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Agreement No. 00090497SLA

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”), dated as of MAR 29 2018 is entered
into by and between HERON LAKE BIOENERGY, LLC, Heron Lake, Minnesota, a limited
liability company (the “Borrower”), and COMPEER FINANCIAL, FLCA and COMPEER
FINANCIAL, PCA, each a federally-chartered instrumentality of the United States
(collectively, “Lender”).

 

RECITALS

 

(A)The Borrower and AgStar Financial Services, FLCA are parties to that certain
Master Loan Agreement, as amended, dated as of July 29, 2014 (the “Existing
Agreement”).  Pursuant to the terms of the Existing Agreement, the parties
entered into one or more Supplements and/or Promissory Notes and Supplements
thereunder (the “Existing Promissory Note(s) and Supplement(s)”).  The Borrower
and Lender now desire to amend and restate the Existing Agreement and to apply
this Agreement to the Existing Promissory Note(s) and Supplement(s), as well as
any new Promissory Note(s) that may be issued hereunder.  For that reason and
for valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Borrower and Lender hereby agree that the Existing Agreement
will be amended and restated by this Agreement.

 

In consideration of the agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower and Lender agree as follows:

 

ARTICLE 1Defined Terms; Accounting Principles.  Certain capitalized terms used
in this Agreement bear the definitions given to them in this
Agreement.  References to accounting standards are to United States generally
accepted accounting principles, consistently applied (the “Accounting
Standards”).

 

ARTICLE 2 The Facilities.

 

2.1Promissory Note.  In the event the Borrower desires to borrow from Lender and
Lender is willing to lend to the Borrower, or in the event the parties desire to
consolidate any existing loans hereunder, the parties will enter into a
promissory note (a “Promissory Note”).  Each Promissory Note will set forth
Lender’s commitment to make a loan or loans to the Borrower, the amount of the
loan(s), the purpose of the loan(s), the interest rate or rate options
applicable to the loan(s), the repayment terms of the loan(s), and any other
terms and conditions applicable to the particular loan(s).  Each Promissory Note
will also contain the Borrower’s promise to make payments of interest on the
unpaid principal balance of the loan(s), and fees and premiums, if any, and to
repay the principal balance of the loan(s).  Each loan will be governed by the
terms and conditions contained in this Agreement and in the Promissory Note
relating to that loan.

 

2.2Sale of Participation Interests and Appointment of Administrative Agent.  The
Borrower acknowledges that concurrent with the execution of this Credit
Agreement and related Promissory Note(s), Lender is selling a participation
interest in this Credit Agreement and each Promissory Note to CoBank, FCB, an
affiliate of CoBank, ACB (“CoBank”).  Pursuant to an Administrative Agency
Agreement and Intercreditor Agreement dated of even date herewith (“Agency
Agreement”), Lender has

 

 

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appointed CoBank as Administrative Agent (“Agent”) in place of Lender hereunder
and under each Promissory Note and any security documents to be executed
hereunder.  All advances of funds hereunder shall be made by Agent, all
repayments by the Borrower hereunder shall be made to Agent, and all notices to
be made to Lender hereunder shall be made to Agent.  Agent shall be solely
responsible for the administration of this agreement, each Promissory Note and
the security documents to be executed by the Borrower hereunder and the
enforcement of all rights and remedies of Lender hereunder and thereunder.  The
Borrower acknowledges the appointment of Agent and consents to such appointment.

 

2.3Availability.  Loans will be made available on any day on which Agent and the
Federal Reserve Banks are open for business (a “Business Day”) upon the
telephonic or written request of an authorized employee of the
Borrower.  Requests for loans must be received by 12:00 p.m. Denver, Colorado
time on the date the loan is desired.  Loans will be made available by wire
transfer of immediately available funds.  Wire transfers will be made to such
account or accounts as may be authorized by the Borrower.

 

2.4Security.  The Borrower’s obligations under this Agreement, each Promissory
Note, and each interest rate swap, hedge, cap, collar, forward fix or similar
agreement, including any master agreement published by the International Swap
and Derivatives Association, Inc., between the Borrower and Lender and/or
CoBank, designed to protect the Borrower from fluctuations in interest rates
(the “Interest Rate Agreement”) will be secured by a statutory first lien on all
equity that the Borrower may now own or hereafter acquire or be allocated in
Lender (including Lender’s parent company, as applicable) and/or CoBank.  The
statutory first lien on all equity that the Borrower may own, acquire or be
allocated in Lender shall be for Lender’s sole and exclusive benefit and the
statutory first lien on all equity that the Borrower may own, acquire or be
allocated in CoBank shall be for CoBank’s sole and exclusive benefit.  In
addition, except as otherwise provided in a Promissory Note or in a closing
instruction letter signed by the parties (an “Instruction Letter”), the
Borrower’s obligations hereunder and under each Promissory Note will be:

 

(a)secured by a first priority lien (subject only to exceptions approved in
writing by Agent) on all real and personal property of the Borrower, whether now
existing or hereafter acquired.  The Borrower agrees to take such steps,
including, without limitation, the execution and recordation or filing, as
applicable, of mortgages, deeds of trust, security agreements, intercreditor or
parity agreements, pledge agreements, control agreements, financing statements,
and amendments to any of the foregoing, and such other instruments and documents
as Agent may require to enable Agent to obtain, perfect, and maintain a lien on
such property, and the payment of any applicable mortgage recording, documentary
stamp, or intangible taxes; and

 

(b)guaranteed by an unsecured or secured, limited or continuing guarantee of
payment, in form and substance and from such parties as may be required by Agent
from time to time.  If Agent requires such guarantee(s) to be secured by lien on
the real and/or personal property of a guarantor (a “Guarantor”), Borrower will
cause each Guarantor to take such steps, including, without limitation, the
execution and recordation or filing, as applicable, of mortgages, deeds of
trust, security agreements, pledge agreements, control agreements, financing
statements, and amendments to any of the foregoing, and such other instruments
and documents as Agent may require to enable Agent to obtain, perfect, and
maintain a lien on such property, and the payment of any applicable mortgage
recording, documentary stamp, or intangible taxes.

 

(c)In addition, the Borrower agrees, as may be required by Agent from time to
time, to provide to Agent ALTA lender’s policies of title insurance in face
amounts and from title companies acceptable to Agent insuring the lien under any
mortgage or deed of trust granted by the Borrower or any Guarantor to

 

 

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Agent and Lender.  The Borrower agrees to pay the cost of such title policies,
together with such endorsements as may be reasonably requested by Agent.

 

2.5Payments Generally.  The Borrower’s obligation to repay each loan will be
evidenced by a Promissory Note.  Agent will maintain a record of all loans, the
interest accrued thereon, and all payments made with respect thereto, and such
record will, absent proof of manifest error, be conclusive evidence of the
outstanding principal and interest on the loans.  Payments under each Promissory
Note will be made by wire transfer of immediately available funds, by check, or
by automated clearing house (ACH) or other similar cash handling processes as
specified by separate agreement between the Borrower and Agent.  Wire transfers
will be made to ABA No. 307088754 for advice to and credit of “CoBANK” (or to
such other account as Agent may direct by notice).  The Borrower will give Agent
telephonic notice no later than 12:00 p.m. Denver, Colorado time on the day the
Borrower intends to pay by wire of such intent, and funds received after 3:00
p.m. Denver, Colorado time will be credited on the next Business Day.  Checks
will be mailed to CoBANK, Department 167, Denver, Colorado 80291-0167 (or to
such other place as Agent may direct by notice).  Credit for payment by check
will not be given until the later of the next Business Day after receipt of the
check or the day on which Agent receives immediately available funds.  If any
installment of principal or interest is due on a date that is not a Business
Day, then such installment will be due and payable on the next Business Day.

 

2.6Broken Funding Surcharge.  Notwithstanding the terms of any Promissory Note
giving the Borrower the right to repay any loan prior to the date it would
otherwise be due and payable, the Borrower agrees to provide three Business
Days’ prior written notice for any prepayment of a fixed rate balance and to pay
to Agent a broken funding surcharge in the amount set forth below in the event
the Borrower:  (a) repays any fixed rate balance prior to the last day of its
fixed rate period (whether such payment is made voluntarily, as a result of an
acceleration, or otherwise); (b) converts any fixed rate balance to another
fixed rate or to a variable rate prior to the last day of the fixed rate period
applicable to such balance; or (c) fails to borrow any fixed rate balance on the
date scheduled therefor.  The surcharge will be in an amount equal to the
greater of (1) the present value of any funding losses imputed by Lender and/or
Agent to have been incurred as a result of such payment, conversion or failure
or (2) $300.00.  Notwithstanding the foregoing, in the event any fixed rate
balance is repaid as a result of the Borrower refinancing the loan with another
lender or by other means, then in lieu of the foregoing, the Borrower will pay
to Agent a surcharge in an amount sufficient (on a present value basis) to
enable Lender and/or Agent to maintain the yield it would have earned during the
fixed rate period on the amount repaid.  Any surcharge will be determined and
calculated in accordance with methodology established by Lender and Agent,
copies of which will be made available upon request.  Notwithstanding the
foregoing, in the event of a conflict between the provisions of this section and
of the broken funding charge section of a forward fix agreement between Agent
and the Borrower, for losses imputed by Agent, the provisions of the forward fix
agreement will control.

 

2.7Taxes; Change in Law.  Any payment by the Borrower to Agent will be made net
of any taxes (other than income and similar taxes imposed on or measured by
Lender’s and/or Agent’s overall net income).  If any change in any law, rule,
regulation, code, ordinance, order or the like to which the Borrower is subject,
including, without limitation, all laws relating to environmental protection,
and taxes (collectively, “Laws”), increases the cost of making or maintaining
any loan (or any associated commitment to lend), or reduces the amount received
or receivable by Agent hereunder then, upon request, the Borrower will pay to
Agent such additional amount as will compensate Lender and/or Agent for such
additional costs incurred or reduction suffered.

 

 

 

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ARTICLE 3Conditions Precedent.

 

3.1Conditions to Initial Promissory Note.  Lender’s obligation to extend credit
under the initial Promissory Note hereunder is subject to the condition
precedent that Agent receive, in form and substance satisfactory to Agent, each
of the following:

 

(a)This Agreement.  A duly executed copy of this Agreement, the other Loan
Documents (as defined below), the Instruction Letter accompanying this
Agreement, and all instruments and documents contemplated hereby and thereby.

 

(b)Banking Service Agreements.  A duly completed and executed copy of any
banking service agreement, including any agreement relating to the provision by
CoBank of cash management services, required by Agent from time to time.  Agent
will be entitled to rely on (and will incur no liability to the Borrower in
acting on) any request or direction furnished in accordance with the terms
thereof.

 

3.2Conditions to Each Promissory Note.  Lender’s obligations to extend credit
under each Promissory Note hereunder, including the initial Promissory Note, is
subject to the condition precedent that Agent receive, in form and substance
satisfactory to Agent, each of the following:

 

(a)Promissory Note.  A duly executed copy of the Promissory Note and all
instruments and documents contemplated by the Promissory Note.

 

(b)Instruction Letter.  Any and all items or requirements detailed in an
Instruction Letter.

 

(c)Evidence of Perfection.  Such evidence as Agent may require that it has duly
perfected liens as required under this Agreement.

 

(d)Evidence of Authority.  Such certified board resolutions, certificates of
incumbency, and other evidence that Agent may require that the Promissory Note,
all instruments and documents executed in connection therewith, and, in the case
of the initial Promissory Note hereto, this Agreement, the other Loan Documents
(as defined below) and all instruments and documents executed in connection
herewith and therewith, including any security documents, have been duly
authorized and executed.

 

(e)Fees and Other Charges.  Any fees or other charges provided for herein, in
the Promissory Note or in any invoice provided by Agent.

 

(f)Insurance.  Such evidence as Agent may require that the Borrower is in
compliance with Section 5.4 below.

 

3.3Conditions to Each Loan.  Lender’s obligation under each Promissory Note to
make any loan to the Borrower thereunder is subject to the condition that no
“Event of Default” (as defined in Section 8.1 below) or event that, with the
giving of notice and/or the passage of time and/or the occurrence of any other
condition, would ripen into an Event of Default (a “Potential Default”) will
have occurred and be continuing or would be caused by the making of such loan.

 

ARTICLE 4Representations and Warranties.  The execution by the Borrower of this
Agreement and each Promissory Note hereunder, or any renewal or extension by
Agent on behalf of Lender of any Promissory Note hereunder, will constitute a
representation and warranty by the Borrower that:

 

 

 

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4.1Instruction Letter; Loan Documents.  Each representation and warranty and all
information set forth in any Instruction Letter and/or any of the Loan Documents
(as defined below) and/or any other document submitted in connection with, or to
induce Lender to enter into, such Promissory Note is correct in all material
respects as of the date of such Promissory Note.

 

4.2Compliance; Legal Proceedings.  Each Loan Party (as defined below) and its
Subsidiaries (as defined below) and all property owned or leased or proposed to
be acquired with the proceeds of any Promissory Note hereunder by each Loan
Party and/or its Subsidiaries and all of its/their operations are in compliance
with all applicable Laws and the terms of the Loan Documents and no Event of
Default or Potential Default exists or is continuing.  In addition, there are no
pending legal, arbitration, or governmental actions or proceedings to which any
Loan Party or any Subsidiary is a party or to which any of its or any
Subsidiaries’ property is subject which, if adversely determined, might have a
material adverse effect on the financial condition, operations, properties,
profits, or business of any Loan Party or any Subsidiary, and to the best of
each Loan Party’s knowledge, no such actions or proceedings are threatened or
contemplated.  “Loan Party” means the Borrower and any Guarantor.

 

4.3Organization; Good Standing.  Each Loan Party (a) is duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
organization, (b) has the lawful power to own or lease its properties and to
engage in the business it conducts or proposes to conduct, and (c) is duly
qualified and in good standing in each jurisdiction where the property owned or
leased by it or the nature of the business transacted by it makes such
qualification necessary.

 

4.4Binding Agreement.  The Loan Documents constitute legal, valid, and binding
obligations of each Loan Party that are enforceable in accordance with their
terms.

 

4.5Conflicting Agreements.  Neither this Agreement nor any Promissory Note,
Interest Rate Agreement, or other instrument or document securing or otherwise
relating hereto or to any Promissory Note (each a “Loan Document” and
collectively, at any time, the “Loan Documents”) conflicts with, or constitutes
(with or without the giving of notice and/or the passage of time and/or the
occurrence of any other condition) a default under, any other agreement to which
the Borrower is a party or by which it or any of its property may be bound or
affected, and does not conflict with any provision of its bylaws, articles of
incorporation or other organizational documents.

 

4.6Consents and Approvals.  No consent, permission, authorization, order or
license of any governmental authority or of any party to any agreement to which
each Loan Party is a party or by which it or any of its property may be bound or
affected, is necessary in connection with the project, acquisition or other
activity being financed by such Promissory Note, or the execution, delivery,
performance or enforcement of any Loan Document, except as have been obtained
and are in full force and effect.

 

4.7Budgets; Full Disclosure.  All budgets, projections, feasibility studies, and
other documentation submitted by the Borrower or its Affiliates (as defined
below) to Agent in connection with, or to induce Lender to enter into, such
Promissory Note are based upon assumptions that are reasonable and realistic,
and as of the date of such Promissory Note, no fact has come to light, and no
event has occurred, that would cause any assumption made therein to not be
reasonable or realistic.  No Loan Document or other certificate, statement,
agreement, or document furnished to Agent in connection with this Agreement or
any other Loan Document (a) contains any untrue statement of a material fact, or
(b) fails to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.  The Borrower is not aware of any Material Adverse Change
that has not been disclosed in writing to Agent.  “Affiliate” means any
individual, sole

 

 

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proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or governmental
agency, (1) that directly or indirectly controls, is controlled by, or is under
common control with the Borrower, (2) that beneficially owns or holds 5% or more
of any class of the voting or other equity interests of the Borrower, or (3) 5%
or more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by the Borrower.  A
“Material Adverse Change” means any material adverse change, as reasonably
determined by Agent, in the condition, financial or otherwise, operations,
business, liabilities (actual or contingent) or properties of a Loan Party or
Subsidiary or in its ability to perform its obligations hereunder, under any
security instrument or document, or under any other Loan Document.

 

4.8Accurate Financial Information.  Each submission of financial information or
documents relating to a Loan Party will constitute a representation and warranty
by the Loan Party that such information and documents (a) are true and accurate
in all material respects, and (b) do not fail to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading, and (c) have been reviewed by a
Principal Financial Officer of the Borrower or, as applicable, the relevant Loan
Party.  As used herein, the term “Principal Financial Officer” means an officer
of the applicable Loan Party responsible for overseeing the financial activities
of the Loan Party.

 

4.9ERISA.  The Borrower and its Subsidiaries are in compliance in all material
respects with the applicable provisions of the Employee Retirement Income
Security Act of 1974, and the regulations and published interpretations
thereunder from time to time (“ERISA”).

 

4.10Margin Stock.  No Loan Party is engaged or intends to engage principally, or
as one of its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or carrying
margin stock (within the meaning of Regulation U, T or X as promulgated by the
Board of Governors of the Federal Reserve System of the United States of America
(the “Board”)).  No part of the proceeds of any loan made by Lender to the
Borrower has been or will be used, immediately, incidentally or ultimately, to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or in any way that is inconsistent
with the provisions of the regulations of the Board.  No Loan Party or any
Subsidiary of any Loan Party holds or intends to hold margin stock in such
amounts that more than 25% of the reasonable value of the assets of any Loan
Party or Subsidiary of any Loan Party are or will be represented by margin
stock.

 

ARTICLE 5Affirmative Covenants.  Unless otherwise agreed to in writing by Agent,
while this Agreement is in effect, the Borrower agrees to, and with respect to
Sections 5.3, 5.4, 5.5, and 5.8, agrees to cause each subsidiary, if any, listed
on SCHEDULE 5.0 attached hereto (singularly a “Subsidiary”, and collectively the
“Subsidiaries”) to:

 

5.1Reports and Notices.  Furnish to Agent:

 

(a)Annual Financial Statements.  As soon as available, but in no event more than
90 days after the end of each fiscal year of the Borrower occurring during the
term hereof, annual consolidated and consolidating financial statements of the
Borrower and its consolidated Subsidiaries, prepared in accordance with the
Accounting Standards.  Such financial statements will:  (1) be audited by
independent certified public accountants selected by the Borrower and acceptable
to Agent; (2) be accompanied by a report of such accountants containing an
opinion thereon acceptable to Agent; (3) be prepared in reasonable detail and in
comparative form; (4) include a balance sheet, a statement of income, a
statement of retained

 

 

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earnings, a statement of cash flows, and all notes and schedules relating
thereto; and (5) include unconsolidated schedules of the Borrower and its
consolidated Subsidiaries.

 

(b)Interim Financial Statements.  As soon as available, but in no event more
than 30 days after the end of each month, an unconsolidated balance sheet of the
Borrower as of the end of such month, an unconsolidated statement of income for
the Borrower for such period and for the period year to date, and such other
interim statements as Agent may specifically request, all prepared in reasonable
detail and in comparative form in accordance with the Accounting Standards; and,
if required by written notice from Agent, certified by a Principal Financial
Officer of the Borrower.

 

(c)Notice of Default.  Promptly after becoming aware thereof, notice of the
occurrence of an Event of Default or a Potential Default, including, without
limitation, any error in the Borrower’s financial information previously
provided to Agent and the occurrence of any breach, default, event of default or
event that, with the giving of notice and/or the passage of time and/or the
occurrence of any other condition, would become a breach, default or event of
default under any loan agreement, indenture, mortgage, or other credit or
security agreement or instrument to which a Loan Party is a party or by which it
or any of its property may be bound or affected.

 

(d)Notice of Litigation, Environmental Matters, Etc.  Promptly after becoming
aware thereof, notice of:  (1) the commencement of any action, suit or
proceeding before any court, arbitrator or governmental department, commission,
board, bureau, agency, or instrumentality having jurisdiction over any Loan
Party or any Subsidiary, that, if adversely decided, could result in a Material
Adverse Change; (2) the receipt of any notice, indictment, pleading or other
communication alleging a condition that may require any Loan Party or any
Subsidiary to undertake or to contribute to a clean-up or other response under
any environmental Law, or that seeks penalties, damages, injunctive relief,
criminal sanctions or other relief as a result of an alleged violation of any
such Law, or that claims personal injury or property damage as a result of
environmental factors or conditions; and (3) any matter that could have a
material adverse effect on the Borrower, including any decision of any
regulatory authority or commission.

 

(e)Notice of Certain Events.  (1) Notice at least 30 days prior thereto, of any
change in the Borrower’s name or corporate structure; (2) notice at least 30
days prior thereto, of any change in the Borrower’s organizational documents or
membership and marketing agreements (or similar documents), which changes must
be approved in writing by Agent in its reasonable discretion; (3) notice at
least 30 days prior thereto, of any change in the principal place of business of
the Borrower or the office where its records concerning its accounts are kept;
and (4) as soon as available after any changes thereto, copies of the Borrower’s
organizational documents or membership and marketing agreements (or similar
documents), in each case certified by the Borrower’s Secretary or equivalent
officer acceptable to Agent.

 

(f)Compliance Certificates.  Together with each set of financial statements
furnished to Agent pursuant to Section 5.1(a) and Section 5.1(b) above, as
applicable, a certificate of a Principal Financial Officer of the Borrower, in
form and content acceptable to Agent:  (1) certifying that no Event of Default
or Potential Default occurred during the period covered by such statement(s) or,
if an Event of Default or Potential Default occurred, a description thereof and
of all actions taken or to be taken to remedy same; and (2) setting forth
calculations showing compliance with the financial covenants set forth in
Article 7 below.

 

5.2Instruction Letter.  Comply with any and all requirements detailed in an
Instruction Letter.

 

5.3Corporate Existence, Etc.  Preserve and keep in full force and effect its
existence and good standing in the jurisdiction of its incorporation or
formation, qualify and remain qualified to transact

 

 

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business in all jurisdictions where such qualification is required, and obtain
and maintain all licenses, certificates, permits, authorizations, approvals, and
the like that are material to the conduct of its business or required by any
Law.

 

5.4Insurance.  Maintain insurance with reputable and financially sound insurance
companies or associations, including self-insurance to the extent customary,
acceptable to Agent in such amounts and covering such risks as are usually
carried by companies engaged in the same or similar business and similarly
situated, and make such increases in the type or amount of coverage as Agent may
reasonably request.  All such policies insuring any collateral for the
Borrower’s obligations to Lender and Agent will have additional insured,
mortgagee and lender’s loss payee clauses or endorsements, as applicable, in
form and substance satisfactory to Agent.  At Agent’s request, the Borrower
agrees to deliver to Agent such proof of compliance with this section as Agent
may require.

 

5.5Property Maintenance.  Maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice of
other businesses of similar character and size, all of those properties useful
or necessary to its business, and make all alterations, replacements, and
improvements thereto as may from time to time be necessary in order to ensure
that its properties remain in good working order and condition.  The Borrower
agrees that at Agent’s request, which request may not be made more than once a
year, the Borrower will furnish to Agent a report on the condition of the
Borrower’s property prepared by a professional engineer satisfactory to Agent.

 

5.6Inspection.  Permit Agent or its agents, upon reasonable notice and during
normal business hours or at such other times as the parties may agree, to
inspect and visit any of its properties, examine and make excerpts from its
books and records, and to discuss its business affairs, finances and accounts
with its officers, directors, employees, and independent certified public
accountants and to conduct reviews of any collateral.  Without limiting the
foregoing, the Borrower will permit Agent, through an employee of Agent or
through an independent third party contracted by Agent, to conduct on an annual
basis a review of the collateral covered by any security instruments or
documents provided to Agent pursuant to this Agreement.  The Borrower further
agrees to pay to Agent a collateral inspection fee designated by Agent and
reimburse Agent all reasonable costs and expenses incurred by Agent in
connection with such collateral inspection reviews performed by Agent employees
or its agents.

 

5.7Books and Records.  Maintain and keep proper books and records of account in
which full, true and correct entries of all its dealings, business and financial
affairs will be made in accordance with the Accounting Standards.

 

5.8Compliance With Laws.  Comply in all material respects with all Laws and any
patron or member investment program applicable to the Borrower.  In addition,
the Borrower agrees to cause all persons occupying or present on any of its
properties, and to cause each Subsidiary to cause all persons occupying or
present on any of its properties, to comply in all material respects with all
Laws relating to such properties.

 

5.9Further Assurances and Other Information.  From time to time and at its
expense, execute and deliver such documents and do such other acts and things as
Agent in its sole discretion may deem necessary or advisable from time to time
in order to more fully carry out the provisions and purpose of the Loan
Documents, including delivery of such other information regarding the condition
or operations, financial or otherwise, of a Loan Party or Subsidiary as Agent
may from time to time reasonably request, including, but not limited to, copies
of all pleadings, notices and communications referred to in Section 5.1(d)
above.

 

 

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5.10Capital.  Maintain its status as an entity eligible to borrow from
Lender.  In addition, the Borrower agrees to purchase and maintain stock or
participation certificates in Lender or Lender’s parent association, as
applicable, in amounts as may be required under the Capital Plan adopted by the
Board of Directors of Lender or Lender’s parent association, pursuant to
applicable Bylaws.  The Chief Financial  Officer is authorized by the Borrower
to exercise any voting rights in Lender or Lender’s parent association, subject
to applicable Bylaws, and to receive effective interest rate disclosures, unless
otherwise agreed to in writing by the parties.

 

The Borrower acknowledges receipt of:

 

(a)pertaining to the Lender or the Lender’s parent association, as applicable,
the most recent annual report and most recent quarterly report, if more recent
than the annual report;

 

(b)a copy of the notice to the Borrower concerning investment, which includes a
description of the terms and conditions under which equity is issued;

 

(c)capitalization bylaws; and

 

(d)an Effective Interest Rate Disclosure Statement.  Lender’s bylaws limit
membership on the Lender’s Nomination Committee and Board of Directors to
Borrowers who reside or farm in Lender’s territory.

 

5.11Delivery of Original Loan Documents.  If executed copies of any Loan
Documents are delivered to Agent as provided in Article 3 above, immediately
deliver to Agent the original executed versions of such Loan Documents.

 

5.12Indemnity for Taxes.  At all times indemnify and hold and save Lender and
Agent harmless from and against any and all actions or causes of action, claims,
demands, liabilities, loss, damage or expense of whatsoever kind and nature
incurred by Lender and/or Agent as a result of the nonpayment of any documentary
stamp tax, intangible tax, interest or penalties associated therewith or any
other local, state or federal assessment required to be paid, but not paid in
conjunction with the indebtedness evidenced by the Loan Documents.  The Borrower
agrees to pay to Agent, its successors and assigns, all sums of money requested
by Agent hereunder within ten days of such request, which Lender and/or Agent
will or may advance, pay or cause to be paid, or become liable to pay, on
account of or in connection with failure to pay as required by the regulations
of the governmental authority so imposing said payment.  Agent will be entitled
to charge for any and all disbursements made by it in good faith, under the
reasonable belief that it or the Borrower is or was liable for the amount so
assessed.  Any default by the Borrower in making any payments required under
this covenant will constitute a payment Event of Default under the Loan
Documents and Agent may, at its option, declare the entire amount of principal
plus accrued interest thereon due and payable without notice or demand.

 

5.13ERISA.  The Borrower and its Subsidiaries, for so long as this Agreement
remains outstanding, will remain in compliance in all material respects with the
applicable provisions of ERISA, the failure to comply with which has or may have
a material adverse effect on the Borrower.

 

ARTICLE 6Negative Covenants.  Unless otherwise agreed to in writing by Agent,
while this Agreement is in effect, the Borrower will not and will not permit its
Subsidiaries to:

 

 

 

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6.1Other Indebtedness.  Create, incur, assume or allow to exist, directly or
indirectly, any indebtedness or liability for borrowed money (including trade or
bankers’ acceptances), letters of credit, or for the deferred purchase price of
property or services (including leases that should be capitalized on the books
of the lessee in accordance with the Accounting Standards), except for:

 

(a)debt to Lender and/or CoBank.

 

(b)accounts payable to trade creditors incurred in the ordinary course of
business.

 

(c)current operating liabilities (other than for borrowed money) incurred in the
ordinary course of business.

 

(d)capitalized leases with Farm Credit Leasing Services Corporation.

 

(e)purchase money loans to finance inventory and equipment existing on the date
hereof.

 

(f)debt of the Borrower to other lenders and finance companies in an aggregate
amount not to exceed $2,000,000.00.

 

6.2Contingent Liabilities.  Assume, guarantee, become liable as a surety,
endorse, contingently agree to purchase, or otherwise be or become liable,
directly or indirectly (including, but not limited to, by means of a maintenance
agreement, an asset or stock purchase agreement, or any other agreement designed
to ensure any creditor against loss), for or on account of the obligation of any
person or entity, except:

 

(a)by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of the Borrower’s business.

 

6.3Liens.  Create, incur, assume, or allow to exist any mortgage, deed of trust,
pledge, lien (including the lien of an attachment, judgment, or execution),
security interest, or other encumbrance of any kind upon any of its property,
real or personal (collectively, “Liens”).  The foregoing restrictions will not
apply to:

 

(a)Liens in favor of Lender and/or CoBank.

 

(b)Liens for taxes, assessments, or governmental charges that are not past due.

 

(c)Liens and deposits under workers’ compensation, unemployment insurance, and
social security Laws.

 

(d)Liens and deposits to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), and like obligations arising in
the ordinary course of business as conducted on the date hereof.

 

(e)Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and
like persons that secure obligations that are not past due.

 

(f)Easements, rights-of-way, restrictions, and other similar encumbrances which,
in the aggregate, do not materially interfere with the occupation, use, and
enjoyment of the property or assets

 

 

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encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto.

 

(g)Liens in favor of Farm Credit Leasing Services Corporation.

 

(h)Liens in favor of other lenders and finance companies to secure indebtedness
permitted hereunder.

 

(i)purchase money security interests in inventory and equipment existing on the
date hereof and previously approved by Agent in writing.

 

6.4Transactions with Affiliates.  Enter into any transaction with any Affiliate
except in the ordinary course of and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm’s-length transaction with a person or entity
that was not an Affiliate.

 

6.5Loans and Investments.  Make any loan or advance to any person or entity, or
purchase any capital stock, obligations or other securities of, make any capital
contributions to, or otherwise invest in any person or entity, or form or create
any partnerships or joint ventures, except:

 

(a)trade credit extended in the ordinary course of business.

 

(b)equity in, or obligation of, Lender and/or CoBank.

 

(c)loans or advances by the Borrower to Agrinatural Gas, LLC in an aggregate
principal amount not to exceed $6,550,000.00 at any one time outstanding.

 

6.6Dividends and Distributions.  Declare or pay any dividends, or make any
distribution of assets to the members/owners, or purchase, redeem, retire or
otherwise acquire for value any equity, or allocate or otherwise set apart any
sum for any of the foregoing, except that in any fiscal year of the Borrower,
the Borrower may pay dividends in an amount up to 75.00% of its net income for
the prior fiscal year, provided that no Event of Default or Potential Default
will have occurred and be continuing or would result therefrom.

 

6.7Mergers, Acquisitions, Etc.  Merge or consolidate with any other entity or
acquire all or a material part of the assets of any other person or entity, or
form or create any new Subsidiary, or commence operations under any other name,
organization, or entity, including any joint venture.

 

6.8Transfer of Assets.  Sell, transfer, lease, or otherwise dispose of any of
its assets, except:  (a) in the ordinary course of business; and (b) the sale,
transfer or disposal of any obsolete or worn-out assets that are no longer
necessary or required in the conduct of the Borrower’s business.

 

6.9Change in Business.  Engage in any business activities or operations
substantially different from or unrelated to the Borrower’s present business
activities or operations.

 

6.10Use of Proceeds.  Use the proceeds of any loan made by Lender to the
Borrower, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.

 

 

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6.11Operating Leases.  Create, incur, assume, or permit to exist any obligation
as lessee under operating leases for the rental or hire of any real or personal
property except:

 

(a)railroad leases.

 

(b)leases with Farm Credit Leasing Services Corporation.

 

(c)railcar leases provided, however, no such lease will exceed an initial or
extended term of 120 months.

 

(d)other leases which do not in the aggregate require the Borrower or any
Subsidiary to make scheduled payments to the lessors in any fiscal year of the
Borrower in excess of $250,000.00.

 

ARTICLE 7Financial Covenants.  Unless otherwise agreed to in writing by Agent,
while this Agreement is in effect:

 

7.1Working Capital.  The Borrower will have at the end of each period for which
financial statements are required to be furnished pursuant to this Agreement an
excess of unconsolidated current assets over unconsolidated current liabilities
of not less than the amount shown next to such period set forth below, except
that in determining consolidated current assets, any amount available under any
revolving term promissory note with Lender hereunder (less the amount that would
be considered a current liability if fully advanced hereto) may be included (all
as determined in accordance with the Accounting Standards).

 

 

Period

Working Capital

From the date hereof up through September 30,

2018

$8,000,000.00

beginning October 31, 2018 and

for each other period thereafter

$10,000,000.00

 

7.2Net Worth.  The Borrower will have at the end of each period for which
financial statements are required to be furnished pursuant to this Agreement an
excess of unconsolidated total assets over unconsolidated total liabilities of
not less than $32,000,000.00 (all as determined in accordance with the
Accounting Standards).

 

7.3Debt Service Coverage Ratio.  The Borrower will have at the end of each
fiscal year of the Borrower a Debt Service Coverage Ratio (as defined below) for
such year of not less than 1.15 to 1.00.  For purposes hereof, “Debt Service
Coverage Ratio” means:  (a) unconsolidated net income (after taxes), plus
depreciation and amortization, minus non-cash investment income (plus loss),
minus extraordinary gains (plus losses), minus gain (plus loss) on asset sale;
divided by (b) $4,000,000.00 (all as determined in accordance with the
Accounting Standards).

 

ARTICLE 8Default.

 

8.1Each of the following will constitute an “Event of Default” hereunder:

 

 

 

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(a)Payment Default.  The Borrower should fail to make any payment to Agent when
due, or should fail to purchase any equity in Lender or Lender’s parent
Association as and when required by the Capital Plan and/or Bylaws of Lender or
its parent Association.

 

(b)Representations and Warranties.  Any representation, warranty, certification
or statement of fact made at any time by the Borrower, herein or in any other
Loan Document, or in any certificate, other instrument or statement furnished to
Agent by or on behalf of the Borrower, will have been false or misleading in any
material respect as of the time it was made or furnished.

 

(c)Covenants.  The Borrower will default in the observance or performance of any
covenant set forth in Article 5 (other than Sections 5.1(c), 5.1(d), 5.1(e)(1),
and 5.1(e)(2) above), and such default continues for 30 days after written
notice thereof will have been delivered to the Borrower by Agent.

 

(d)Other Covenants and Agreements.  The Borrower will default in the observance
or performance of Sections 5.1(c), 5.1(d), 5.1(e)(1), and 5.1(e)(2) or any other
covenant or agreement contained herein or in any other Loan Document or will use
the proceeds of any loan for any unauthorized purpose.

 

(e)Cross Default.  Any Loan Party should, after any applicable grace period,
breach or be in default under the terms of any other Loan Document (including,
without limitation, any security instrument or document) or any other agreement
between any Loan Party and Lender or CoBank, or between any Loan Party and any
Affiliate of Lender or CoBank, including without limitation Farm Credit Leasing
Services Corporation.

 

(f)Other Indebtedness.  Any Loan Party or Subsidiary should fail to pay when due
any indebtedness to any other person or entity for borrowed money or any
long-term obligation for the deferred purchase price of property (including any
capitalized lease), or any other event occurs that, under any agreement or
instrument relating to such indebtedness or obligation, has the effect of
accelerating or permitting the acceleration of such indebtedness or obligation,
whether or not such indebtedness or obligation is actually accelerated or the
right to accelerate is conditioned on the giving of notice, the passage of time,
or otherwise.

 

(g)Judgments.  A judgment, decree, or order for the payment of money will have
been rendered against any Loan Party and either:  (1) enforcement proceedings
will have been commenced; (2) a Lien prohibited by this Agreement, any security
instrument, or any other Loan Document, will have been obtained; or (3) such
judgment, decree, or order will continue unsatisfied and in effect for a period
of 30 consecutive days without being vacated, discharged, satisfied, bonded, or
stayed pending appeal.

 

(h)Loan Document Unenforceable.  Any of the Loan Documents ceases to be a legal,
valid, and binding agreement enforceable against any Loan Party or is in any way
terminated (except in accordance with its terms) or becomes or is declared
ineffective or inoperative.

 

(i)Revocation of Guaranty.  Any guaranty, suretyship, subordination agreement,
maintenance agreement, or other agreement furnished in connection with the
Borrower’s obligations hereunder and under any Promissory Note will, at any
time, cease to be in full force and effect, or will be revoked or declared null
and void, or the validity thereof will be contested by the Guarantor, surety or
other maker thereof, or the Guarantor will deny any further liability or
obligations thereunder, or will fail to perform its obligations thereunder, or
any representation or warranty set forth therein will be breached, or the
Guarantor will breach or be in default under the terms of any other agreement
with Lender and/or Agent

 

 

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(including any loan agreement or security agreement), or a default set forth in
sections (f) through (h) will occur with respect to the Guarantor.

 

(i)Insolvency, Etc.  Any Loan Party or Subsidiary will:  (1) become insolvent or
will generally not, or will be unable to, or will admit in writing its inability
to, pay its debts as they become due; or (2) suspend its business operations or
a material part thereof or make an assignment for the benefit of creditors; or
(3) apply for, consent to, or acquiesce in the appointment of a trustee,
receiver, or other custodian for it or any of its property; or (4) have
commenced against it any action or proceeding for the appointment of a trustee,
receiver, or other custodian and such action or proceeding is not dismissed
within 30 days of the date thereof, or a trustee, receiver, or other custodian
is appointed for all or any part of its property; or (5) receive notice from any
regulatory or governmental authority to the effect that such authority intends
to replace the management of any Loan Party or assume control over any Loan
Party or Subsidiary; or (6) commence or have commenced against it any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution, or liquidation law of any jurisdiction.

 

(j)Material Adverse Change.  Any Material Adverse Change occurs, as reasonably
determined by Agent.

 

8.2Remedies.  Upon the occurrence and during the continuance of an Event of
Default or Potential Default, neither Lender nor Agent will have any obligation
to extend or continue to extend credit to the Borrower and may discontinue doing
so at any time without prior notice or other limitation.  In addition, upon the
occurrence and during the continuance of any Event of Default, Lender and Agent
may, upon notice to the Borrower:

 

(a)Termination and Acceleration.  Terminate any commitment and declare the
unpaid principal balance of the loans, all accrued interest thereon, and all
other amounts payable under this Agreement, each Promissory Note, and all other
Loan Documents to be immediately due and payable.  Upon such a declaration, the
unpaid principal balance of the loans and all such other amounts will become
immediately due and payable, without protest, presentment, demand, or further
notice of any kind, all of which are hereby expressly waived by the Borrower.

 

(b)Enforcement.  Proceed to protect, exercise, and enforce such rights and
remedies as may be provided by this Agreement, any security instrument or
document, any other Loan Document, or under Law.  Each and every one of such
rights and remedies will be cumulative and may be exercised from time to time,
and no failure on the part of Lender or Agent to exercise, and no delay in
exercising, any right or remedy will operate as a waiver thereof, and no single
or partial exercise of any right or remedy will preclude any future or other
exercise thereof, or the exercise of any other right.  Without limiting the
foregoing, Agent may hold and/or set off and apply against the Borrower’s
obligations to Lender the proceeds of any equity in Lender or Lender’s parent
Association, any cash collateral held by Lender or Agent, or any balances held
by Lender or Agent for the Borrower’s account (whether or not such balances are
then due).

 

(c)Application of Funds.  Agent may apply all payments received by it to the
Borrower’s obligations to Lender in such order and manner as Agent may elect in
its sole discretion.

 

In addition to the rights and remedies set forth above and notwithstanding any
Promissory Note:  (1) upon the occurrence and during the continuance of an Event
of Default, at Lender and/or Agent’s option in each instance, the entire
indebtedness outstanding hereunder and under each Promissory Note will bear
interest from the date of such Event of Default until such Event of Default will
have been waived or cured in a

 

 

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manner satisfactory to Lender and Agent at 4.00% per annum in excess of the
rate(s) of interest that would otherwise be in effect on that loan under the
terms of the applicable Promissory Note; and (2) after the maturity of any loan
(whether as a result of acceleration or otherwise), the unpaid principal balance
of such loan (including without limitation, principal, interest, fees and
expenses) will automatically bear interest at 4.00% per annum in excess of the
rate(s) of interest that would otherwise be in effect on that loan under the
terms of the Promissory Note.  All interest provided for herein will be payable
on demand and will be calculated on the basis of a year consisting of 360 days.

 

ARTICLE 9Miscellaneous.

 

9.1Amendments; Waivers; Etc.  No amendment, modification, or waiver of any
provision of this Agreement or the other Loan Documents, and no consent to any
departure by the Borrower herefrom or therefrom, will be effective unless
approved by Agent and contained in a writing signed by or on behalf of Lender by
Agent, and then such waiver or consent will be effective only in the specific
instance and for the specific purpose for which given.  In the event this
Agreement is amended or restated, each such amendment or restatement will be
applicable to all Promissory Notes hereto.

 

ARTICLE 10Expenses; Indemnification; Damage Waiver.

 

10.1Costs and Expenses.  To the extent allowed by Law, the Borrower agrees to
pay all reasonable out-of-pocket costs and expenses (including the fees and
expenses of counsel retained or employed by Lender and/or Agent) incurred by
Lender and/or Agent and any participants of Lender and/or Agent in connection
with the origination, administration, collection and enforcement of this
Agreement and the other Loan Documents, including, without limitation, all costs
and expenses incurred in obtaining, perfecting, maintaining, determining the
priority of, and releasing any security for the Borrower’s obligations to Lender
and/or Agent, and any stamp, intangible, transfer or like tax incurred in
connection with this Agreement or any other Loan Document or the recording
hereof or thereof.

 

10.2Indemnification.  The Borrower indemnifies Lender, Agent, each of their
Affiliates and each of its and their respective officers, directors, employees,
agents and advisors (each an “Indemnitee”) against, and holds each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including fees and expenses of employed or retained counsel) incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrower arising out of or as a result of (a) the execution or delivery of
any Loan Document, the performance or nonperformance by the Borrower of its
obligations under any Loan Document or the consummation of the transactions
contemplated thereby, including the use of the proceeds therefrom, (b) breach of
representations, warranties or covenants of the Borrower under any Loan
Document, or (c) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, including any such items or losses
relating to or arising under environmental Laws or pertaining to environmental
matters, regardless whether any Indemnitee is a party thereto; provided that
such indemnity will not, as to an Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by a final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

 

10.3Waiver of Consequential Damages.  To the fullest extent permitted by
applicable Law, the Borrower will not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of, in connection with, or as a
result of, any Loan Document, the transactions contemplated thereby or the use
of the proceeds thereof.

 

 

 

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10.4Notices.  All notices hereunder will be in writing and will be deemed to
have been duly given when addressed to the party intended to receive the same at
the address of such party set forth below (or such other address either party
may specify by like notice), (a) upon delivery if personally delivered to a
party at such address, (b) three days after the same is deposited in the United
States mail as first class, certified mail, return receipt requested, postage
paid, (c) one business day after the same has been deposited with Federal
Express or another nationally recognized overnight courier service if designated
for next-day delivery, and (d) upon delivery if sent by facsimile or electronic
mail with confirmation of delivery of the same:

 

If to Lender, as follows:If to the Borrower, as follows:

Compeer Financial, FLCA

Compeer Financial, PCAHeron Lake BioEnergy, LLC

14800 Galaxie Ave Ste 20591246 390th Avenue

Apple Valley, Minnesota 55124Heron Lake, Minnesota 56137-0077

 

Attn:  91246 390th Avenue

Fax No.:  Heron Lake, Minnesota 56137-0077

 

If to Agent, as follows:Attention:  CFO

Fax No.:  (507) 793-0078

For general correspondence purposes:

P.O. Box 5110

Denver, Colorado 80217-5110

 

For direct delivery purposes, when desired:

6340 South Fiddlers Green Circle

Greenwood Village, Colorado 80111-1914

 

Attention:  Credit Information Services

Fax No. (303) 224-6101

 

10.5Effectiveness and Severability.  This Agreement will continue in effect
until:  (a) all indebtedness and obligations of the Borrower under this
Agreement and the other Loan Documents have been paid or satisfied; (b) Lender
has no commitment to extend credit to or for the account of the Borrower under
any Promissory Note; and (c) either Lender, Agent, or the Borrower sends written
notice to the other parties terminating this Agreement.  Any provision of this
Agreement or any other Loan Document that is prohibited or unenforceable in any
jurisdiction will be ineffective to the extent of such prohibition or
unenforceable without invalidating the remaining provisions hereof or thereof.

 

10.6Successors and Assigns.

 

(a)Successors and Assigns Generally.  This Agreement and the other Loan
Documents will be binding upon and inure to the benefit of the Borrower, Lender,
Agent and their respective successors and assigns, except that the Borrower may
not assign or transfer its rights or obligations under this Agreement or the
other Loan Documents without the prior written consent of Agent.

 

(b)Participations, Etc.  From time to time, Lender and/or Agent may sell to one
or more banks, financial institutions, or other lenders a participation in one
or more of the loans or other extensions of credit made pursuant to this
Agreement.  However, no such participation will relieve Lender of any commitment

 

 

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made to the Borrower hereunder.  In connection with the foregoing, Lender and
Agent may disclose information concerning the Borrower and its subsidiaries, if
any, to any participant or prospective participant, provided that such
participant or prospective participant agrees to keep such information
confidential.  Patronage distributions in the event of a sale of a participation
interest will be governed by Lender’s or Lender’s Parent Association Bylaws and
Capital Plan (as each may be amended from time to time).  A sale of a
participation interest may include certain voting rights of the participants
regarding the loans hereunder (including without limitation the administration,
servicing, and enforcement thereof).  Lender and Agent agrees to give written
notification to the Borrower of any sale of a participation interest, which
notifications may be given by Agent on behalf of Lender.

 

10.7Integration; Other Types of Credit; Counterparts.

 

(a)Integration.  The Loan Documents are intended by the parties to be a complete
and final expression of their agreement.  Each Promissory Note will be deemed to
incorporate all of the terms and conditions of this Agreement as if fully set
forth therein.  Without limiting the foregoing, any capitalized term utilized in
any Promissory Note (or in any amendment to this Agreement or Promissory Note)
and not otherwise defined in the Promissory Note (or amendment) will have the
meaning set forth herein or, if applicable, in the Accounting Standards.  In the
event the Accounting Standards are changed after the date hereof, then all such
changes will be applicable hereto, unless Agent otherwise specifies in writing.

 

(b)Other Types of Credit.  From time to time, Agent on behalf of Lender may
issue letters of credit or extend other types of credit to or for the account of
the Borrower.  In the event the parties desire to do so under the terms of this
Agreement, then the agreement of the parties with respect thereto may be set
forth in a Promissory Note and this Agreement will be applicable thereto.

 

(c)Counterparts.  This Agreement, each Promissory Note and any other Loan
Document may be executed in counterparts, each of which will constitute an
original, but all of which when taken together will constitute a single
contract.  Delivery of an executed counterpart of a signature page of this
Agreement by facsimile or other electronic means will be as effective as
delivery of a manually executed counterpart of this Agreement.

 

10.8Applicable Law; Submission to Jurisdiction; Service of Process; Waiver of
Venue; Waiver of Jury Trial.

 

(a)Applicable Law.  Without giving effect to the principles of conflict of laws
and except to the extent governed by federal law, the Laws of the State of
Colorado, without reference to choice of law doctrine, will govern this
Agreement, each Promissory Note and any other Loan Document for which Colorado
is specified as the applicable law, and all disputes and matters between the
parties to this Agreement, including all disputes and matters whatsoever arising
under, in connection with or incident to the lending and/or leasing or other
business relationship between the parties, and the rights and obligations of the
parties to this Agreement or any other Loan Document by and between the parties
for which Colorado is specified as the applicable law.

 

(b)Submission to Jurisdiction; Service of Process.  The Borrower hereby
irrevocably consents to the nonexclusive jurisdiction of any state or federal
court in Denver, Colorado, and consents that Lender and/or Agent may effect any
service of process in the manner and at the Borrower’s address set forth herein
for providing notice or demand; provided that nothing contained in this
Agreement will prevent Lender and/or Agent from bringing any action, enforcing
any award or judgment or exercising any rights

 

 

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against the Borrower individually, against any collateral or against any
property of the Borrower within any other county, state or other foreign or
domestic jurisdiction.

 

(c)Waiver of Venue.  The Borrower acknowledges and agrees that the venue
provided above is the most convenient forum for the Borrower and Lender and
Agent.  The Borrower waives any objection to venue and any objection based on a
more convenient forum in any action instituted under this Agreement.

 

(d)Waiver of Jury Trial.  The Borrower and Lender each hereby irrevocably waives
any right it may have to a trial by jury in connection with any action directly
or indirectly arising out of or relating to this Agreement or any other Loan
Document.  Each party hereto (1) certifies that no representative,
administrative agent or attorney of any other person has represented, expressly
or otherwise, that such other person would not, in the event of litigation, seek
to enforce the foregoing waiver and (2) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement and other Loan
Documents by, among other things, the mutual waivers and certifications in this
section.

 

10.9USA Patriot Act Notice.  Agent hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act, it is required to obtain, verify, and
record information that identifies the Borrower in accordance with the USA
Patriot Act.  The Borrower covenants and agrees it will not, and agrees to cause
each of its subsidiaries not to, at any time, directly or indirectly be (a) a
person with whom Lender and/or Agent is restricted from doing business under any
Anti-Terrorism Law, (b) engaged in any business involved in making or receiving
any contribution of funds, goods or services to or for the benefit of such a
person or in any transaction that evades or avoids, or has the purpose of
evading or avoiding, the prohibitions set forth in any Anti-Terrorism Law, or
(c) otherwise in violation of any Anti-Terrorism Law (the Borrower will and will
cause each of its subsidiaries to provide to Lender and/or Agent any
certifications or information that Lender and/or Agent requests to confirm
compliance by the Borrower and its subsidiaries with any Anti-Terrorism
Law).  “Anti-Terrorism Law” means any Law relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department’s Office of Foreign Asset Control, as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced.

 

SIGNATURE PAGE FOLLOWS

 

 

 

18

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SIGNATURE PAGE TO CREDIT AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers, have
executed this Agreement.

 

 

HERON LAKE BIOENERGY, LLC

 

By:/s/ Stacie Schuler

 

Name:Stacie Schuler

 

Title:CFO

 

3/8/18

 

 

 

19

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SIGNATURE PAGE TO CREDIT AGREEMENT

 

IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers, have
executed this Agreement.

 

COMPEER FINANCIAL, FLCA

 

By:/s/ Erik Moe

 

Name:Erik Moe

 

Title:Manager Syndications & Agency

 

COMPEER FINANCIAL, PCA

 

By:/s/ Erik Moe

 

Name:Erik Moe

 

Title:Manager Syndications & Agency

 

 

 

 

 

20

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