Document:

Prepared by MERRILL CORPORATION

EXHIBIT 10.12

 

CONDITIONAL LOAN COMMITMENT

 

November 2, 2001

 

Great

Plains Ethanol, LLC

c/o Larry

Ward

Broin and

Associates

2209 East

57th Street North

Sioux

Falls, SD 57104

 

Re:          Great Plains Ethanol Project,

Chancellor, South Dakota

 

Ladies

and Gentlemen:

 

AgCountry

Farm Credit Services (the “Lender”) is pleased to extend to Great Plains

Ethanol, LLC, a South Dakota limited liability company (the “Borrower”) its

conditional commitment to make a first mortgage loan (the “Loan”) for the

purpose of acquiring, constructing, owning, and operating a 40 million gallon

ethanol plant near Chancellor, South Dakota (the “Project”). The terms and

conditions of the Loan shall be set forth in the Loan Agreement and

accompanying Loan Documents to be prepared by our legal counsel and to be

satisfactory in form and substance to the Lender.

 

The Loan

Documents shall include, among other provisions, the following terms and

conditions:

 

I.              GENERAL TERMS AND CONDITIONS

 

	

  A.

  	

  Borrower -

  Great Plains Ethanol, LLC, a South Dakota limited liability company.

  
	

   

  	

   

  
	

  B.

  	

  Loan Facilities - The Loan shall be comprised of a $32,500,000 non-revolving

  construction loan (the “Construction Facility”) available from Closing until

  October 1, 2003 (the “Construction Period”). If the Borrower is not in default

  under the Loan on October 1, 2003, the amount outstanding under the Loan at

  such time will convert to a term loan with a ten year maturity (the “Term

  Facility”). Six million dollars of the Term Facility may be converted to a

  revolving term facility with a maturity of October 1, 2013, with monthly

  payments of interest, with interest rate options as set forth below in

  Sections I.D.(1)(a) and (b), requiring a $600,000 principal payment annually

  resulting in declining availability on the revolving term facility of

  $600,000 annually, and requiring payment of an unused commitment fee payable

  quarterly in arrears in the amount of one-half percent (1/2%) per annum of

  the average amount of the revolving term facility (as such revolving term

  facility is reduced annually) which is not outstanding during such quarter.

  Notwithstanding anything to the contrary contained herein, the Loan at no

  time shall exceed the lesser of (1) $32,500,000 and (2) 65% of Borrower’s

  construction costs and start-up working capital.

  

 

 

C.            Construction

Facility -

 

(1)           Interest

Rate - 30 day LIBOR plus 3.14 percent per annum (today the rate would be

5.41%).

 

(2)           Payment

Schedule - Interest shall be payable monthly in arrears.

 

(3)           Use

of Construction Proceeds - Proceeds shall be used for:

 

(a)           the

cost of design and engineering for the Project preparing the site, constructing

the building, and purchasing and installing equipment; and

 

(b)           the

interest expense incurred and capitalized in accordance with Generally Accepted

Accounting Principles (GAAP) during construction.

 

D.            Term

Facility -

 

(1)           Interest

Rate Options - The Borrower shall have the option of choosing (a) 30-day

LIBOR plus 2.64 percent per annum (today the rate would be 5.21%), (b) Lender’s

cost of funds plus 2.5 percent per annum (today the rate would be 5.07%) (c) a

three-year adjustable of 6.19 percent per annum (if the Loan closed today), (d)

a five-year adjustable rate of 7.09 percent per annum (if the Loan closed

today), (e) a ten-year fixed rate of 7.44 percent per annum (if the Loan closed

today), and (f) a ten-year fixed rate of 7.29 percent per annum (if the Loan

closed today) subject, however, to the prepayment penalty set forth in

paragraph 4 below. Other interest rate options are available and may or may not

include prepayment penalties.

 

(2)           Payment

Schedule - During the Term Facility the Borrower shall make forty level

amortized quarterly payments based on the applicable interest rate on the Loan

in order to completely repay the outstanding principal balance over the

ten-year term. Payments shall commence on January 1, 2004, and conclude on

October 1, 2013. Payments will be adjusted when the applicable interest rate

changes in order to assure a complete amortization of the Loan by October 1,

2013. The entire unpaid principal balance evidenced by the Term Facility shall

be due and payable no later than October 1, 2013.

 

(3)           Additiona1

Payments - In addition to the payments described above in paragraph (2) the

Borrower shall also be required to make additional principal payments. In an

amount equal to 25% of Borrower’s annual free cash flow. The term “free cash

flow” shall be defined to mean Borrower’s annual earnings before interest,

taxes, depreciation and amortization (EBITDA) less interest expense, mandatory

debt retirement, and non-financed maintenance capital expenditures; provided

the annual payments provided for in this paragraph shall not exceed $1,500,000

annually.

 

(4)           Prepayment

- The Borrower may prepay all or part of the outstanding indebtedness under the

Term Facility at any time without premium or penalty; provided, however, if

Borrower selects an interest rate option with a prepayment penalty, Borrower

shall pay that prepayment penalty as agreed upon in the Loan Documents.

 

(5)           Bio-Energy

Credits - If Borrower receives bio-energy credits, Lender may require

additional principal payments.

 

(6)           Start

Up Working Capital - The parties agree that $4,558,000 of Term Facility

will be used by Borrower as start up working capital.

 

E.             Collateral

- The Loan shall be secured by a first and prior lien against the real property

comprising the Project running in favor of the Lender, by a first priority

security interest on all personal property which is a part of or related to the

Project, by a collateral assignment of all management contracts, all supply

contacts, all off-take contracts (including all contracting relating to

marketing and sales), all railroad, trucking and other transportation

contracts, all power contracts, and all other material contracts of the Borrower

(together with the consent to such collateral assignments by all third parties

to such contacts), and by such other collateral assignments, security interests

and documents as may be deemed necessary by the Lender.

 

F.             Closing

- The closing for the Loan shall be no later than April 1, 2002 (the

“Closing”).

 

G.            Closing

Conditions - All conditions precedent to the funding of the Construction

Facility set forth in the Loan Agreement and other Loan Documents shall be

satisfied by Borrower on or before the Closing.

 

H.            Fees

- At Closing, the Borrower will pay Lender a closing fee of $243,750 (which is

equal to 0.75% of the Loan). Within ten days of acceptance of this Conditional

Loan Commitment, Borrower shall pay $24,375 of the closing fee to Lender (which

shall be deemed fully earned at such time) with the balance due at Closing. In

addition, the Borrower will pay Lender a quarterly fee in arrears equal to

0.25% of the unused amount of the Loan for the period from Closing to October

1, 2003.

 

II.            PRE-CLOSING REQUIREMENTS

 

                Upon acceptance of this

Commitment by Borrower, Borrower shall submit to the Lender as soon as

practical, but in no event later than twenty (20) days prior to Closing each of

the following in form and substance acceptable to the Lender:

 

A.            Title

Insurance - A title insurance commitment to insure the lien of the Lender’s

first mortgage, in all respects acceptable to the Lender’s legal counsel and

specifically, but without limitation, waiving the standard exceptions to title

insurance relating to matters of survey, mechanic’s liens, and parties in

possession.

 

B.            Survey

- Three (3) copies of a current, certified survey of the Project prepared in a

manner acceptable to the Lender, its counsel, and the title insurer.

 

C.            Insurance

- Insurance containing the following coverages;

 

(1)           The

Borrower shall keep the buildings, structures, fixtures, personal property, and

other improvements now existing or hereafter erected or placed on the Project

insured against loss by fire, perils of extended coverage, and such other

hazards, casualties, and contingencies as required by Lender in an amount at

least equal to the unpaid indebtedness secured by the mortgage outstanding at

any given time. The policies shall include “all risk” coverage, and shall be satisfactory

in form and substance to Lender. All insurance shall be carricd with companies

approved by Lender, and the policies and renewals thereof shall (i) contain a

waiver of defense based on co-insurance (ii) be assigned and pledged to Lender

as additional security, and (iii) have attached thereto standard mortgagee and

loss payee clauses in form acceptable to Lender.

 

(2)           If

steam boilers or similar equipment for the generation of steam are located in,

on or about the Project, the Borrower shall maintain insurance against loss or

damage by explosion, rupture or bursting of such equipment and appurtenances

thereto, without a co-insurance clause, in an amount satisfactory to Lender,

and containing a standard mortgagee clause in form acceptable to Lender.

 

(3)           If

the Project or any part thereof is located in a flood hazard area for which

flood insurance is available, Borrower shall maintain flood insurance insuring

the existing and contemplated improvements on the Project to the maximum limit

of coverage made available, or in such lesser amount as Lender may in writing

consent, and containing standard mortgagee and loss payee clauses in form

acceptable to Lender.

 

(4)           Borrower

shall maintain comprehensive general liability insurance naming Lender as an

additional insured in an amount acceptable to Lender, insuring against claims

arising from any accident or occurrence in or upon the Project.

 

All

insurance policies shall be issued by companies approved by Lender, and shall

provide at least 30 days notice to Lender prior to cancellation or non-renewal

thereof. Borrower shall provide copies of all such insurance policies to

Lender.

 

D.            Disbursement

Schedule - Borrower’s estimated schedule for disbursement of the

Construction Facility proceeds.

 

E.             Zoning

- A letter satisfactory to Lender from appropriate governmental offices

regarding zoning, building code, ordinance and all other federal, state, and

local requirements for the Project. 

Borrower shall have obtained all applicable permits and licenses for

operation of the Project, including without limitation all air quality and

water quality permits, prior to the conversion of the Construction Facility to

the Term Facility.

 

F.             Utilities

- Written confirmation of availability from the suppliers of water, storm, and

sanitary sewer, gas, electric, and telephone utilities for the Project.

 

G.            UCC

- UCC security interest searches from the appropriate office in Turner County,

South Dakota, and from the office of the Secretary of State of South Dakota,

covering the Borrower.

 

H.            Organizational

Documents - A copy of Borrower’s organizational and governance documents

certified by the South Dakota Secretary of State or the Borrower’s secretary,

as applicable, together with evidence, reasonably satisfactory to the Lender,

that Borrower has complied with all necessary filing requirements to permit

Borrower to do business in the State of South Dakota, and evidence, reasonably

satisfactory to the Lender, that Borrower has complied with such documents in

executing this Commitment and the documents referred to herein.

 

I.              Equity

- The Lender shall be satisfied in its reasonable discretion with the equity

and capital structure of the Borrower, and that all applicable laws have been

compiled with in raising such equity.

 

J.             Other

- Such other agreements, documents, and exhibits, without limitation, which the

Lender may require to assure compliance with the requirements of this

Commitment.

 

                III.           CLOSING DOCUMENTATION

 

A.            Loan

Documents -

 

The

following documents (the “Loan Documents”) will be prepared by the Lender’s

counsel in accordance with the terms of this Commitment. The parties shall

execute the same and/or cause the same to be executed at C1osing.

 

(1)           A

note in an original amount not to exceed Thirty-two million Five Hundred Thousand

Dollars ($32,500,000).

 

(2)           A

first mortgage upon fee title to the real property comprising the Project.

 

(3)           A

general assignment of all leases of, rents from, and funds associated with the

operation of the Project.

 

(4)           A

security agreement evidencing a first security interest in all fixtures,

equipment, and other personal property owned by Borrower located upon the

Project or used or usable in connection with the development, operation and/or

maintenance of the Project, and appropriate financing statements.

 

(5)           An

assignment of the plans and specifications and an assignment of the Project

architect’s agreement, along with written acknowledgment from the Project

architect authorizing the Lender to rely on and utilize the Plans and agreement

without additional charge, and further confirming to the Lender that, in the

event of default, the Project architect will cooperate with the Lender

regarding the completion of the Project.

 

(6)           An

assignment of Borrower’s general construction contract for the Project and an

agreement from the general contractor to honor and perform the same for the

Lender in the event of default.

 

(7)           A

loan agreement containing such representations, warranties, covenants,

conditions, events of default, and such other provisions as are customary and

satisfactory to Lender.

 

(8)           A

disbursing agreement with the title company detailing the terms, conditions,

and procedures for disbursing amounts under the Construction Facility.

 

(9)           The

collateral assignments and consents described above in paragraph I.E.

 

(10)         Such

other documents, licenses, permits, and items as the Lender may require.

 

The

Lender may designate which of the Loan Documents are to be placed of record and

the offices in which the same are to be recorded.  Borrower shall pay all documentary, recording and/or registration

taxes and/or fees upon the Loan Document.

 

B.            Other

Documents and Requirements -

 

The

following further requirements shall be satisfied prior to Closing:

 

(1)           Borrower

shall deliver a ALTA mortgagee’s policy of title insurance fully acceptable to

Lender dated as of Closing and issued in accordance with the title insurance

commitment approved by the Lender.

 

(2)           Borrower

shall deliver an opinion from outside counsel for Borrower confirming

compliance with the legal requirements of the laws of South Dakota and

confirming such other matters as the Lender’s counsel may deem necessary.

 

(3)           Borrower

shall deliver such other affidavits, statements, certificates, and forms from

Borrower or third parties as may be required by Lender’s counsel.

 

(4)           All

toxic or hazardous substances, hazardous wastes, pollutants or contaminants,

including petroleum products, polychlorinated biphenyls and urea-formaldehyde,

all as defined in any applicable state, local or federal statute, ordinance,

code or regulation (collectively, “Substances”) shall be manufactured, stored

and/or used by Borrower in strict compliance with all applicable laws.

 

(5)           Lender

shall be provided with evidence satisfactory to Lender indicating that there are

not presently any Substances on, about or beneath the surface of the real

property comprising the Project.  In

furtherance and not in limitation of the foregoing, the Borrower shall deliver

a Phase One environmental assessment report to Lender prepared by a qualified

certified testing laboratory acceptable to Lender.  If such Phase One report indicates a likelihood of the presence

of any such Substances, the Lender, in its sole discretion, may require further

tests and findings of the real property comprising the Project to perform such

additional inspections, tests or borings. 

Borrower shall be responsible for removing or causing to be removed

prior to closing any and all Substances discovered on the real property

comprising the Project.  Borrower shall

be responsible for all costs and expenses in connection with the performance of

the foregoing tests, the preparation of the report and the removal of any

Substances from the real property comprising the Project.

 

(6)           The

loan documentation shall provide and Borrower shall agree that if Lender

determines at any time that asbestos containing materials exist on the real

property comprising the Project and present a health hazard, or removal or

containment of the asbestos containing materials or any other Substances from

the real property comprising the Project is required by applicable governmental

or regulatory authorities or pursuant to applicable laws or regulations, Lender

may, in its sole discretion, require the removal or containment of such

asbestos containing materials or any other Substances at Borrower’s expense.

 

(7)           There

shall be at the time of Closing no action, proceeding or investigation pending

or threatened (or any basis therefor) which involves the real property

comprising the Project or which might materially adversely affect the

condition, business or prospects of the Borrower or any of Borrower’s

properties or assets, or which might adversely affect the Borrower’s ability to

perform the obligations under the Loan documentation.

 

(8)           On

or prior to Closing, the Borrower shall have obtained in a manner satisfactory

to Lender $18,750,000 which shall serve as a part of Borrower’s equity funds

for the Project.  The $18,750,000 must

be paid into the Project prior to any disbursements of the Loan from the

Lender.  Borrower has represented to

Lender that it has applied for, and has received, a USDA grant of

$401,700.  Borrower shall deliver a copy

of such USDA approval to Lender.  In

addition, Borrower has represented to Lender that it expects to receive tax

increment financing (TIF) funds in the approximate amount of $1,345,300.  All such TIF money and the USDA grant must

be paid into the Project prior to the conversion of the Construction Facility

to the Term Facility.  In any case, if

Borrower does not receive all of the funds expected from the USDA grant and the

TIF funds, Borrower must have paid in a total of $20,500,000 of equity funds

(including the actual TIF funds and USDA grant) prior to conversion to a Term

Facility.

 

(9)           The

Loan Documents shall contain financial covenants as follows:

 

(a)           Current

ratio:  A minimum ratio of (i) total

current assets to (ii) total current liabilities 1:1 on October 1, 2003 and

thereafter, and 1.2:1 on or after October 1, 2004.

 

(b)           Leverage

ratio:  A maximum ratio of (i) net worth

to (ii) total assets of 0.4:1 on October 1, 2004, and thereafter.

 

(c)           Fixed

charge coverage ratio: A minimum fixed charge coverage ratio of (i) earnings

before interest, taxes, depreciation and amortization to (ii) the sum of interest,

mandatory debt payments, non-financed maintenance capital expenditures, and

equity distributions of 1.15:1 at all times.

 

(d)           Without

the prior consent of Lender, capital expenditures shall not exceed $500,000 in

any fiscal year of Borrower following completion of project.

 

(e)           Without

the prior consent of Lender, annual distributions to the owners of Borrower

shall not exceed 75% of Borrower’s pre-tax net income (after Borrower has made

all required payments of principal and interest under the Loan Documents).  No distributions can be made if Borrower is

(or would be) in default under the Loan Documents either prior to or after such

distributions.

 

(10)         The

Lender shall be reasonably satisfied with the management contract and the

manager for operation of the Project. 

The Lender shall have completed its due diligence of the Borrower, the

Project, and all documents required to be delivered by Borrower hereunder, and

the Lender shall be satisfied in its sole discretion therewith.

 

IV.           OTHER TERMS AND CONDITIONS

 

A.            No

Sale or Liens – Borrower shall not voluntarily or involuntarily cause,

suffer, or permit (1) any sale or transfer of any interest of Borrower, legal

or equitable, in the Project, or (2) any mortgage, deed of trust, pledge,

encumbrance, or lien to be imposed or remain outstanding on the Project or the

granting of any security interest therein, except as granted by the Loan

Documents and the permitted encumbrances listed in the mortgage, without, in

each instance, obtaining the prior written consent of the Lender.

 

B.            Plans

– No changes shall be made in the plans and specifications after the approval

thereof by the Lender without the prior written consent of the Lender if such

change would in any material way alter the design or structure of the Project,

or decrease the Project cost as detailed in the sworn construction cost

statement.  In any event, Borrower will

furnish the Lender with two (2) copies of “as built” drawings upon completion

of the Project.  All engineers and other

personnel of Borrower’s general contractor shall be reasonably satisfactory to

Lender, and Borrower shall provide the qualifications of such individuals to

Lender for Lender’s review upon request.

 

C.            Architect

– If a default or event of default occurs under any of the Loan Documents, (a)

the Lender may retain an independent architect or engineer to review and

approve the plans, soil reports, construction contracts and subcontracts, cost

figures, and sworn construction cost statement; (b) the Lender may request the

inspecting architect to inspect all work for which payment is requested and all

other work upon the Project, review all draw request, and approve such work and

draw requests prior to each disbursement of Loan proceeds; and (c) neither

Borrower nor any third party shall have the right for any purpose to use or

rely upon the reports of the inspecting architect, whether they are made prior

to or subsequent to the commencement of construction of the improvements.

 

D.            Costs

– Borrower shall pay all attorneys’ fees (including, without limitation, fees

of the Lender’s counsel), the inspecting architect’s fees, and all other

expenses incurred by the Lender or Borrower in connection with the issuance of

this Commitment, preparation of the Loan Documents, and the making, closing,

repayment and/or transfer of the Loan, whether or not the Loan closes.

 

E.             Additional

Information – Borrower shall furnish promptly such additional information

as shall be requested by the Lender, including, but not limited to, interim

financial statements within 30 days of the end of each monthly period and

audited financial statements for Borrower, within one hundred twenty (120) days

following the end of each fiscal year thereof. Borrower represents that all

financial information heretofore furnished to the Lender, and to be furnished

to the Lender, is and will be accurate and not misleading in any respect.

 

F.             Disbursement

– Disbursement of the Loan proceeds shall be made in accordance with the

Lender’s form of disbursing agreement, and in a manner which will always

preserve the first lien status of the mortgage.  With respect to any draws under the Construction Facility for

payment of amounts owed under construction contacts, disbursements shall also

be subject to a retainage in an amount equal to or at least two percent (2%) of

each draw until such time as the Project is fifty percent (50%) completed.  Retainages required for subcontracts will be

released upon certification to the Lender by the project architect that the

work described in such subcontract has been completed.

 

G.            No

Assignment – Without the prior written consent of the Lender, Borrower’s

rights under this Commitment may not be assigned. This Commitment sets forth

the entire agreement of the parties with respect to the subject matter hereof

and supersedes all prior written or oral understandings with respect thereto,

except that all representations made by Borrower to the Lender with respect to

the subject matter hereof shall survive this Commitment.  No modification or waiver of any provision

of this Commitment shall be effective unless set forth in writing and signed by

the parties hereto.

 

H.            Participations

– The Lender may arrange for other lenders to purchase or to participate with

the Lender in the Loan, and the Lender shall be entitled to retain any

compensation received from any such other lender. The Lender’s obligation to

advance any amounts under the Loan is expressly conditioned upon the Lender’s

receipt of participations in the Loan in such amounts as are satisfactory to Lender

in its sole discretion.

 

I.              Funding

Bank – The Lender’s obligation to advance any amounts under the Loan is

expressly conditioned upon the approval of Lender’s funding bank (AgriBank).

 

J.             Choice

Of Law – Except to the extent otherwise provided in the Loan Documents, the

rights of the parties hereto shall be governed by and construed in accordance

with the laws of the State of North Dakota.

 

K.            Expiration

of Commitment – This Commitment shall expire and be null and void on

December 1, 2001, unless an accepted copy of this Commitment is received by the

Lender prior to said expiration date.

 

L.             Signs

– The Lender may, if it so desires, place a sign or signs of reasonable size on

the land indicating that the Lender is providing financing for the Project.

 

M.           No

Early Start –  As an express

condition to the Closing, and prior to the record date of the Lender’s Loan

Documents, no mechanics lien or other encumbrance shall have been filed or

exist against the real estate comprising the Project as a result of:

 

(1)           work

on or construction of the Project;

 

(2)           materials

delivered to the land for use or construction thereon;

 

(3)           the

filing of a construction contract or any memorandum thereof for record; or

 

(4)           the

filing of an affidavit or other evidence of any oral agreement for the

construction of any improvements, performance of labor, furnishing of

materials, or providing of specially fabricated materials in connection with

the Project.

 

N.            Borrower’s

Full Compliance – Lender’s obligation to make the Loan is conditioned upon

Borrower’s performance of each and every obligation and covenant and the

accuracy of each representation and warranty contained in this letter, and

Lender’s obligations hereunder may, at the Lender’s option, be terminated,

whether or not this offer to lend has been accepted by Borrower, by written

notice to Borrower at the above address if (1) there is any material adverse

change in the  security for the Loan or

in the Borrower, (2) any information, representation or warranty furnished to the

Lender in connection with the Loan shall have contained at the time made or

furnished or at any time thereafter any untrue statement or at any such time

shall have omitted to state any fact necessary to make the application or any

such information, representation or warranty not materially misleading, (3) the

Borrower fails to deliver properly executed Loan Documents, or perform any of

the terms, conditions or agreements of this offer to lend, (4) in the

reasonable judgment of the Lender any condition contained herein or in the Loan

Documents cannot be fulfilled by Closing, (5) a petition in bankruptcy or

insolvency is filed by or against the Borrower or an assignment for the benefit

of creditors is made by Borrower which is not withdrawn or dismissed, cancelled

and/or terminated within sixty (60) days after the filing of the same or entry

into the same, or (6) the Project, or any part thereof, shall be taken by

condemnation or shall be materially damaged by fine or other casualty.

 

O.            Default

– Upon the occurrence of a default under any Loan Document, the Lender shall

have the right to declare the entire unpaid principal balance of and all unpaid

accrued interest on the Loan to be immediately due and payable.

 

P.             Advances

–  The Lender shall not be required to

make any advances or authorize any disbursements of Loan proceeds until the

conditions and requirements set forth in this Commitment have all been

completed and fulfilled to the satisfaction of the Lender.  However, the Lender may make advances and authorize

disbursements prior to completion and fulfillment of any or all of such

conditions and requirements, without waiving its right to require such

completion and fulfillment before additional advances are made or additional

disbursements are authorized.

 

Q.            Survival

of Warranties and Agreements – All of the representations, warranties and

agreement made herein, in any application for the Loan, or in connection with

the Loan shall survive the Closing and inure to the benefit of the Lender, its

successors and assigns.

 

R.            Right

to Inspect – As long as this offer to lend, or any Loan pursuant thereto,

is in force and effect, the Lender shall have the right at all reasonable times

to inspect the Project.

 

S.             Notices

– Borrower shall provide immediate written notice to Lender of any adverse

developments with respect to the construction and/or operation of the Project.

 

	

   

  	

  LENDER

  
	

   

  	

   

  
	

   

  	

  AG COUNTRY FARM CREDIT SERVICES

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Denny DeVos

  
	

   

  	

  Title:

  	

  Senior Vice President

  
	

   

  	

   

  	

  Agribusiness Finance

  

 

The

foregoing Commitment is hereby accepted by the Borrower as of the date shown

below.

 

	

  Dated:

  	

  11/07/01

  	

   

  	

   

  
	

   

  	

  BORROWER:

  
	

   

  	

   

  
	

   

  	

  GREAT PLAINS ETHANOL, LLC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Darrin IhnenPrepared by MERRILL CORPORATION

Exhibit 10.1

EMPLOYMENT

AGREEMENT

This Employment Agreement is made as of

September 11, 2001 (the “Effective Date”), by and between Michael

Levine (the “Executive”) and META Group, Inc. and any of its

subsidiaries, divisions and affiliates, and its and their predecessors,

successors and assigns (the “Company”).

WHEREAS, the

Company desires to retain the services of the Executive;

WHEREAS, the

Executive has certain experience and expertise that qualify him to provide the

skills required by the Company;

WHEREAS, the

Executive desires to be employed by the Company;

WHEREAS, the

Executive and the Company deem it in their respective best interests to enter

into an agreement providing for the employment of the Executive as the

Company’s President, subject to the terms and conditions hereinafter set forth;

and

NOW, THEREFORE, in

consideration of the foregoing and the agreements herein contained, the parties

hereto hereby agree as follows:

1.             Employment. 

Subject to the terms and conditions set forth in this Agreement, the

Company offers and the Executive hereby accepts full-time employment, effective

as of September 11, 2001 (such date being referred to herein as the “Effective

Date”).

2.             Term. 

Subject to earlier termination as provided in Section 5 hereof,

this Agreement shall continue for an indefinite term commencing on the

Effective Date (“Term”) and shall be on an “at-will” basis, which means

that either the Executive or a majority of the Company’s Board of Directors

(the “Board”) may terminate the employment relationship and this

Agreement at any time, for any or no reason, with or without Cause (as defined

below).

3.             Capacity and Performance.  During the term hereof, the Executive shall

serve the Company as its President and/or in any other position that may be

assigned to him by the Board.  The

Executive shall report to the Company’s Board. 

For so long as he is President of the Company and not a member of the

Board, Executive shall have Board meeting attendance rights except for

executive sessions of the Board and subject to the right of the Board to

request Executive to excuse himself from certain portions of such

meetings.  The Executive shall comply

with and perform, faithfully, diligently and to the best of his ability, such

directions and duties in relation to the Company’s business and affairs as the

Board may from time to time vest in or request of him.  Such duties and responsibilities shall

include, but not be limited to, responsibility for Sales, Marketing and Product

Development.  The Executive shall devote

substantially all of his business time, attention and energies to the Company’s

business and shall not engage in any other business activity (without the

Board’s written approval), whether or not for profit or other pecuniary

advantage, that may conflict with the performance of his duties hereunder.

 

4.             Compensation and Benefits.  As compensation for the Executive

satisfactorily performing his duties and obligations hereunder to the Company

and subject to the provisions of Section 5, the Executive shall receive:

4.1.          Base Salary.  The Executive will receive his base salary

paid at a rate $24,166.66 per month, subject to any upward modification

resulting from his performance review as approved by the Compensation Committee

of the Board (at least annually) (the “Base Salary”).  The Base Salary shall be payable in

accordance with the customary payroll practices of the Company as may be

established or modified from time to time. 

Currently, salaries are paid on a bi-weekly basis.

4.2.          Signing Bonus. On the Company’s

first regularly scheduled payroll payment date immediately following

Executive’s commencement of employment with the Company, Executive shall be

paid (i) a one-time signing bonus (“Signing Bonus”) in the amount of

$48,333.32 (two months’ initial Base Salary) and (ii) reimbursement of all

reasonable legal fees and expenses of Executive associated with the negotiation

of this Agreement and related matters not to exceed $3,000; provided that, to

the extent permitted by applicable law, Executive shall be required to repay

the Signing Bonus to the Company in the event that during the first year after

the Effective Date Executive terminates his employment with the Company or if

the Company terminates his employment with the Company for Cause.  To the extent permitted by applicable law,

the Executive agrees that the Company may offset amounts otherwise owed to

Executive to recover the Signing Bonus.

4.3           Performance Bonus. During the

Term hereof, the Executive will be eligible to receive an annual performance

bonus in accordance with the following:

 

(a.)          Subject to Section 4.3(d), the target

bonus amount for the fiscal year ending December 31, 2002 is $290,000 based on

achievement of 100% of specified goals set in advance by the Compensation

Committee of the Company’s Board (“Compensation Committee”), as

established in their sole discretion after receiving recommendations from

management of the Company.  If in the

determination of the Compensation Committee, Executive achieves between 70% and

100% of the specified goals, except as set forth in Section 4.3(b), any bonus

shall be prorated between $0 and $290,000. 

If in the determination of the Board, the Executive achieves less than

70% of the specified goals, except as set forth in Section 4.3(b), the Executive

will receive no bonus.

 

(b.)          Subject to Section 4.3(d), the

Compensation Committee guarantees a bonus of at least $145,000 for the fiscal

year ending December 31, 2002 (with the remainder, if any, to be determined by

the Compensation Committee in its sole discretion).

(c.)          Subject to Section 4.3(d), the

Compensation Committee guarantees a bonus for the fiscal year ending December

31, 2001 in an amount to be determined by the following formula:

$290,000 x A/B, where A equates to the number of days

from the Effective Date through December 31, 2001 and B equates to 365 days.

 

(d.)          The

foregoing is subject to the Company’s bonus policy and will be paid, if at all,

at the same time and in the same manner as bonuses for the comparable period

are paid to the Company’s other senior executive officers.  All bonus payments shall be payable in

accordance with the Company’s customary bonus practices as established or

modified from time to time.  If

Executive is in compliance with the last sentence of this Section 4.3(d), the

guaranteed bonuses set forth in Sections 4.3(b) and 4.3(c) shall be paid

notwithstanding anything to the contrary in the bonus policy or practices of

the Company referred to in the immediately preceding two sentences of this

Section 4.3(d).  In addition, the bonus

which may be paid, if at all, pursuant to (i) Section 4.3(a) and (b) shall be

subject in all cases to Executive’s continued employment with the Company

through December 31, 2002 and (ii) Section 4.3(c) shall be subject in all cases

to Executive’s continued employment with the Company through December 31, 2001.

4.4.          Benefits.  During the Term hereof and subject to any

contribution therefor generally required of the Company, the Executive shall be

eligible to participate in all employee benefits plans as from time to time

adopted by the Company and in effect for executives of the Company in similar

positions, with such eligibility commencing on a date no later than October 1,

2001 (except with respect to participation in the Company’s Employee Stock

Purchase Plan, with respect to which the next enrollment period commences in

December 2001).  Such participation

shall be subject to (i) the terms of the applicable plan documents,

(ii) generally applicable Company policies, and (iii) the discretion

of the Company and/or the Board or any administrative or other committee

provided for in or contemplated by such plan. 

The Company’s current plans and policies shall govern all other

benefits.  The Company may alter,

modify, add to, or delete its employee benefits plans and/or policies at any

time as the Company and/or the Board (and any committee thereof), in their sole

judgment, determines to be appropriate.

4.5.          Business Expenses.  The Company shall pay or reimburse the

Executive for all reasonable business expenses incurred or paid by the

Executive in the performance of his duties and responsibilities hereunder,

subject to (i) any expense policy set by the Company as may be modified from

time to time, and (ii) such reasonable substantiation and documentation

requirements as may be specified by the Company from time to time.

4.6.          Relocation Expenses; Stipend for

Commuting Expenses.  For any single

relocation undertaken by Executive (during his employment with the Company and

during the two years after the Effective Date) to a location geographically

closer to Stamford, Connecticut (or such other location that is the then

current-headquarters of the Company) than Executive’s current residence (the “Relocation”),

Company will reimburse all normal and reasonable relocation costs to the

Executive including costs associated with the sale of his home and purchase of

a new home, moving of Executive’s cars and all household effects, including

packing, moving, insurance, storage and unpacking.  The Executive shall use his best efforts to minimize the costs by

obtaining, in each instance, terms which are as favorable as those which the

Executive would negotiate if he were to pay for such expenses directly

himself.  Further, the Executive agrees

to provide suitable and accurate documentation evidencing such costs incurred,

and the Company shall provide reimbursement within a reasonable time after the

receipt of such documentation.  For the

period beginning on the Effective Date and ending on the earlier of (a) the date

which is two years after the Effective Date and (b) the date of the Relocation,

Company will pay to Executive a stipend of $1,500 per month during his

employment with the Company (which is intended to be used to defray commuting

expenses).

 

                                4.7.          Equity.  Subject to the

approval of the Compensation Committee and the terms, conditions and

restrictions of the Stock Plan (as defined below) and the incentive stock

option agreement to be executed by the Executive and the Company attached as Exhibit

A hereto (the “META Group, Inc. Incentive Stock Option Agreement”),

the Company will grant the Executive an option to purchase 175,000 shares of

the Company’s common stock granted as of the Effective Date at an exercise

price per share equal to the fair market value on the Effective Date, with such

options granted as incentive stock options to the maximum extent possible.  If the Executive remains employed with the

Company as its President and is performing satisfactorily and in accordance

with his obligations under this Agreement, the Compensation Committee of the

Board will determine whether Executive will be granted any subsequent options

to purchase Company common stock.

 

5.             Termination of Employment.  Notwithstanding the provisions of Section 2

hereof, the Executive's employment and this Agreement shall terminate prior to

the expiration of the Term of this Agreement under the following circumstances:

5.1.          Death or Disability.  In the event of the Executive's death or

Disability (as defined in Section 10B of the Amended and Restated 1995

Stock Plan, as the same may be amended or amended and restated from time to

time (the “Stock Plan”)) during the Term hereof, the Executive's

employment and this Agreement shall immediately and automatically terminate and

the Company shall pay to the Executive (or in the case of death, the

Executive's designated beneficiary or, if no beneficiary has been designated by

the Executive, his estate), any Base Salary and vacation earned but unpaid

through the date of death or Disability. 

To the extent the Executive qualifies for either short term disability

and/or long term disability insurance in accordance with the terms and

conditions of the Company’s plans, the Company may offset any such insurance

payments against any Base Salary paid to the Executive (including any such

payment made pursuant to this section).

5.2.          By the Company for Cause.

(a) Upon approval of a

majority of the Board, the Board may terminate the Executive's employment and

this Agreement for Cause at any time during the Term hereof.  The Board and/or Company shall thereafter

have no further obligation or liability to the Executive relating to the

Executive's employment or this Agreement, other than Base Salary and vacation

earned but unpaid through the date of termination.

 

(b) The following events

or conditions shall constitute “Cause” for termination:  (i) the substantial and continuing

failure of the Executive, after notice thereof, to render services to the

Company or any Related Corporation (as that term is defined in the Stock Plan)

in accordance with the terms or requirements of his employment;

(ii) disloyalty, gross negligence, willful misconduct, dishonesty or

breach of fiduciary duty to the Company or any Related Corporation;

(iii) the commission of an act of embezzlement or fraud;

(iv) deliberate disregard of the rules or policies of the Company or any

Related Corporation which results in direct or indirect loss, damage or injury

to the Company or any Related Corporation; (v) the unauthorized disclosure

of any trade secret or confidential information of the Company or any Related

Corporation; or (vi) the commission of an act which constitutes unfair

competition with the Company or any Related Corporation or which induces any

customer or supplier to breach a contract with the Company or any Related

Corporation.

5.3.          By

the Company other than for Cause.

(a.)          Upon approval of a majority of the

Board, the Board may terminate the Executive's employment and this Agreement

other than for Cause at any time during the Term hereof.  In the event of such termination, the

Executive will be eligible for the following:

(i)            A

continuation of his salary for six months to be paid at his Base Salary rate as

of his termination date.  Any salary

continuation payments shall be paid in accordance with the Company’s normal

payroll practice as modified from time to time.

(ii)           If Executive elects to continue medical insurance

coverage after his termination date in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act

of 1985 (“COBRA”), then the Company shall pay the portion of Executive's

monthly premium payments customarily paid by the Company for employees through

the salary continuation period, or until Executive accepts other employment,

whichever occurs first.  Thereafter,

Executive will be responsible for any and all payments for the elected period

of continued health insurance coverage under COBRA.

(b.)          The Company’s obligation to pay any severance amount and

benefit hereunder shall be subject to and conditioned upon the Executive’s

execution of a comprehensive release of claims satisfactory to the

Company.  Such release will

provide for a 7-day revocation period if required by applicable law (the “Revocation

Period”).  Notwithstanding the

above, if any severance payments or acceleration would otherwise be paid or be

triggered on a date prior to the expiration of the Revocation Period, such

payment or acceleration shall instead be paid/triggered on the business day

immediately following the expiration of the Revocation Period (provided that no

revocation right has been exercised by Executive).

5.4.          By the Executive.  If the Executive terminates this Agreement

and/or his employment with the Company for any reason other than death or

Disability, the Company shall have no further obligation or liability to the

Executive relating to the Executive’s employment or this Agreement, other than

for any Base Salary and vacation earned but unpaid through the termination

date.

 

6.             Effect of Termination.  The provisions of this Section 6 shall apply in the event of

termination of this Agreement and/or the Executive’s employment pursuant to

Sections 2 or 5.

6.1.          Payment in Full.  Payment by the Company to the Executive of

any Base Salary and other compensation amounts as provided and referenced

herein shall constitute the entire obligation of the Company to the Executive,

except that nothing in this Section 6.1 is intended or shall be construed

to affect the rights and obligations of the Company, on the one hand, and the

Executive, on the other, with respect to any loans, stock warrants, stock

pledge arrangements, option plans or other agreements to the extent said rights

or obligations survive the Executive’s termination of employment under the

provisions of documents relating thereto.

6.2.          Termination of Benefits.  Except for any right of continuation of

benefits coverage to the extent provided by COBRA or other applicable law or as

otherwise described herein, benefits shall terminate pursuant to the terms of

the applicable benefit plans as of the termination date of the Executive’s

employment without regard to any severance or other payments to the Executive

following such termination date.

6.3           Cessation of Compensation and

Benefits.  If the Executive breaches

his obligations under this Agreement and/or the Employee Noncompetition,

Nondisclosure and Developments Agreement referred to in Section 9 (the “Noncompetition

Agreement”), the Executive agrees that the Company may (i) immediately

cease payment of all compensation and benefits described in this Agreement and

(ii) recover any severance payments (as referenced in

Section 5.3(a)(i)-(ii)) paid by the Company to the Executive after the

date on which the Executive breached this Agreement or the Noncompetition Agreement,

as applicable.  The Executive also

agrees that the cessation and recovery of these payments shall be in addition

to, and not as an alternative to, any other remedies at law or in equity

available to the Company, including the right to seek specific performance or

an injunction.

7.             Survival of Certain Provisions.  The obligations of the Executive under the

Noncompetition Agreementexpressly survive any termination of the Executive’s

employment, regardless of the manner of such termination, or termination of

this Agreement.

8.             Withholding; Taxes.  All payments made by the Company under this Agreement shall be

subject to and reduced by any federal, state and/or local taxes or other

amounts required to be withheld by the Company under any applicable law, and

the Company may withhold from any amounts payable to the Executive (including

any amounts payable to the Executive pursuant to this Agreement) in order to

comply with such withholding obligations.

9.             Other Agreements; Noncompetition Agreement.  The Executive confirms to the Company that

entering into this Agreement and his performance of the position and duties

described herein do not and will not breach any agreement entered into by the

Executive prior to employment with the Company.  The Executive has, or prior to the Effective Date will, provide

the Company with a copy of any such agreements.  In addition, the Executive acknowledges that he will be required

to sign the Noncompetition

Agreement as a condition of his employment with the Company.  A copy of such agreement has been made

available to the Executive and his counsel.

 

10.           Miscellaneous.

10.1.        Assignment.  The Executive shall not assign this

Agreement or any interest herein.  The

Company may assign this Agreement.  No

such assignment shall be deemed a “termination” of the Executive’s employment

within the meaning of Section 5. 

This Agreement shall inure to the benefit of and be binding upon the

Company’s successors and assigns.

10.2         Severability.  In the event that any nonmaterial provision

of this Agreement is determined to be legally invalid, the affected provision

shall be stricken from the Agreement and the remaining terms of the Agreement

shall be enforced so as to give effect to the intention of the parties to the

maximum extent practicable.  In the event

that any material provision of this Agreement is determined to be legally

invalid by a court of competent jurisdiction, the parties hereto, upon

returning the consideration exchanged in executing this Agreement, may

discontinue performance under this Agreement.

 

10.3.        Waiver;

Amendment.  Any waiver by the

Company of a breach of any provision of this Agreement shall not operate or be

construed as a waiver of any subsequent breach of such provision or any other

provision hereof.  In addition, any

amendment to or modification of this Agreement or any waiver of any provision

hereof must be in writing and signed by the Company.

 

10.4.        Notices.  All notices, requests and other

communications provided for by this Agreement shall be in writing and shall be

effective when delivered in person or four business days after being deposited

in the mail of the United States, postage prepaid, registered or certified, and

addressed (a) in the case of the Executive, to the address set forth

underneath his signature to this Agreement or (b) in the case of the

Company, to the attention of the Board, with a copy to the CEO c/o META Group,

Inc.; and/or to such other address as either party may specify by notice to the

other.

10.5.        Entire Agreement.  This Agreement, the Noncompetition

Agreement, the Stock Plan and the META Group, Inc. Incentive Stock Option

Agreement constitute the entire agreement between the Company and the Executive

with respect to the terms and conditions of the Executive's employment with the

Company and supersede and cancel all prior communications, agreements and

understandings, written or oral, between the Executive and the Company with

respect to the terms and conditions of the Executive's employment with the

Company.

10.6.        Counterparts.  This Agreement may be executed in

counterparts, each of which shall be original and all of which together shall

constitute one and the same instrument.

10.7.        Governing Law.  This Agreement, the employment relationship

contemplated herein and any claim arising from such relationship, whether or

not arising under this Agreement, shall be governed by and construed in

accordance with the internal laws of the State of Connecticut without giving

effect to any choice or conflict of laws provision or rule thereof, and this

Agreement shall be deemed to be performable in such State.

 

10.8.        Consent to Jurisdiction.  The Executive, by his execution hereof,

hereby irrevocably submits to the exclusive jurisdiction of the state or

federal courts of the State of Connecticut for the purpose of any claim

or action arising out of or based upon this Agreement, the Executive’s

employment with the Company and/or termination thereof, or relating to the

subject matter hereof, and agrees not to commence any such claim or action

other than in the above–named courts.

 

IN WITNESS WHEREOF,

this Agreement has been executed by the Company, by its duly authorized

representative, and by the Executive, as of the date first above written.

	

   

  	

  META

  GROUP, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By: 

  	

  /s/ Dale Kutnick

  
	

   

  	

   

  	

   

  
	

   

  	

  Name:

  	

  Dale Kutnick

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  Chief Executive Officer and Chairman

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  THE EXECUTIVE

  
	

   

  	

   

  	

   

  
	

   

  	

  /s/ Michael Levine

  
	

   

  	

  Michael Levine

  
	

   

  	

   

  	

   

  
	

   

  	

  ADDRESS:

  	

  1204 Timberbrook Drive

  
	

   

  	

   

  	

  Bedminster, NJ 07921

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