Exhibit 10.2

 

CHANGE IN TERMS AGREEMENT

 

Principal

 

Loan Date

 

Maturity

 

Loan No

 

Call/Coll

 

Account

 

Officer

 

Initials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20,000,000.00

 

12-19-2001

 

12-31-2003

 

53455

 

47/400

 

119284

 

JB

 

 

 

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing “* * *” has been omitted due to text length
limitations.

 

Borrower:

 

HUSKER AG, LLC (TIN:  47-0836953)

LENDER:

 

STEARNS BANK NATIONAL ASSOCIATION

 

 

PO BOX 10

 

 

4191 SO 2ND ST

 

 

PLAINVIEW, NE 68769

 

 

PO BOX 7338

 

 

 

 

 

ST CLOUD, MN 56302

 

Principal Amount:  $20,000,000.00

Initial Rate:  5.250%

Date of Agreement: SEPTEMBER 30, 2003

 

DESCRIPTION OF EXISTING INDEBTEDNESS.  PROMISSORY NOTE DATED 12-19-2001 IN THE
ORIGINAL PRINCIPAL AMOUNT OF $20,000,000.00.

 

DESCRIPTION OF CHANGE IN TERMS.  EXTEND MATURITY DATE, ADJUST INTEREST RATE,
INCLUDE PREPAYMENT PENALTY AND ADD PROVISIONS & COVENANTS AS STATED WITHIN THIS
DOCUMENT.

 

PROMISE TO PAY.  HUSKER AG, LLC (“Borrower”) promises to pay to STEARNS BANK
NATIONAL ASSOCIATION (“Lender”), or order, in lawful money of the United States
of America, the principal amount of Twenty Million & 00/100 Dollars
($20,000,000.00), together with interest on the unpaid principal balance from
September 30, 2003, until paid in full.

 

PAYMENT.  Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan on demand.  Payment in full is due immediately upon
Lender’s demand.  If no demand is made, Borrower will pay this loan in 2 regular
payments of $285,774.29 each and one irregular last payment estimated at
$19,694,148.88.  Borrower’s first payment is due October 31, 2003, and all
subsequent payments are due on the same day of each month after that. 
Borrower’s final payment will be due on December 31, 2003, and will be for all
principal and all accrued interest not yet paid.  Payments include principal and
interest.  Unless otherwise agreed or required by applicable law, payments will
be applied first to any accrued unpaid Interest; then to principal; and then to
any unpaid collection costs.  Interest on this Agreement is computed on a
365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding.  Borrower will pay Lender at Lender’s address shown above or at
such other place as Lender may designate in writing.

 

VARIABLE INTEREST RATE.  The interest rate on this Agreement is subject to
change from time to time based on changes in an independent index which is the
WALL STREET JOURNAL PRIME RATE (the “Index”).  The Index is not necessarily the
lowest rate charged by Lender on its loans.  If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notice to Borrower.  Lender will tell Borrower the current Index rate upon
Borrower’s request.  The interest rate change will not occur more often than
each DAY.  Borrower understands that Lender may make loans based on other rates
as well.  The index currently is 4.000% per annum.  The interest rate to be
applied to the unpaid principal balance of the Note will be at a rate of 1.250
percentage points over the Index, resulting in an initial rate of 5.250% per
annum.  NOTICE:  Under no circumstances will the interest on the Note be more
than the maximum rate allowed by applicable law.  Whenever increases occur in
the interest rate, Lender, at its option, may do one or more of the following:
(A) increase Borrower’s payments to ensure Borrower’s loan will pay off by its
original final maturity date, (B) increase Borrower’s payments to cover accruing
interest, (C) increase the number of Borrower’s payments, and (D) continue
Borrower’s payments at the same amount and increase Borrower’s final payment.

 

PREPAYMENT PENALTY.  Upon prepayment of this Agreement, Lender is entitled to
the following prepayment penalty:  THIS NOTE MAY NOT BE PREPAID, EITHER IN WHOLE
OR IN PART, EXCEPT AS PROVIDED HEREIN.  EFFECTIVE SEPTEMBER 30, 2003 THIS NOTE
MAY BE PREPAID AT ANY TIME IN WHOLE OR IN PART UPON 10 DAYS WRITTEN NOTICE TO
THE HOLDER HEREOF AND UPON PAYMENT OF A PREPAYMENT PREMIUM IN AN AMOUNT EQUAL TO
3.0% OF THE AMOUNT OF SUCH PREPAYMENT DURING THE CONSTRUCTION PERIOD, 5.0% OF
THE AMOUNT OF SUCH PREPAYMENT DURING YEAR ONE FOLLOWING THE CONSTRUCTION PERIOD,
4.0% OF THE AMOUNT OF SUCH PREPAYMENT DURING THE YEAR TWO FOLLOWING THE
CONSTRUCTION PERIOD, 3.0% OF THE AMOUNT OF SUCH PREPAYMENT DURING THE YEAR THREE
FOLLOWING THE CONSTRUCTION PERIOD, 2.0% OF THE AMOUNT OF SUCH PREPAYMENT DURING
YEAR FOUR FOLLOWING THE CONSTRUCTION PERIOD, AND 1.0% OF THE AMOUNT OF SUCH
PREPAYMENT DURING YEAR FIVE FOLLOWING THE CONSTRUCTION PERIOD.  ALL PREPAYMENTS
SHALL, AT THE OPTION OF THE HOLDER HEREOF, FIRST BE APPLIED TO ACCRUED INTEREST
AND THE REMAINDER THEREOF TO PRINCIPAL.  NOT WITHSTANDING ANY SUCH
PREPAYMENT(S), UNTIL THE PRINCIPAL AMOUNT OF THIS NOTE AND ALL INTEREST THEREON
IS PAID IN FULL, THE MAKER HEREOF SHALL CONTINUE TO MAKE INSTALLMENT PAYMENTS OF
PRINCIPAL AND INTEREST IN THE AMOUNTS AND AT THE TIMES PROVIDED HEREIN.  Except
for the foregoing, Borrower may pay all or a portion of the amount owed earlier
than it is due.  Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower’s obligation to continue to make payments under the
payment schedule.  Rather, early payments will reduce the principal balance due
and may result in Borrower’s making fewer payments.  Borrower agrees not to send
Lender payments marked “paid in full,” “without

 

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Loan No. 53455

 

recourse”, or similar language.  If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s rights under this Agreement, and
Borrower will remain obligated to pay any further amount owed to Lender.  All
written communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in full”
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to: 
STEARNS BANK NATIONAL ASSOCIATION, 4191 SO 2ND ST, ST. CLOUD, MN  56302-7338.

 

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final
maturity, the total sum due under this Agreement will bear interest from the
date of acceleration or maturity at the variable interest rate on this
Agreement.  The interest rate will not exceed the maximum rate permitted by
applicable law.

 

DEFAULT.  Each of the following shall constitute an Event of Default under this
Agreement:

 

Payment Default.  Borrower fails to make any payment when due under the
indebtedness.

 

Other Defaults.  Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties.  Borrower defaults under any loan, extension
of credit, security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may materially affect
any of Borrower’s property or Borrower’s ability to perform Borrower’s
obligations under this Agreement or any of the related Documents.

 

False Statements.  Any warranty, representation or statement made or furnished
to Lender by Borrower or on Borrower’s behalf under this Agreement or the
Related Documents is false or misleading in any material respect, either now or
at the time made or furnished or becomes false or misleading at any time
thereafter.

 

Death or Insolvency.  The dissolution of Borrower (regardless of whether
election to continue is made), any member withdraws from Borrower, or any other
termination of Borrower’s existence as a going business or the death of any
member, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower’s property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

 

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the indebtedness.  This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender.  However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender.  In its sole discretion, as being an adequate reserve or bond for the
dispute.

 

Events Affecting Guarantor.  Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any Guaranty of the indebtedness evidenced by this Note.  In the event of a
death, Lender, at its option, may, but shall not be required to, permit the
guarantor’s estate to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.

 

Adverse Change.  A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment of performance of the
indebtedness is impaired.

 

Insecurity.  Lender in good faith believes itself insecure.

 

Cure Provisions.  If any default, other than a default in payment is curable and
if Borrower has not been given a notice of a breach of the same provision of
this Agreement within the preceding twelve (12) months, it may be cured (and no
event of default will have occurred) if Borrower, after receiving written notice
from Lender demanding cure of such default:  (1) cures the default within
fifteen (15) days; or (2) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender’s sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

 

LENDER’S RIGHTS.  Upon default, Lender may declare the entire unpaid principal
balance on this Agreement and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

 

2

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ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help collect
this Agreement if Borrower does not pay.  Borrower will pay Lender that amount. 
This includes, subject to any limits under applicable law, Lender’s reasonable
attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,
including reasonable attorneys’ fees, expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and
appeals.  If not prohibited by applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by law.

 

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other.

 

GOVERNING LAW.  This Agreement will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Minnesota.  This
Agreement has been accepted by Lender in the State of Minnesota.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account).  This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future. 
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law.  Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender’s option, to
administratively freeze all such accounts to allow Lender to protect Lender’s
charge and setoff rights provided in this paragraph.

 

COLLATERAL.  Borrower acknowledges this Agreement is secured by COLLATERAL AS
DESCRIBED IN THE FOLLOWING DOCUMENTS:  DEED OF TRUST, ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT FROM BORROWER TO LENDER DATED 12-19-01.

 

CONTINUING VALIDITY.  Except as expressly changed by this Agreement, the terms
of the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect. 
Consent by Lender to this Agreement does not waive Lender’s right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms.  Nothing in this Agreement will constitute a
satisfaction of the obligations(s).  It is the intention of Lender to retain as
liable parties all makers and endorsers of the original obligation(s) including
accommodation parties, unless a party is expressly released by Lender in
writing.  Any maker or endorser, including accommodation makers will not be
released by virtue of this Agreement.  If any person who signed the original
obligation does not sign this Agreement below, then all persons signing below
acknowledge that this Agreement is given conditionally, based on the
representation to Lender that the non-signing party consents to the changes and
provisions of this Agreement or otherwise will not be released by it.  This
waiver applies not only to any initial extension modification or release, but
also to all such subsequent actions.

 

LATE CHARGE.  SHOULD BORROWER FAIL TO PAY ANY PAYMENT REQUIRED DURING THE TERM
OF THIS LOAN, OR TO PAY THE INDEBTEDNESS UPON THE MATURITY OF THIS LOAN, AND
SHOULD ANY SUCH AMOUNT REMAIN UNPAID FOR A PERIOD OF TEN (10) DAYS FOLLOWING ITS
DUE DATE, THEN BORROWER AGREES AND COVENANTS TO PAY TO LENDER A LATE CHARGE IN
THE AMOUNT OF FIVE PERCENT (5%) OF ANY SUCH AMOUNT, INCLUDING THE AMOUNT DUE AND
PAYABLE AT MATURITY.

 

ADDITIONAL COVENANTS.

A)  NO DISTRIBUTIONS WITHOUT PRIOR LENDER APPROVAL AND ISSUANCE OF THE USDA LOAN
NOTE GUARANTEE.

B)  MINIMUM 40% BALANCE SHEET TANGIBLE NET WORTH MUST BE MAINTAINED.

C)  DEBT SERVICE COVERAGE RATIO OF AT LEAST 1.20x AFTER DISTRIBUTIONS.

 

ADDITIONAL PROVISION.  IN THE EVENT USDA DECLINES THE ORIGINAL LOAN REQUEST FOR
$20,000,000.00, WITH A 60% GUARANTY, THE BORROWER AND LENDER AGREE TO PROCEED ON
THE FOLLOWING TERMS:

 

LOAN A:  $8,837,300 - 70% USDA GUARANTEE - AMORTIZED OVER 15 YEARS

LOAN B:  $8,837,300 - CONVENTIONAL LOAN - AMORTIZED OVER 7 YEARS

LOAN C:  $1,505,900 - CONVENTIONAL LOAN - AMORTIZED OVER 3 YEARS (REQUIRES A
PRINCIPAL REDUCTION OF $819,500)

 

THE INTEREST RATE WILL BE WSJP INDEX + 1.25%, ADJUSTING ON THE FIRST DAY OF EACH
CALENDAR QUARTER.

 

THESE TERMS ARE SUBJECT TO ISSUANCE OF A 70% USDA LOAN NOTE GUARANTEE,
CONVERSION FEE OF $116,277.80 AND USDA FEE OF $123,722.20

 

SUCCESSORS AND ASSIGNS.  Subject to any limitations stated in this Agreement on
transfer of Borrower’s interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns.  If ownership of
the Collateral becomes vested in a person other than Borrower, Lender, without
notice to Borrower, may deal with Borrower’s successors with reference to this
Agreement and the indebtedness by way of forbearance or extension without
releasing Borrower from the obligations of this Agreement or liability under the
indebtedness.

 

3

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MISCELLANEOUS PROVISIONS.  This Agreement is payable on demand.  The inclusion
of specific default provisions or rights of Lender shall not preclude Lender’s
right to declare payment of this Agreement on its demand.  Lender may delay or
forgo enforcing any of its rights or remedies under this Agreement without
losing them.  Borrower and any other person who signs, guarantees or endorses
this Agreement, to the extent allowed by law, waive presentment, demand for
payment, and notice of dishonor.  Upon any change in the terms of this
Agreement, and unless otherwise expressly stated in writing, no party who signs
this Agreement, whether as maker, guarantor, accommodation maker or endorser,
shall be released from liability.  All such parties agree that Lender may renew
or extend (repeatedly and for any length of time) this loan or release any party
or guarantor or collateral; or impair, fall to realize upon or perfect Lender’s
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone.  All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.  The obligations
under this Agreement are joint and several.

 

SECTION DISCLOSURE.  This loan is made under Minnesota Statutes, Section 47.59.

 

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER
AGREES TO THE TERMS OF THE AGREEMENT.

 

BORROWER:

 

HUSKER AG, LLC

 

 

By:

 

(Seal)

 

By:

 

(Seal)

 

GARY KUESTER, Chairman of HUSKER AG, LLC

 

 

JACK FRAHM, Secretary of HUSKER AG, LLC

 

 

By:

 

(Seal)

 

By:

 

(Seal)

 

SCOTT CARPENTER, Vice Chairman of HUSKER AG, LLC

 

 

CORY FURSTENAU, Treasurer of HUSKER AG, LLC

 

4

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DISBURSEMENT REQUEST AND AUTHORIZATION

 

Principal

 

Loan Date

 

Maturity

 

Loan No

 

Call/Coll

 

Account

 

Officer

 

Initials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20,000,000.00

 

12-19-2001

 

12-31-2003

 

53455

 

47/400

 

119284

 

JB

 

 

 

 

References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing “* * *” has been omitted due to text length
limitations.

 

Borrower:

 

HUSKER AG, LLC (TIN:  47-0836953)

LENDER:

 

STEARNS BANK NATIONAL ASSOCIATION

 

 

PO BOX 10

 

 

4191 SO 2ND ST

 

 

PLAINVIEW, NE 68769

 

 

PO BOX 7338

 

 

 

 

 

ST CLOUD, MN 56302

 

LOAN TYPE.  This is a Variable Rate Nondisclosable Loan to a Limited Liability
Company for $20,000,000.00 due on December 31, 2003.  The reference rate (WALL
STREET JOURNAL PRIME RATE, currently 4.000%) is added to the margin of 1.250%,
resulting in an initial rate of 5.250.  This is a secured renewal loan.

 

PRIMARY PURPOSE OF LOAN.  The primary purpose of this loan is for:

 

o Maintenance of Borrower’s Primary Residence.

 

o Personal, Family or Household Purposes or Personal Investment.

 

o Agricultural Purposes.

 

ý Business Purposes.

 

SPECIFIC PURPOSE.  The specific purpose of this loan is:  CONSTRUCT A 20 MGY
CAPACITY ETHANOL PLANT IN PLAINVIEW NE.

 

FLOOD INSURANCE.  As reflected on Flood Map No. 310466 0025B dated 06-04-1987,
for the community of PIERCE COUNTY, some of the property that will secure the
loan is not located in an area that has been identified by the Director of the
Federal Emergency Management Agency as an area having special flood hazards. 
Therefore, although flood insurance may be available for the property, no
special flood hazard insurance is required by law for this loan.

 

DISBURSEMENT INSTRUCTIONS.  Borrower understands that no loan proceeds will be
disbursed until all of Lender’s conditions for making the loan have been
satisfied.  Please disburse the loan proceeds of $20,000,000.00 as follows:

 

Other Disbursements:

 

$

20,000,000.00

 

$19,827,859.74 Outstanding Balance

 

 

 

$172,140.26 AVAILABLE BALANCE

 

 

 

 

 

 

 

 

 

 

 

Note Principal:

 

$

20,000,000.00

 

 

CHARGES PAID IN CASH.  Borrower has paid or will pay in cash as agreed the
following charges:

 

Prepaid Finance Charges Paid in Cash:

 

$

0.00

 

 

 

 

 

Other Charges Paid in Cash:

 

$

98,833.64

 

$20.50 FILING / RECORDING FEES

 

 

 

$500.00 RENEWAL FEE

 

 

 

$98,313.14 ACCRUED INTEREST

 

 

 

 

 

 

 

Total Charges Paid in Cash:

 

$

98,833.64.

 

 

FINANCIAL CONDITION.  BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER’S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO LENDER.  THIS
AUTHORIZATION IS DATED SEPTEMBER 30, 2003.

 

BORROWER:

 

HUSKER AG, LLC

 

By:

 

(Seal)

 

By:

 

(Seal)

 

GARY KUESTER, Chairman of HUSKER AG, LLC

 

 

JACK FRAHM, Secretary of HUSKER AG, LLC

 

 

 

 

By:

 

(Seal)

 

By:

 

(Seal)

 

SCOTT CARPENTER, Vice Chairmen of HUSKER AG, LLC

 

 

CORY FURSTENAU, Treasurer of HUSKER AG, LLC

 

5

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