EXHIBIT 10.1

 

[Stearns Bank Letterhead]

 

 

September 26, 2003

 

The Board of Directors

Husker Ag, LLC

510 W. Locust Street

PO Box 10

Plainview, NE  68769

 

RE:                    USDA Permanent loan financing for a 20 Million Gallon
Ethanol Plant Plainview, Nebraska

 

Gentlemen:

 

Stearns Bank is pleased to extend the following financing proposal with regards
to the above-referenced project:

 

Borrower:

 

Husker Ag, LLC

 

 

 

 

 

Extension:  90 day extension of the $20,000,000 construction loan.  Begin P&I
payments based on a 7 year amortization.  Change the interest rate to 1.25% over
the WSJP Index, adjusting daily.

 

 

 

Covenants:

 

Add the following covenants:

 

 

a)  No distributions without prior lender approval and issuance of the USDA Loan
Note Guaranty.

 

 

b)  Minimum 40% balance sheet tangible net worth must be maintained.

 

 

c)  Debt Service Coverage Ratio of at least 1.20x after distributions.

 

 

 

Prepayment Penalty:

 

3% prepayment penalty

 

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The USDA declined the original $20,000,000 loan request with a 60% guaranty, the
borrower and lender agree to proceed on the following terms:

 

Loan Amount:

 

Loan A - $8,837,300 - 70% USDA Guaranty loan-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)

 

 

 

Interest Rate:

 

Prime plus 1.25%, adjusted quarterly

 

 

 

 

 

Closing Costs:

 

Conversion Fee ($116,277.80), 2% USDA Fee ($123,722.20)

 

 

 

 

 

Collateral:

 

Collateral on Loan A & B will be as follows on a pari passu basis with USDA:

 

 

 

 

 

 

 

•          A first real estate mortgage on the proposed real estate project
located in Plainview, Nebraska (legal to govern).

 

 

 

 

 

 

 

•          A first Security Agreement/Financing Statement covering accounts
receivable, inventory, equipment and fixtures, along with personal property and
general intangibles.

 

 

 

 

 

 

 

Loan C will have a second position on the above collateral.

 

 

 

 

 

Guarantee:

 

Permanent loan A is subject to a 70% USDA Guaranteed Loan

 

 

 

 

 

Prepayment Premium:

 

5% of balance in year one, 4% of balance in year two, 3% of balance in year
three, 2% of balance in year four, and 1% of balance in year five.

 

 

 

 

 

Escrows:

 

An escrow account must be maintained with Lender from which real estate taxes
will be paid.

 

 

 

 

 

Equity:

 

A minimum of 40% tangible balance sheet equity must be maintained.

 

 

 

 

 

Covenants:

 

To be determined with USDA Rural Development

 

 

 

 

 

Financial Information:

 

The following financial information will be required:

 

 

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a)      Fiscal year-end audited statement prepared by an independent CPA firm;

 

 

b)     Annual tax returns, including all supporting schedules;

 

 

c)      Quarterly interim financial statements prepared internally or by a CPA
firm

 

The Lender’s conditional commitment is subject to the negotiation and execution
of definitive credit, security and related loan documents (the “Credit
Documents”) satisfactory to the Lender.  The Credit Documents will embody the
structure, pricing and other terms described in the summary of terms and
conditions.  They will also include provisions viewed by the Lender and its
counsel as appropriate for this transaction and for transactions of this type. 
Accordingly, it should be recognized that this letter is indicative, but not
exhaustive, as to the terms and conditions, which shall govern this facility.

 

This conditional commitment letter supercedes and replaces any and all
conditional commitment letter issued by the Lender to the Borrower.

 

 

Sincerely,

 

/s/ Norm Skalicky

 

 

Norm Skalicky

CEO

 

 

I hereby accept the terms and conditions of the above-described proposal to
provide financing.

 

Husker Ag Processing, LLC

 

By:

/s/ Gary Kuester

 

 

 

Chairman of the Board and President

Date: September 29, 2003

 

 

 

 

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