Document:

exv10w4

 

Exhibit 10.4

Loan No. RI0340S01

STATUSED REVOLVING CREDIT SUPPLEMENT

     THIS SUPPLEMENT to the Master Loan Agreement dated February 17, 2006, (the “MLA”), is entered
into as of February 17, 2006, and effective March 1, 2007, or such earlier date as Agent (as that
term is defined in the MLA) may establish in its sole discretion, (the “Effective Date”) between
FARM CREDIT SERVICES OF AMERICA, FLCA (“Farm Credit”) and ADVANCED BIOENERGY, LLC, Fairmont,
Nebraska (the “Company”).

     SECTION 1. The Revolving Credit Facility. On the terms and conditions set forth in the MLA
and this Supplement, Farm Credit agrees to make loans to the Company during the period set forth
below in an aggregate principal amount not to exceed, at any one time outstanding, the lesser of
$5,000,000.00 (the “Commitment”), or the “Borrowing Base” (as calculated pursuant to the Borrowing
Base Report attached hereto as Exhibit A). Within the limits of the Commitment, the Company may
borrow, repay and reborrow.

     SECTION 2. Purpose. The purpose of the Commitment is to finance eligible grain inventory and
equity in Chicago Board of Trade (“CBOT”) futures positions.

     SECTION 3. Term. The term of the Commitment shall be from the Effective Date hereof, up to
and including March 1, 2008, or, if earlier, the date which is twelve (12) months after the
Effective Date, or such later date as Agent may, in its sole discretion, authorize in writing.

     SECTION 4. Interest. The Company agrees to pay interest on the unpaid balance of the loans in
accordance with one or more of the following interest rate options, as selected by the Company:

          (A) Agent Base Rate. At a rate per annum equal at all times to the rate of interest
established by Agent from time to time as its “Agent Base Rate”, which Rate is intended by Agent to
be a reference rate and not its lowest rate. The Agent Base Rate will change on the date
established by Agent as the effective date of any change therein and Agent agrees to notify the
Company of any such change.

          (B) Quoted Rate. At a fixed rate per annum to be quoted by Agent in its sole discretion in
each instance. Under this option, rates may be fixed on such balances and for such periods, as may
be agreeable to Agent in its sole discretion in each instance, provided that: (1) the minimum
fixed period shall be 30 days; (2) amounts may be fixed in increments of $100,000.00 or multiples
thereof; and (3) the maximum number of fixes in place at any one time shall be five.

          (C) LIBOR. At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus 3.10%.
Under this option: (1) rates may be fixed for “Interest Periods” (as hereinafter defined) one
month; (2) amounts may be fixed in increments of $100,000.00 or multiples thereof; (3) the maximum
number of fixes in place at any one time shall be five; and (4) rates may only be fixed on a
“Banking Day” (as hereinafter defined) on 3 Banking Days’ prior written notice. For purposes
hereof: (a) “LIBOR” shall mean the rate (rounded upward to the nearest sixteenth and adjusted for
reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for banks subject to “FRB
Regulation D” (as herein defined) or required by any other federal law or regulation) quoted by the
British Bankers Association (the “BBA”) at 11:00 a.m. London time 2 Banking Days before the
commencement of the Interest Period for the offering of U.S. dollar deposits in the London
interbank market for the Interest Period designated

 

 

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Statused Revolving Credit Supplement RI0340S01

Advanced BioEnergy, LLC

Fairmont, Nebraska

by the Company, as published by Bloomberg or another major information vendor listed on BBA’s
official website; (b) “Banking Day” shall mean a day on which Agent is open for business, dealings
in U.S. dollar deposits are being carried out in the London interbank market, and banks are open
for business in New York City and London, England; (c) “Interest Period” shall mean a period
commencing on the date this option is to take effect and ending on the numerically corresponding
day in the next calendar month; provided, however, that: (i) in the event such ending day is not a
Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day
falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (ii)
if there is no numerically corresponding day in the month, then such period shall end on the last
Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall have meaning as set forth
in “FRB Regulation D”; and (e) “FRB Regulation D” shall mean Regulation D as promulgated by the
Board of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

The Company shall select the applicable rate option at the time it requests a loan hereunder and
may, subject to the limitations set forth above, elect to convert balances bearing interest at the
variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the
foregoing, rates may not be fixed for periods expiring after the maturity date of the loans. All
elections provided for herein shall be made electronically (if applicable), telephonically or in
writing and must be received by Agent not later than 12:00 Noon Company’s local time in order to be
considered to have been received on that day; provided, however, that in the case of LIBOR rate
loans, all such elections must be confirmed in writing upon Agent’s request. Interest shall be
calculated on the actual number of days each loan is outstanding on the basis of a year consisting
of 360 days and shall be payable monthly in arrears by the 20th day of the following month or on
such other day in such month as Agent shall require in a written notice to the Company; provided,
however, in the event the Company elects to fix all or a portion of the indebtedness outstanding
under the LIBOR interest rate option above, at Agent’s option upon written notice to the Company,
interest shall be payable at the maturity of the Interest Period and if the LIBOR interest rate fix
is for a period longer than 3 months, interest on that portion of the indebtedness outstanding
shall be payable quarterly in arrears on each three-month anniversary of the commencement date of
such Interest Period, and at maturity.

     SECTION 5. Promissory Note. The Company promises to repay the unpaid principal balance of the
loans on the last day of the term of the Commitment. In addition to the above, the Company
promises to pay interest on the unpaid principal balance of the loans at the times and in
accordance with the provisions set forth in Section 4 hereof.

     SECTION 6. Borrowing Base Reports, Etc. The Company agrees to furnish a Borrowing Base Report
to Agent at such times or intervals as Agent may from time to time request. Until receipt of such
a request, the Company agrees to furnish a Borrowing Base Report to Agent within 30 days after each
month end calculating the Borrowing Base as of the last day of the month for which the Report is
being furnished. However, if no balance is outstanding hereunder on the last day of such month,
then no Report need be furnished. Regardless of the frequency of the reporting, if at any time the
amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately
notify Agent and repay so much of the loans as is necessary to reduce the amount outstanding under
the Commitment to the limits of the Borrowing Base.

 

 

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Statused Revolving Credit Supplement RI0340S01

Advanced BioEnergy, LLC

Fairmont, Nebraska

     SECTION 7. Letters of Credit. If agreeable to Agent in its sole discretion in each instance,
in addition to loans, the Company may utilize the Commitment to open irrevocable letters of credit
for its account. Each letter of credit will be issued within a reasonable period of time after
receipt of a duly completed and executed copy of Agent’s then current form of application or, if
applicable, in accordance with the terms of any CoTrade Agreement between the parties, and shall
reduce the amount available under the Commitment by the maximum amount capable of being drawn
thereunder. Any draw under any letter of credit issued hereunder shall be deemed an advance under
the Commitment. Each letter of credit must be in form and content acceptable to Agent and must
expire no later than the maturity date of the loans. Notwithstanding the foregoing or any other
provision hereof, the maximum amount capable of being drawn under each letter of credit must be
statused against the Borrowing Base in the same manner as if it were a loan, and in the event that
(after repaying all loans) the maximum amount capable of being drawn under the letters of credit
exceeds the Borrowing Base, then the Company shall immediately notify Agent and pay to Agent (to be
held as cash collateral) an amount equal to such excess.

     SECTION 8. Commitment Fee. In consideration of the Commitment, the Company agrees to pay to
Agent a commitment fee on the average daily unused portion of the Commitment at the rate of 1/4 of
1% per annum (calculated on a 360 day basis), payable monthly in arrears by the 20th day following
each month. Such fee shall be payable for each month (or portion thereof) occurring during the
original or any extended term of the Commitment. For purposes of calculating the commitment fee
only, the “Commitment” shall mean the dollar amount specified in Section 1 hereof, irrespective of
the Borrowing Base

     SECTION 9. Loan Origination Fee. In consideration of the Commitment, the Company agrees to
pay to Agent on the execution hereof a loan origination fee in the amount of $12,500.00.

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

	 	 	 	 	 	 	 	 	 	 	 
	FARM CREDIT SERVICES	 	 	 	ADVANCED BIOENERGY, LLC	 	 
	   OF AMERICA, FLCA	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jeremy Wilhelm
	 	 	 	By:
	 	/s/ Revis L. Stephenson III	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	VP
	 	 	 	Title:
	 	Chairmanexv10w5

 

Exhibit 10.5

Loan No. RI0340T02

CONSTRUCTION AND REVOLVING TERM LOAN SUPPLEMENT

     THIS SUPPLEMENT to the Master Loan Agreement dated February 17, 2006, (the “MLA”), is entered
into as of February 17, 2006, and effective as of December 1, 2006, (the “Effective Date”) between
FARM CREDIT SERVICES OF AMERICA, FLCA (“Farm Credit”) and ADVANCED BIOENERGY, LLC, Fairmont,
Nebraska (the “Company”).

     SECTION 1. The Construction and Revolving Term Loan Commitment. On the terms and conditions
set forth in the MLA and this Supplement, Farm Credit agrees to make loans to the Company from time
to time during the period set forth below in an aggregate principal amount not to exceed, at any
one time outstanding, $21,000,000.00 less the amounts scheduled to be repaid during the period set
forth below in Section 6 (the “Commitment”). Requests for advances which are for the purpose of
paying the costs to construct the ethanol plant described below shall be accompanied by
documentation evidencing such costs. Within the limits of the Commitment, the Company may borrow,
repay and reborrow.

     The Company may, in its sole discretion, elect to permanently reduce the amount of the Commitment
by giving Agent (as that term is defined in the MLA) ten (10) days prior written notice. Said
election shall be made only if the Company is not in default at the time of the election and will
remain in compliance with all financial covenants after such reduction. Any such reduction shall
be treated as an early, voluntary reduction of the Commitment amount and shall not delay or reduce
the amount of any scheduled Commitment reduction under Section 6 hereof (which reductions shall
continue in the increments and on the dates determined in accordance with Section 6), but rather
shall result in an earlier expiration of the Commitment and final maturity of the loans.

     SECTION 2. Purpose. The purpose of the Commitment is to partially finance the Company’s
construction of a 100 million gallon (annual) ethanol plant (the “Improvements”) identified in the
plans and specifications provided to and approved by Agent pursuant to Section 7(A)(xi) of the MLA
(as the same may be amended pursuant to Section 12(A) herein, the “Plans”), on real property owned
by the Company near Fairmont, Nebraska (the “Property”) and to provide working capital to the
Company. The Company agrees to utilize the proceeds of the Commitment for these purposes only.
 

     SECTION 3. Term. The term of the Commitment shall be from the Effective Date hereof (or, if
requested by Company, such earlier date as Agent may, in its sole discretion, authorize in
writing), up to and including March 1, 2017, or such later date as Agent may, in its sole
discretion, authorize in writing.

     SECTION 4. Disbursements of Proceeds.

          (A) Disbursement Procedures.

               (1) Limits on Advances. Agent shall not be required to advance funds: (i) for any category
or line item of acquisition or construction cost an amount greater than the amount specified
therefor in the Project Budget (as defined in Section 7(A)(xi) of the MLA); or (ii) for any
services not yet performed or for materials or goods not yet incorporated into the Improvements or
delivered to and properly stored on the Property. No advance hereunder shall exceed 100% of the
aggregate costs actually paid or currently due and payable and represented by invoices accompanying
a Request for Construction Loan Advance submitted pursuant to Section 9(B)(1) herein less the amount of retainage
(“Retainage”)

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

set out in the construction contract between the Company and Fagen, Inc., and other
construction contracts of the Company for the Improvements.

               (2) Advance of Retainage. The Retainage (but in no case greater than the unused balance of
the Commitment allocated for construction) will be advanced by Agent to the Company pursuant to the
conditions set forth in such construction contracts, upon written request by the Company certifying
the satisfaction of such conditions precedent for payment of Retainage.

               (3) Advances for Working Capital Purposes. Company may request advances for pre-production
expenses or working capital purposes at any time upon written verification to Agent of the purpose
of such advance request.

          (B) Payments to Third Parties. If there is an Event of Default (as defined in the MLA) at its
option and without further authorization from the Company, Agent is authorized to make advances
under the Commitment by paying, directly or jointly with the Company, any person to whom Agent in
good faith determines payment is due and any such advance shall be deemed made as of the date on
which Agent makes such payment and shall be secured under the deed of trust/mortgage securing the
Commitment and any other loan documents securing the Commitment as fully as if made directly to the
Company.

     SECTION 5. Interest and Fees.

          (A) Interest. The Company agrees to pay interest on the unpaid principal balance of the loans
in accordance with one or more of the following interest rate options, as selected by the Company:

               (1) Agent Base Rate. At a rate per annum equal at all times to 1/2 of 1% above the rate of
interest established by Agent from time to time as its Agent Base Rate, which Rate is intended by
Agent to be a reference rate and not its lowest rate. Upon the satisfaction of the maximum
aggregate Free Cash Flow payment (as defined in Section 6 of the Construction and Term Loan
Supplement No. RI0340T01 dated February 17, 2006), then the Agent Base Rate spread will be reduced
to zero. The Agent Base Rate will change on the date established by Agent as the effective date of
any change therein and Agent agrees to notify the Company of any such change.

               (2) Quoted Rate. At a fixed rate per annum to be quoted by Agent in its sole discretion in
each instance. Under this option, rates may be fixed on such balances and for such periods, as may
be agreeable to Agent in its sole discretion in each instance, provided that: (1) the minimum
fixed period shall be 30 days; (2) amounts may be fixed in increments of $500,000.00 or multiples
thereof; and (3) the maximum number of fixes in place at any one time shall be five.

               (3) LIBOR. At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus 3.40%.
Under this option: (1) rates may be fixed for “Interest Periods” (as hereinafter defined) of 1, 2,
3, 6, 9, or 12 months as selected by the Company; (2) amounts may be fixed in increments of
$500,000.00 or multiples thereof; (3) the maximum number of fixes in place at any one time shall be
five; and (4) rates may only be fixed on a “Banking Day” (as hereinafter defined) on 3 Banking
Days’ prior written notice. For purposes hereof: (a) “LIBOR” shall mean the rate (rounded upward
to the nearest sixteenth and
adjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for banks
subject to

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

“FRB Regulation D” (as herein defined) or required by any other federal law or
regulation) quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time 2
Banking Days before the commencement of the Interest Period for the offering of U.S. dollar
deposits in the London interbank market for the Interest Period designated by the Company; as
published by Bloomberg or another major information vendor listed on BBA’s official website; (b)
“Banking Day” shall mean a day on which Agent is open for business, dealings in U.S. dollar
deposits are being carried out in the London interbank market, and banks are open for business in
New York City and London, England; (c) “Interest Period” shall mean a period commencing on the date
this option is to take effect and ending on the numerically corresponding day in the next calendar
month or the month that is 2, 3, 6, 9, or 12 months thereafter, as the case may be; provided,
however, that: (i) in the event such ending day is not a Banking Day, such period shall be
extended to the next Banking Day unless such next Banking Day falls in the next calendar month, in
which case it shall end on the preceding Banking Day; and (ii) if there is no numerically
corresponding day in the month, then such period shall end on the last Banking Day in the relevant
month; (d) “Eurocurrency Liabilities” shall have meaning as set forth in “FRB Regulation D”; and
(e) “FRB Regulation D” shall mean Regulation D as promulgated by the Board of Governors of the
Federal Reserve System, 12 CFR Part 204, as amended.

The Company shall select the applicable rate option at the time it requests a loan hereunder and
may, subject to the limitations set forth above, elect to convert balances bearing interest at the
variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the
foregoing, rates may not be fixed in such a manner as to cause the Company to have to break any
fixed rate balance in order to pay any installment of principal. All elections provided for herein
shall be made electronically (if applicable), telephonically or in writing and must be received by
Agent not later than 12:00 Noon Company’s local time in order to be considered to have been
received on that day; provided, however, that in the case of LIBOR rate loans, all such elections
must be confirmed in writing upon Agent’s request. Interest shall be calculated on the actual
number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be
payable monthly in arrears by the 20th day of the following month or on such other day in such
month as Agent shall require in a written notice to the Company; provided, however, in the event
the Company elects to fix all or a portion of the indebtedness outstanding under the LIBOR interest
rate option above, at Agent’s option upon written notice to the Company, interest shall be payable
at the maturity of the Interest Period and if the LIBOR interest rate fix is for a period longer
than 3 months, interest on that portion of the indebtedness outstanding shall be payable quarterly
in arrears on each three-month anniversary of the commencement date of such Interest Period, and at
maturity.

          (B) Commitment Fee. In consideration of the Commitment, the Company agrees to pay to Agent a
commitment fee on the average daily unused portion of the Commitment (as permanently reduced by the
Company, if applicable, under Section 1 above) at a rate of 5/8 of 1% per annum (calculated on a
360 day basis), payable monthly in arrears by the 20th day following each month. Such fee shall be
payable for each month (or portion thereof) occurring during the original or any extended term of
the Commitment.

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

     SECTION 6. Promissory Note. The Company promises to repay on the dates set forth below, the
outstanding principal, if any, that is in excess of the listed amounts:

	 	 	 	 	 
	Payment Date	 	Reducing Commitment Amount
	March 1, 2015
	 	$	17,000,000.00	 
	September 1, 2015
	 	$	13,000,000.00	 
	March 1, 2016
	 	$	9,000,000.00	 
	September 1, 2016
	 	$	5,000,000.00	 
	March 1, 2017
	 	$	0.00	 

Provided, however, that if Construction and Term Loan Supplement No. RI0340T01 dated February 17,
2006, has been repaid prior to its maturity date of September 20, 2014, then repayment for this
loan shall begin on the first day of the month that is six months after the first day of the month
following the repayment of RI0340T01, and reductions in principal as noted above shall occur every
six months thereafter. If any installment due date is not a day on which Agent is open for
business, then such installment shall be due and payable on the next day on which Agent is open for
business. In addition to the above, the Company promises to pay interest on the unpaid principal
balance hereof at the times and in accordance with the provisions set forth in Section 5 hereof.

     SECTION 7. Prepayment. Subject to the broken funding surcharge provision of the MLA,
prepayment of any outstanding principal balance due to refinancing, or refinancing of any
unadvanced Commitment, up to and including February 1, 2009, will result in a 3% prepayment charge
in addition to any broken funding surcharges which may be applicable, based on the amounts prepaid
and on the total amount of the Commitments in effect at such time.

     SECTION 8. Security. Security is set forth in the MLA.

     SECTION 9. Additional Conditions Precedent.

          (A) Initial Advance. Agent’s obligation to make the initial advance is subject to the
satisfaction of each of the following additional conditions precedent on or before the date of such
advance:

               (1) List of Permits. Receipt by Agent of a detailed list of all permits required for both the
construction of the improvements and the operation of the facility setting forth for each listed
permit whether such permit is required for commencement of construction or required for
commencement of operation, and identifying to Agent’s satisfaction whether such permits have been
issued or can reasonably be expected to be issued.

               (2) Construction Permits. Receipt by Agent of evidence of issuance of all permits that are
required to be obtained prior to the commencement of construction of the improvements.

               (3) Engineer’s Certificate. Receipt by Agent of a report of Agent’s retained engineer
(pursuant to the provisions of Section 14(D)) indicating that the current plans and specifications
of the Improvements and the related contracts establish that the finished project will have
adequate natural gas, electricity, water and waste water treatment to service the requirements of
the project.

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

          (B) Each Advance. Agent’s obligation to make each advance hereunder, including the initial
advance, is subject to the satisfaction of each of the following additional conditions precedent on
or before the date of such advance:

               (1) Request for Construction Loan Advance. That Agent receives an executed request for
construction loan advance from the Company in the form of Exhibit A attached hereto (the “Request
for Construction Loan Advance”), together with all items called for therein.

               (2) Construction Certificate. If an independent inspector has been employed by Agent pursuant
to Section 14(D), a certificate or report of such inspector to the effect that the construction of
the Improvements to the date thereof has been performed in a good and workmanlike manner and in
accordance with the Plans, stating the estimated total cost of construction of the Improvements,
stating the percentage of in-place construction of the Improvements, and stating that the remaining
non-disbursed portion of the Commitment is adequate to complete the construction of the
Improvements.

     SECTION 10. Representations and Warranties. In addition to the representations and warranties
contained in the MLA, the Company represents and warrants as follows:

          (A) Project Approvals; Consents; Compliance. The Company has obtained all Project Approvals
relating to the construction and operation of the Improvements, except those the Company has
disclosed to Agent in writing. All such Project Approvals heretofore obtained remain in full force
and effect and the Company has no reason to believe that any such Project Approval not heretofore
obtained will not be obtained by the Company in the ordinary course during or following completion
of the construction of the Improvements. To the extent that any Project Approval may terminate or
become void or voidable or terminable, upon any sale, transfer or other disposition of the Property
or the Improvements, including any transfer pursuant to foreclosure sale under the Mortgage, the
Company will cooperate with Agent to obtain any replacement Project Approvals. No consent,
permission, authorization, order, or license of any governmental authority is necessary in
connection with the execution, delivery, performance, or enforcement of the loan documents to which
the Company is a party, except such as have been obtained and are in full force and effect. The
Company is in compliance in all material respects with all Project Approvals having application to
the Property or the Improvements except as the Company has disclosed to Agent in writing. Without
limiting the foregoing, there are no unpaid or outstanding real estate or other taxes or
assessments on or against the Property or the Improvements or any part thereof (except only real
estate taxes not yet due and payable). The Company has received no notice nor has any knowledge of
any pending or contemplated assessments against the Property or the Improvements which have not
been disclosed to Agent in writing.

          (B) Environmental Compliance. Without limiting the provisions of the MLA, all property owned
or leased by the Company, including, without limitation, the Property and the Improvements, and all
operations conducted by it are in compliance in all material respects with all Laws and all Project
Approvals relating to environmental protection, the failure to comply with which could have a
material adverse effect on the condition, financial or otherwise, operations, properties, or
business of the Company, or on the ability of the Company to perform its obligations under the loan
documents, except as the Company has disclosed to Agent in writing.

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

          (C) Feasibility. Each of the Project Budget, the Project Schedule and the Disbursement
Schedule is realistic and feasible.

     SECTION 11. Affirmative Covenants. In addition to the affirmative covenants contained in the
MLA, the Company agrees to:

          (A) Reports and Notices. Furnish to Agent:

               (1) Regulatory and Other Notices. Promptly after receipt thereof, copies of any notices or
other communications received from any governmental authority with respect to the Property, the
Improvements, or any matter or proceeding the effect of which could have a material adverse effect
on the condition, financial or otherwise, operations, properties, or business of the Company, or
the ability of the Company to perform its obligations under the loan documents.

               (2) Notice of Nonpayment. Promptly after the filing or receipt thereof, a description of or a
copy of any lien filed by or any notice, whether oral or written, from any laborer, contractor,
subcontractor or materialman to the effect that such laborer, contractor, subcontractor or
materialman has not been paid when due for any labor or materials furnished in connection with the
construction of the Improvements.

               (3) Notice of Suspension of Work. Prompt notice of any suspension in the construction of the
Improvements, regardless of the cause thereof, in excess of ten (10) days and a description of the
cause for such suspension.

          (B) Construction Liens. Pay or cause to be removed, within fifteen (15) days after notice
from Agent, any lien on the Improvements or Property, provided, however, that Company shall have
the right to contest in good faith and with reasonable diligence the validity of any such lien or
claim.

          (C) Identity of Contractors, etc. Furnish to Agent from time to time on request by Agent, in
a form acceptable to Agent, correct lists of all contractors, subcontractors and suppliers of labor
and material supplied in connection with construction of the Improvements and true and correct
copies of all executed contracts, subcontracts and supply contracts. Agent may contact any
contractor, subcontractor or supplier to verify any facts disclosed in the lists and contracts.
All contracts and subcontracts relating to construction of the Improvements must contain provisions
authorizing or not prohibiting the Company to supply to Agent the listed information and copies of
contracts or not otherwise prohibiting any transfers.

          (D) Lien Waivers. Furnish to Agent, at any time and from time to time upon the request of
Agent, lien waivers bearing a then current date and prepared on a form satisfactory to Agent from
such contractor, subcontractor, or supplier as Agent shall designate.

          (E) Operating Permits. Furnish to Agent, unless as otherwise consented to in writing by
Agent, as soon as possible but prior to the commencement of operation of the constructed facility,
evidence of the issuance of all necessary permits for such operation.

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

     SECTION 12. Negative Covenants. In addition to the negative covenants contained in the MLA,
the Company will not:

          (A) Change Orders. Allow any substantial deviation, addition, extra, or change order to the
Plans, Project Budget or Project Schedule, the cost of which in the aggregate exceeds $100,000.00,
without Agent’s prior written approval. All requests for substantial changes shall be made using a
Change Order Request in the form of Exhibit B attached hereto. Agent will have a reasonable time
to evaluate any requests for its approval of any changes referred to in this covenant, and will not
be required to consider approving any changes unless all other approvals that may be required have
been obtained. Agent may approve or disapprove changes in its discretion. All contracts and
subcontracts relating to the construction of the Improvements must contain provisions satisfactory
to Agent implementing the above provisions of this covenant. Company shall promptly provide to
Agent copies of all change orders that, pursuant to the above described procedures, did not require
Agent’s prior written approval.

          (B) Materials. Purchase or install any materials, equipment, fixtures or articles of personal
property for the Improvements if such shall be covered under any security agreement or other
agreement where the seller reserves or purports to reserve title or the right of removal or
repossession, or the right to consider them personal property after their incorporation in the
Improvements.

     SECTION 13. Casualties.

          (A) Right To Elect To Apply Proceeds. In case of material loss or damage to the Property or
to the Improvements by fire, by a taking by condemnation for public use or the action of any
governmental authority or agency, or the transfer by private sale in lieu thereof, either
temporarily or permanently, or otherwise, if in the sole judgment of Agent there is reasonable
doubt as to Company’s ability to complete construction of the Improvements on or before April 1,
2007, by reason of such loss or damage or because of delays in making settlements with governmental
agencies or authorities or with insurers, Agent may terminate its obligations to make advances
hereunder and elect to collect, retain and apply to the Commitment all proceeds of the taking or
insurance after deduction of all expense of collection and settlement, including attorneys’ and
adjusters’ fees and charges. In the event such proceeds are insufficient to pay the Commitment in
full, Agent may declare the balance remaining unpaid on the Commitment to be due and payable
forthwith and avail itself on any of the remedies afforded thereby as in any case of default.

          (B) Election Not To Apply Proceeds. In case Agent does not elect to apply such proceeds to
the Commitment, Company will:

               (1) Settle. Proceed with diligence to make settlement with the governmental agencies or
authorities or the insurers and cause the proceeds of insurance to be paid to Company.

               (2) Resume Construction. Promptly proceed with the resumption of construction of the
Improvements, including the repair of all damage resulting from such fire or other cause and
restoration to its former condition.

          (C) Use of Proceeds. All such proceeds shall be fully used before the disbursement of any
further proceeds of the Commitment.

 

 

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Fairmont, Nebraska

     SECTION 14. Other Rights of Agent.

          (A) Right To Inspect. Agent or its agent may enter on the Property at any time and inspect
the Improvements. If the construction of the Improvements is not reasonably satisfactory to Agent,
Agent may reasonably and in good faith stop the construction and order its replacement or the
correction thereof or additions thereto, whether or not said unsatisfactory construction has been
incorporated in the Improvements, and withhold all advances hereunder until such construction is
satisfactory to Agent. Such construction shall promptly be made satisfactory to Agent.

          (B) Obligation of Agent. Neither Agent nor any inspector hired pursuant to Subsection (D)
below is obligated to construct or supervise construction of the Improvements. Inspection by Agent
or such inspector thereof is for the sole purpose of protecting Agent’s security and is not to be
construed as a representation that there will be compliance on anyone’s part with the Plans or that
the construction will be free from faulty material or workmanship. Neither Agent nor such
inspector shall be liable to the Company or any other person concerning the quality of construction
of the Improvements or the absence therefrom of defects. The Company will make or cause to be made
such other independent inspections as it may desire for its own protection.

          (C) Right To Complete Upon Event of Default. Upon any Event of Default hereunder, Agent may
complete construction of the Improvements, subject to Agent’s right at any time to discontinue any
work without liability, and apply the proceeds of the Commitment to such completion, and may demand
such additional sums from the Company as may be necessary to complete construction, which sums the
Company shall promptly pay to Agent. In connection with any construction of the Improvements
undertaken by Agent pursuant to this Subsection, Agent may (i) enter upon the Property; (ii) employ
existing contractors, architects, engineers and subcontractors or terminate them and employ others;
(iii) make such addition, changes and corrections in the Plans as shall, in the judgment of Agent,
be necessary or desirable; (iv) take over and use any personal property, materials, fixtures,
machinery, or equipment of the Company to be incorporated into or used in connection with the
construction or operation of the Improvements; (v) pay, settle, or compromise all existing or
future bills and claims which are or may be liens against the Property or the Improvements; and
(vi) take such other action, as Agent may in its sole discretion determine, to complete the
construction of the Improvements. The Company shall be liable to Agent for all costs paid or
incurred for construction of the Improvements, and all payments made hereunder shall be deemed
advances by Agent, shall be evidenced by the Note and shall be secured by the Mortgage and any
other loan document securing the Commitment (including any amounts in excess of the Commitment).

          (D) Right To Employ Independent Engineer. Agent reserves the right to employ an independent
construction engineer, among other things, to review the Project Budget, the Project Schedule and
the Plans, inspect all construction of the Improvements and the periodic progress of the same, and
review all Draw Requests and change orders, the cost therefor to be the sole responsibility of the
Company and shall be paid by the Company upon demand by Agent.

          (E) Indemnification and Hold Harmless. The Company shall indemnify and hold Farm Credit and
Agent harmless from and against all liability, cost or damage arising out of this Agreement or any
other loan document or the transactions contemplated hereby and thereby, including, without

 

 

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Construction and Term Loan Supplement RI0340T02

Advanced BioEnergy, LLC

Fairmont, Nebraska

limitation, (i) any alleged or actual violation of any Law or Project Approval relating to the
Property or the Improvements and (ii) any condition of the Property or the Improvements whether
relating to the quality of construction or otherwise and whether Agent elects to complete
construction upon an Event of Default or discontinues or suspends construction pursuant to this
Section 14. Agent may commence, appear in or defend any such action or proceeding or any other
action or proceeding purporting to affect the rights, duties or liabilities of the parties
hereunder, or the Improvements, or the Property, or the payment of the Commitment, and the Company
agrees to pay all of Agent’s costs and expenses, including its reasonable attorneys’ fees, in any
such actions. The obligations of the Company under this Subsection 14(E) shall survive the
termination of this Agreement. As to any action or inaction taken by Agent hereunder, Agent shall
not be liable for any error of judgment or mistake of fact or law, absent gross negligence or
willful misconduct on its part. The Company’s obligation to indemnify and hold Agent harmless
hereunder will exclude any liability, cost, or damage related to Agent’s breach of this Agreement
or for Agent’s gross negligence or willful misconduct.

     SECTION 15. Notice of Completion. Company irrevocably appoints Agent as Company’s agent to
file of record any notice of completion, cessation of labor or any other notice that Agent deems
necessary to file to protect any of the interests of Agent. Agent, however, shall have no duty to
make such filing.

     SECTION 16. Signs and Publicity. At Farm Credit’s and Agent’s request, Company will allow
Farm Credit and Agent to post signs on the Property at the construction site for the purpose of
identifying Farm Credit and Agent as the “Construction Lenders”. At the request of Farm Credit and
Agent, Company will use its best efforts to identify Farm Credit and Agent as the construction
lenders in publicity concerning the project.

     SECTION 17. Cooperation. Company will cooperate at all times with Agent in bringing about the
timely completion of the Improvements, and Company will resolve all disputes arising during the
work of construction in a manner which will allow work to proceed expeditiously.

     SECTION 18. Events of Default. In addition to the events of default set forth in the MLA,
each of the following shall constitute an “Event of Default” hereunder:

          (A) Cessation of Construction. Any cessation at any time in the construction of the
Improvements for more than thirty (30) consecutive days, except for strikes, acts of God, or other
causes beyond the Company’s control, or any cessation at any time in construction of the
Improvements for more than thirty (30) consecutive days, regardless of the cause.

          (B) Insufficiency of Loan Proceeds. Agent, in its sole discretion shall determine that the
remaining undisbursed portion of the Commitment is or will be insufficient to fully complete the
Improvements in accordance with the Plans.

     SECTION 19. Remedies Upon Default. In addition to the remedies set forth in the MLA, upon the
occurrence of and during the continuance of each and every Event of Default Agent may (but shall
not be obligated to) take over and complete construction of the Improvements in accordance with
plans and specifications approved by Agent with such changes as Agent may, in its sole discretion,
deem appropriate, all at the risk, cost, and expense of the Company. Agent may assume or reject
any contracts

 

 

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Advanced BioEnergy, LLC

Fairmont, Nebraska

entered into by the Company in connection with the Improvements, and may enter into additional or
different contracts for services, labor, and materials required, in the judgment of Agent, to
complete the construction of the Improvements and may pay, compromise, and settle all claims in
connection with the construction of the Improvements. All sums, including reasonable attorneys’
fees, charges, or fees for supervision and inspection of the construction, and for any other
necessary purpose in the discretion of Agent, expended by Agent in completing the construction of
the Improvements (whether aggregating more or less than the amount of this Commitment) shall be
deemed advances made by Agent to the Company under this Commitment, and the Company shall be liable
to Agent for the repayment of such sums, together with interest on such amounts from the date of
their expenditure at the default rate specified above. Agent may, in its sole discretion, at any
time, abandon work on the construction of the Improvements after having commenced such work, and
may recommence such work at any time, it being understood that nothing in this Section shall impose
any obligation on Agent to either complete or not to complete the construction of the Improvements.
For the purposes of carrying out the provisions of this Section, the Company irrevocably appoints
Agent, its attorney-in-fact, with full power of substitution, to execute and deliver all such
documents, pay and receive such funds, and take such action as may be necessary, in the judgment of
Agent, to complete the construction of the Improvements.

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

	 	 	 	 	 	 	 	 	 	 	 
	FARM CREDIT SERVICES	 	 	 	ADVANCED BIOENERGY, LLC	 	 
	   OF AMERICA, FLCA	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jeremy Wilhelm
	 	 	 	By:
	 	/s/ Revis L. Stephenson III	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	VP
	 	 	 	Title:
	 	Chairman

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