 

8.             Conversion of Construction
Loan Into Term Loan. Subject to the
terms and conditions contained in the MLA and this First Supplement, a portion
of the Construction Loan may be converted into a Term Loan.

 

(a)           Conditions Precedent. In addition to
the terms and conditions of disbursement set forth in the MLA and this First
Supplement and as incorporated from the Disbursing Agreement, the Lender shall
not be obligated to convert any part of the Construction Loan into a Term Loan
unless and until:

 

(i)            Completion of
Project. The Project shall have been completed per the Plans and
Specifications and a Completion Certificate shall have been obtained;

 

(ii)           Amount of Term
Loan. The maximum amount of the Construction Loan which is converted to a
Term Loan shall be $29,000,000.00. The Term Loan shall be payable in full on
the Maturity Date.

 

(iii)          Construction
Loan Exceeds Term Loan. In the event that the amount of the
Construction Loan advanced by Lender exceeds the amount of the maximum Term
Loan to be made by the Lender, including after conversion of those portions of
the Construction Loan which are eligible for conversion into the Term Revolving
Loan pursuant to the MLA and any applicable additional supplement, the Borrower
shall immediately repay the amount of the Construction Loan which is not being
converted into a Term Loan;

 

(iv)          ALTA Survey. The Borrower
shall deliver to the Lender an “as-built” survey of the Real Property which: (a) sets
forth the location and exterior lines and egress and other improvements completed
on the Real Property and demonstrates compliance with all applicable setback
requirements; (b) demonstrates that the Project is entirely within the
exterior boundaries of the Real Property and any building restriction lines and
does not encroach upon any easements or rights-of-way; and (c) contains
such other information as the Lender may reasonably request;

 

(v)           Representations
and Warranties. The representations and warranties set forth in
the MLA and this First Supplement are true and correct in all material respects
as of the Conversion Date to the same extent and with the same effect as if
made at and as of the date thereof;

 

(vi)          No Defaults. The Borrower
is not in default under the terms of the MLA, this First Supplement, the
Related Documents or any other agreement to which the Borrower is a party and
which relates to the construction or operation of the Project.;

 

(vii)         Government
Action. No license, permit, permission or authority necessary for the
construction, operation or use of the Project has been revoked or challenged by
or before any Governmental Authority;

 

(viii)        Marketing
Agreements. The Borrower has executed marketing agreements for
all ethanol and DDGS to be produced at the Project and provided Lender with

 

6

 

collateral assignments of all such agreements in form and content which
is reasonably satisfactory to Lender and its counsel and acknowledged by the
non-Borrower party to all such agreements; and

 

(ix)           Subordinated
Debt. The Borrower shall have closed on all Subordinated Debt contemplated
by the Project Sources and Uses Statement, and the proceeds of all Subordinated
Debt shall have been disbursed by the holders of all Subordinated Debt pursuant
to the provisions of the Disbursing Agreement.

 

(b)           Term Loan
Interest Rate. Subject to the provisions of
Section 2.07 and 2.08 of the MLA and Section 9 and 12 of this First
Supplement, the portion of the Term Loan that has not been converted to a Fixed
Rate Loan pursuant to Section 8(e) of this First Supplement shall
bear interest at a rate equal to the LIBOR Rate plus 295 basis points. The
computation of interest, amortization, maturity and other terms and conditions
of the Term Loan shall be as provided in the Construction Note, provided,
however, in no event shall the applicable rate exceed the Maximum Rate.

 

(c)           Term Loan
Payments. Beginning on the first (1st)
day of the month following the month in which the Conversion Date occurs, and
continuing on the first (1st) day of each succeeding month
thereafter until the seventh month after the Conversion Date, the Borrower
shall make monthly payments of accrued interest. Beginning on the first (1st)
day of the seventh month following the Conversion Date (the “Amortization Date”), and continuing on the first (1st) day of each
succeeding month thereafter until the Maturity Date, the Borrower shall make
equal monthly payments of principal and accrued interest in such amounts as
would be required to fully amortize the entire outstanding principal balance of
the Term Note, together with accrued interest thereon, over a period of 114
months from the Amortization Date. The outstanding principal balance, together
with all accrued interest, if not paid sooner, shall be due and payable in full
on the Maturity Date. Following the Conversion Date, and in addition to all
other payments of principal and interest required under the MLA and this
Construction Note, the Borrower shall annually remit to Lender the Excess Cash
Flow Payment pursuant to Section 11 of this First Supplement.

 

(d)           Term Loan Term.  The Term Loan term shall run for a period beginning on the Conversion
Date and ending on the Maturity Date.

 

(e)           Conversion to Fixed Rate
Loan. As provided in Section 2.05
of the MLA, on the Conversion Date, the Borrower shall have the right to
convert an amount not to exceed fifty percent (50%) of the outstanding
principal balance of the Term Loan into a Fixed Rate Loan, which shall bear
interest at a rate equal to 275 basis points in excess of a mutually agreeable
known fixed rate benchmark rate in effect on the Conversion Date, or another rate as agreed upon by the Lender and
Borrower. Borrower shall provide written notice to Lender atleast 30 days prior
to the Conversion Date of its intention to convert any portion of the Term Loan
to a Fixed Rate Loan. Such written notice shall specify the specific dollar
amount that Borrower is electing to convert to a Fixed Rate Loan. Any amount
subject to a fixed rate of interest pursuant to this Section shall not be
subject to any adjustments under Section 2.07 of the MLA.

 

7

 

(f)         Renewal. Lender agrees that at the Maturity Date Borrower may
request in writing that Lender renew the Term Loan for a period of up to five (5) years
on such terms and conditions as the Lender and Borrower may agree upon in
writing. Nothing in this Agreement shall commit the Lender to renew, extend or
extend any other accommodations to the Borrower regarding the Term Loan.

 

9.             Default Interest. In addition to
the rights and remedies set forth in the MLA: (i) upon the occurrence and
during the continuance of an Event of Default beyond any applicable cure
period, if any, at Lender’s option in each instance, the unpaid balances of the
Loans shall bear interest from the date of the Event of Default or such later
date as Lender shall elect at 2% per annum in excess of the rate(s) of
interest that would otherwise be in effect on the Loans under the terms of the
Construction Note; (ii) after the maturity of the Loans, Whether by reason
of acceleration or otherwise, the unpaid principal balance of the Construction
Loan (including without limitation, principal, interest, fees and expenses)
shall automatically bear interest at 2% per annum in excess of the rate of
interest that would otherwise be in effect on the Loans under the terms of the
Construction Note. Interest payable at the Default Rate shall be payable from
time to time on demand or, if not sooner demanded, on the last day of each
calendar month.

 

10.          Late Charge. If any payment of principal or interest due under
this First Supplement or the Construction Note is not paid within ten (10) days
of the due date thereof, the Borrower shall pay, in addition to such amount, a
late charge equal to five percent (5%) of the amount of such payment.

 

11.          Excess Cash
Flow. In addition to all other
payments of principal and interest required under this Agreement, the
Supplements and the Notes, at the end of the Borrower’s first fiscal year
following the Conversion Date, and continuing each fiscal year thereafter until
the Maturity Date, the Borrower
shall remit to Lender, an amount equal to 55% of the Borrower’s Excess Cash
Flow, calculated based upon that fiscal year’s audited financial statements, on
or before 90 days after the end of each fiscal year of the Borrower (the “Excess  Cash Flow Payment”),  provided however, that the total Excess
Cash Flow Payments required hereunder shall not exceed $2,000,000.00 in any
fiscal year (the “Maximum Excess Cash Flow
Payment”).  The Excess Cash Flow Payment shall
be applied by the Lender to the reduction of the outstanding principal balance
of the Term Loan. Any Excess Cash Flow Payment or any other payment from Excess
Cash Flow shall not constitute a prepayment with respect to which a prepayment
fee under Section 2.10 of this Agreement is required to be paid.
Notwithstanding the foregoing, the total of all Excess Cash Flow Payments shall
not exceed an aggregate amount of $8,000,000.00 during the term of this
Agreement.

 

12.          Changes in
Law Rendering Certain LIBOR Rate Loans Unlawful. In the event that any change in any applicable law
(including the adoption of any new applicable law) or any change in the
interpretation of any applicable law by any judicial, governmental or other regulatory body charged with the
interpretation, implementation or administration thereof, should make it (or in
the good-faith judgment of the Lender should raise a substantial question as to
whether it is) unlawful for the Lender to make, maintain or fund LIBOR Rate
Loans, then: (a) the Lender shall promptly notify each of the other
parties hereto; and (b) the obligation of the

 

8

 

Lender to make LIBOR rate loans of such type shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness. During the period of any suspension, Lender shall make loans to
Borrower that are deemed lawful and that as closely as possible reflect the
terms of the MLA.

 

13.          Maximum
Amount Limitation. Anything in the
MLA, this First Supplement, or the other Loan Documents to the contrary
notwithstanding, Borrower shall not be required to pay unearned interest on the
Construction Note or any of the Loan Obligations, or ever be required to pay
interest on the Construction Note or any of the Loan Obligations at a rate in
excess of the Maximum Rate, if any. If the effective rate of interest which
would otherwise be payable under the MLA, this First Supplement, the
Construction Note, or any of the other Loan Documents would exceed the Maximum
Rate, if any, then the rate of interest which would otherwise be contracted
for, charged, or received under the MLA, this First Supplement, the
Construction Note, or any of the other Loan Documents shall be reduced to the Maximum
Rate, if any. If any unearned interest or discount or property that is deemed
to constitute interest (including, without limitation, to the extent that any
of the fees payable by Borrower for the Loan Obligations to the Lender under
the MLA, this First Supplement, the Construction Note, or any of the other Loan
Documents are deemed to constitute interest) is contracted for, charged, or
received in excess of the Maximum Rate, if any, then such interest in excess of
the Maximum Rate shall be deemed a mistake and canceled, shall not be collected
or collectible, and if paid nonetheless, shall, at the option of the holder of
the Construction Note, be either refunded to the Borrower, or credited on the
principal of the Construction Note. It is further agreed that, without
limitation of the foregoing and to the extent permitted by applicable law, all
calculations of the rate of interest or discount contracted for, charged or
received by the Lender under the Construction Note, or under any of the Loan
Documents, that are made for the purpose of determining whether such rate
exceeds the Maximum Rate applicable to the Lender, if any, shall be made, to
the extent permitted by applicable laws (now or hereafter enacted), by
amortizing, prorating and spreading during the period of the full terms of the
Advances evidenced by the Construction Note, and any renewals thereof all
interest at any time contracted for, charged or received by Lender in
connection therewith. This section shall control every other provision of all
agreements among the parties to the MLA pertaining to the transactions
contemplated by or contained in the Loan Documents, and the terms of this
section shall be deemed to be incorporated in every Loan Document and
communication related thereto.

 

14.          Security. The Borrower’s
obligations hereunder and, to the extent related thereto, the MLA, shall be
secured as provided in the MLA and the Loan Documents.

 

[Signature page follows.]

 

9

 

IN WITNESS WHEREOF, the parties have caused
this First Supplement to the Master Loan Agreement to be executed by their duly
authorized officers as of the date shown above.

 

	
  BORROWER:

  	
  LENDER:

  
	
   

  	
   

  
	
  OTTER
  TAIL AG ENTERPRISES, LLC 

  	
  AGSTAR
  FINANCIAL SERVICES, PCA,

  
	
  a
  Minnesota limited liability company

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Jerry Larson

  	
   

  	
  /s/
  Ron Monson

  
	
  By:
  Jerry Larson 

  	
  By:
  Ron Monson 

  
	
   

  	
  Its:
  President

  	
   

  	
  Its:
  Vice President

  
					

 

10

 

EXHIBIT A

SWORN CONSTRUCTION STATEMENT

 

     SWORN
CONSTRUCTION STATEMENT

 

	
  OWNER: 

  	
   

  
	
   PROPERTY AT:

  	
   

  

 

IMPORTANT NOTICE: This statement must be complete as to names of all
persons and companies furnishing labor and/or  material on the premises
herein. Any increase in cost, from changes in construction or otherwise, must
be forthwith reported to the DISBURSING AGENT with additional deposits to cover
such increase in cost.

 

	
   

  	
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    9

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  38

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  39

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  41

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  42

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  43

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  44

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  45

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  46

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  47

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  48

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  49

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SUBTOTAL

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

11

 

	
  STATE OF 

  	
                                   

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
  > 

  	
  SS.

  	
   

  	
   

  	
   

  	
   

  
	
  COUNTY OF

  	
                              

  	
  )

  	
   

  	
   

  	
   

  	
   

  
								

 

The undersigned being first duly sworn, each for himself, as Contractor
and Borrower, deposes and says that the foregoing are the names of all parties
having contracts or subcontracts for specified portions of the work on said
property and building or material entering into the construction thereof, and
the amounts due and to become due to each of said parties, that the items
mentioned include all labor and material required to complete said buildings
according to plans and specifications, that there are no other contracts
outstanding; and that there is not due or to become due to any person for
material, labor or other work of any kind done upon said building other than as
above stated.

The undersigned further deposes and says that no increase in the cost of
construction will be made under any circumstances without furnishing
information on same to the DISBURSING AGENT with additional deposits to cover
such increase; that, in the event of any such increase, no orders or claims
will be made to said company until such information and additional deposits
shall have been completed; that the purpose of said statement is to induce said
company to pay out the proceeds of a loan of $35,000,000.00 secured by a
leasehold mortgage on said property; and that, upon payment of the specific
unpaid items listed herein, the undersigned Contractor hereby agrees to waive
all claims of priority to said leasehold mortgage and both parties herein will
save said company harmless as to any claims of priority of lien for any labor
or material, furnished or to be furnished, for completion of construction

 

	
   

  	
   

  	
   

  	
   

  
	
  Prime
  Contractor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  OTTER
  TAIL AG ENTERPRISES, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The
  foregoing instrument was acknowledged before me this

  	
                 day
  of                                                                 ,
  20             .

  
	
   

  	
   

  	
   

  
	
  by

  	
   

  	
   

  
	
  NOTARY
  STAMP:

  	
  Signature
  of Notary Public

  	
   

  
						

 

12Exhibit 10.22

 

SECOND SUPPLEMENT

TO THE MASTER LOAN AGREEMENT

(TERM REVOLVING LOAN)

 

THIS SECOND SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this “Second Supplement”),  dated as of March 28,
2007, is between AGSTAR FINANCIAL SERVICES,
PCA (the “Lender”) and OTTER TAIL AG ENTERPRISES, LLC, a Minnesota limited liability
company (the “Borrower”),  and
supplements and incorporates all of the provisions of that certain Master Loan
Agreement, dated as of even date herewith, between the Lender and the Borrower
(as the same may be amended, modified, supplemented, extended or restated from
time to time, the “MLA”).

 

1.             Definitions. As used in this
Second Supplement, the following terms shall have the following meanings.
Capitalized terms used and not otherwise defined in this Second Supplement
shall have the meanings attributed to such terms in the MLA. Terms not defined
in either this Second Supplement or the MLA shall have the meanings attributed
to such terms in the Uniform Commercial Code, as enacted in the State of Minnesota
and as amended from time to time.

 

“Availability Date” shall have the meaning
specified in Section 6 of this Second Supplement.

 

“Maximum Rate” shall have the meaning specified in Section 8
of this Second Supplement.

 

“Monthly Payment Date” means the first (1st) day of
each calendar month.

 

“Outstanding Credit” means, at any time of
determination, the aggregate amount of Advances then outstanding.

 

“Outstanding Term Revolving Advance” means the total Outstanding
Credit under this Second Supplement and the Term Revolving Note.

 

“Reduced Term Revolving Loan Commitment” shall have the meaning
specified in Section 3 of this Second Supplement.

 

“Request for Advance” shall have the meaning specified in Section 7(a) of
this Second Supplement.

 

“Term Revolving Advance” means an advance under this Second
Supplement and the Term Revolving Note.

 

“Term Revolving Note” means that certain promissory note to be
executed and delivered to the Lender by the Borrower on the Conversion Date
pursuant to the terms and conditions provided for in this Second Supplement and
the MLA.

 

“Term Revolving Loan Commitment” shall have the meaning
specified in Section 3 of this Second Supplement.

 

1

 

“Term Revolving Loan Termination Date” shall
have the meaning specified in Section 3 of this Second Supplement.

 

2.            Conversion of Construction Loan into Term Revolving Loan. Pursuant to the terms and conditions contained in
the MLA and this Second Supplement, on the Conversion Date a portion of the
Construction Loan shall be converted into a Term Revolving Loan to be used for
cash and inventory management purposes.

 

(a)           Conditions Precedent. In addition to the terms and conditions set forth in
the MLA, this Second Supplement and as incorporated from the Disbursing
Agreement, the Lender shall not be obligated to convert any part of the
Construction Loan into a Term Revolving Loan unless and until:

 

(i)            Amount of Term
Revolving Loan. The maximum amount of the Construction Loan that
is converted into a Term Revolving Loan shall be $6,000,000.00;

 

(ii)           Completion
Certificate. The Lender shall have received a Completion
Certificate in a form and substance satisfactory to the Lender in its sole
discretion;

 

(iii)          No Defaults. There shall
have been no Events of Default under the MLA or any of the Loan Documents prior
to the Conversion Date;

 

(iv)          Representations
and Warranties. The representations and warranties contained in
the MLA and this Second Supplement are correct on and as of the Conversion Date,
except to the extent that they relate solely to an earlier date; and

 

(v)           Marketing
Agreements. The Borrower has executed marketing agreements for
all ethanol and DDGS to be produced at the Project and provided Lender with
collateral assignments of all such agreements in form and content which is
satisfactory to Lender and its counsel and acknowledged by the non-Borrower
party to all such agreements; and

 

(vi)          Subordinated
Debt. The Borrower shall have closed on all Subordinated Debt contemplated
by the Project Sources and Uses Statement, and the proceeds of all Subordinated
Debt shall have been disbursed by the holders of all Subordinated Debt pursuant
to the provisions of the Disbursing Agreement.

 

3.             Term Revolving Loan Commitment.  Lender agrees,
on the terms and conditions set forth in the MLA and this Second Supplement, to
convert $6,000,000.00 of the Construction Loan into a Term Revolving Loan on
the Conversion Date, and to make one or more advances to the Borrower, during
the period beginning on the Conversion Date and ending at 12:00 noon Central
Time on the Business Day immediately preceding the Maturity Date (the “Term Revolving Loan Termination Date”), in an aggregate principal amount
outstanding at any one time not to exceed $6,000,000.00 (the “Term Revolving Loan Commitment”).Under the Term Revolving Loan
Commitment amounts borrowed and repaid or prepaid may be reborrowed at any time
prior to and including the Term Revolving Loan Termination Date

 

2

 

provided, however, that at no time shall the
sum of the Outstanding Term Revolving Advances exceed $6,000,000.00.

 

4.             Purpose. Advances under
the Loan may be used for cash and inventory management purposes of the Borrower
and its subsidiaries, including closing costs and fees associated with the Term
Revolving Loan. The Borrower agrees that the proceeds of the Loan are to be
used only for the purposes set forth in this Section 4.

 

5.             Repayment
of the Term Revolving Loan.  The Borrower will pay
interest on the Term Revolving Loan on the first (1st) day of each
month, commencing on the first (1st) Monthly Payment Date following
the date on which the first Advance is made on the Term Revolving Loan, and
continuing on each Monthly Payment Date thereafter until the Term Revolving
Loan Maturity Date. On the Term Revolving Loan Maturity Date, the amount of the
then unpaid principal balance of the Term Revolving Loan and any and all other
amounts due and owing hereunder or under any other Loan Document relating to
the Term Revolving Loan shall be due and payable. If any Payment Date is not a
Business Day, then the principal installment then due shall be paid on the next
Business Day and shall continue to accrue interest until paid.

 

6.            Availability. Subject to the
provisions of the MLA and this Second Supplement, during the period commencing
on the date on which all conditions precedent to the initial advance under the
Term Revolving Loan are satisfied (the “Availability Date”)
and ending on the Term Revolving Loan Termination Date, advances under the Term
Revolving Loan will be made as provided in this Second Supplement.

 

7.             Making
the Advances.

 

(a)           Term Revolving Advances. Each Term
Revolving Advance shall be made, on notice from the Borrower (a “Request for Advance”) to the Lender delivered before 12:00
Noon (Minneapolis, Minnesota time) on a Business Day which is at least three (3) Business
Days prior to the date of such Term Revolving Advance specifying the amount of
such Term Revolving Advance, provided that, no Term Revolving Advance shall be
made while an Event of Default exists or if the interest rate for such LIBOR
Rate Loan would exceed the Maximum Rate. Any Request for Advance applicable to
a Term Revolving Advance received after 12:00 Noon (Minneapolis, Minnesota
time) shall be deemed to have been received and be effective on the next
Business Day. The amount so requested from the Lender shall, subject to the
terms and conditions of this Second Supplement, be made available to the
Borrower by: (i) depositing the same, in same day funds, in an account of
the Borrower; or (ii) wire transferring such funds to a Person or Persons
designated by the Borrower in writing.

 

(b)           Requests for Advances Irrevocable. Each Request
for Advance shall be irrevocable and binding on the Borrower and the Borrower
shall indemnify the Lender against any loss or expense it may incur as a result
of any failure to borrow any Advance after a Request for Advance (including any
failure resulting from the failure to fulfill on or before the date specified
for such Advance the applicable conditions set forth in this Section 7 of
this Second Supplement and the MLA), including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Lender
to fund such Advance when such Advance, as a result of such failure, is not
made on such date.

 

3

 

(c)         Minimum Amounts. Each Term
Revolving Advance shall be in a minimum amount equal to $50,000.00.

 

(d)         Conditions Precedent to  All
Advances. The Lender’s obligation to
make each Advance under the Term Revolving Note shall be subject to the terms,
conditions and covenants set forth in the MLA and this Second Supplement,
including, without limitation, the following further conditions precedent:

 

(i)            Representations
and Warranties. The representations and warranties set forth in
the MLA and this Second Supplement are true and correct in all material
respects as of the date of the request for any Advance, except as disclosed in
writing to the Lender, to the same extent and with the same effect as if made
at and as of the date thereof except as disclosed in writing to the Lender;

 

(ii)           No Defaults. The Borrower
is not in default under the terms of the MLA, this Second Supplement, the
Related Documents or any other Material Contracts to which the Borrower is a
party and which relates to the construction of the Project or the operation of
the Borrower’s business; and

 

(iii)          Government
Action. No license, permit, permission or authority necessary for the
construction or operation of the Project has been revoked or challenged by or
before any Governmental Authority.

 

8.             Interest Rate. Subject to the
provisions of Sections 2.07 and 2.08 of the MLA and Sections 9 and 12 of this
Second Supplement, the Term Revolving Loan shall bear interest at a rate equal
to the LIBOR Rate plus 295 basis points. The computation of interest,
amortization, maturity and other terms and conditions of the Term Revolving
Loan shall be as provided in the Term Revolving Note, provided, however, in no
event shall the applicable rate exceed the maximum nonusurious interest rate,
if any, that at any time, or from time to time, may be contracted for, taken,
reserved, charged, or received under applicable state or federal laws (the “Maximum Rate”).

 

9.             Default Interest. In addition to
the rights and remedies set forth in the MLA: (i) upon the occurrence and
during the continuance of an Event of Default beyond any applicable cure
period, if any, at Lender’s option in each instance, the unpaid balance of the
Term Revolving Loan shall bear interest from the date of the Event of Default
or such later date as Lender shall elect at 2% per annum in excess of the rate(s) of
interest that would otherwise be in effect on the Term Revolving Loan under the
terms of the Term Revolving Note; (ii) after the maturity of the Term
Revolving Loan, whether by reason of acceleration or otherwise, the unpaid principal
balance of the Term Revolving Loan (including without limitation, principal,
interest, fees and expenses) shall automatically bear interest at 2% per annum
in excess of the rate of interest that would otherwise be in effect on the Term
Revolving Loan under the terms of the Term Revolving Note. Interest payable at
the Default Rate shall be payable from time to time on demand or, if not sooner
demanded, on the last day of each calendar month.

 

4

 

10.          Late
Charge. If any payment of principal or interest due under
this Second Supplement or the Term Revolving Note 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.

 

11.          Changes
in Law Rendering Certain LIBOR Rate Loans Unlawful.  In the event that any change in any
applicable law (including the adoption of any new applicable law) or any change
in the interpretation of any applicable law by any judicial, governmental or
other regulatory body charged with the interpretation, implementation or
administration thereof, should make it (or in the good-faith judgment of the
Lender should raise a substantial question as to whether it is) unlawful for
the Lender to make, maintain or fund LIBOR Rate Loans, then: (a) the
Lender shall promptly notify each of the other parties hereto; and (b) the
obligation of the Lender to make LIBOR rate loans of such type shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness. During the period of any suspension, Lender shall make loans to
Borrower that are deemed lawful and that as closely as possible reflect the
terms of the MLA.

 

12.          Maximum
Amount Limitation. Anything in the MLA, this Second
Supplement, or the other Loan Documents to the contrary notwithstanding,
Borrower shall not be required to pay unearned interest on the Term Revolving
Note or any of the Loan Obligations, or ever be required to pay interest on the
Term Revolving Note or any of the Loan Obligations at a rate in excess of the
Maximum Rate, if any. If the effective rate of interest which would otherwise
be payable under the MLA, this Supplement, the Term Revolving Note, or any of
the other Loan Documents would exceed the Maximum Rate, if any, then the rate
of interest which would otherwise be contracted for, charged, or received under
the MLA, this Supplement, the Term Revolving Note, or any of the other Loan
Documents shall be reduced to the Maximum Rate, if any. If any unearned
interest or discount or property that is deemed to constitute interest (including,
without limitation, to the extent that any of the fees payable by Borrower for
the Loan Obligations to the Lender under the MLA, this Supplement, the Term
Revolving Note, or any of the other Loan Documents are deemed to constitute
interest) is contracted for, charged, or received in excess of the Maximum
Rate, if any, then such interest in excess of the Maximum Rate shall be deemed
a mistake and canceled, shall not be collected or collectible, and if paid nonetheless,
shall, at the option of the holder of the Term Revolving Note, be either
refunded to the Borrower, or credited on the principal of the Term Revolving
Note. It is further agreed that, without limitation of the foregoing and to the
extent permitted by applicable law, all calculations of the rate of interest or
discount contracted for, charged or received by the Lender under the Term
Revolving Note, or under any of the Loan Documents, that are made for the
purpose of determining whether such rate exceeds the Maximum Rate applicable to
the Lender, if any, shall be made, to the extent permitted by applicable laws
(now or hereafter enacted), by amortizing, prorating and spreading during the
period of the full terms of the Advances evidenced by the Term Revolving Note,
and any renewals thereof all interest at any time contracted for, charged or
received by Lender in connection therewith. This section shall control every
other provision of all agreements among the parties to the MLA pertaining to
the transactions contemplated by or contained in the Loan Documents, and the
terms of this section shall be deemed to be incorporated in every Loan Document
and communication related thereto.

 

5

 

13.          Security. The Borrower’s
obligations hereunder and, to the extent related thereto, the MLA, shall be
secured as provided in the MLA and the Loan Documents.

 

IN WITNESS WHEREOF, the parties have caused this Second Supplement to
the Master Loan Agreement to be executed by their duly authorized officers as
of the date shown above.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC  

  
	
   

  	
  a
  Minnesota limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Jerry Larson

  	
   

  
	
   

  	
  By:
  Jerry Larson

  
	
   

  	
    Its:
  President

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
  AGSTAR FINANCIAL SERVICES, PCA,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Ron Monson

  	
   

  
	
   

  	
  By:  Ron Monson

  
	
   

  	
    Its:
  Vice President

  

 

6

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