Exhibit 10.1
LOCK-UP AND VOTING AGREEMENT
     This Lock-Up and Voting Agreement (this “Agreement”) is made and entered
into as of March 31, 2010, by and among Marshall Financial Group, LLC, Banco
Santander, S.A., New York Branch, Farm Credit Bank of Texas, Coöperatieve
Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch,
KEB NY Financial Corp., Nordkap Bank AG, WestLB AG, New York Branch (“WestLB”)
(collectively, the “Senior Secured Creditors” and each a “Senior Secured
Creditor”), Heartland Grain Fuels, L.P. (“HGF”), Advanced BioEnergy, LLC (“ABE”)
and Oppenheimer Rochester National Municipals (the “Bondholder” and
collectively, together with ABE, HGF and the Senior Secured Creditors that have
executed this Agreement, the “Parties”).
RECITALS
     A. The Senior Secured Creditors are the holders of senior secured notes
issued by HGF and other secured obligations of HGF pursuant to that certain
Senior Credit Agreement, dated as of October 1, 2007 (as amended and
supplemented, the “Senior Credit Agreement”), among HGF, as Borrower, the
Lenders referred to therein and WestLB, as Administrative Agent (the
“Administrative Agent”), Collateral Agent, Issuing Bank, Lead Arranger, Sole
Bookrunner and Syndication Agent.
     B. The Bondholder is the sole holder of the Subordinate Solid Waste
Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project)
Series 2007A (the “Bonds”), issued by Brown County, South Dakota (the “Issuer”)
under that certain Bond Trust Indenture, dated as of October 1, 2007, between
the Issuer and Wells Fargo Bank, National Association, in its capacity as
trustee of the Bonds (the “Trustee”).
     C. ABE, directly and indirectly, owns all of the partnership interests in
HGF.
     D. The Parties have engaged in good faith negotiations with the objective
of reaching an agreement with regard to restructuring and recapitalizing HGF.
     E. The Parties now desire to implement a restructuring (the
“Restructuring”) of HGF consistent with the terms set forth in this Agreement
and the Term Sheet attached hereto as Exhibit A (the “Term Sheet”). In the event
that HGF, ABE, the Bondholder and Senior Secured Creditors that collectively
hold at least two-thirds in amount and are more than fifty percent of the number
of the holders of claims based on amounts owed by HGF under the Senior Credit
Agreement (the “Senior Secured Claims”) agree to the terms of this Agreement,
HGF intends, subject to the terms and conditions of this Agreement, to prepare
and file a plan of reorganization (the “Plan”), consistent with the terms set
forth in this Agreement and the Term Sheet, implementing the Restructuring in a
case (the “Chapter 11 Case”) to be filed under chapter 11 of title 11 of the
United States Code (the “Bankruptcy Code”). Alternatively, in the event that
HGF, ABE, the Bondholder and all of the Senior Secured Creditors agree to the
terms of this Agreement by March 25, 2010, the Parties will implement the
Restructuring through a restructuring agreement consistent with the Term Sheet
and that contains such other terms as are acceptable to the Parties.

 

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     F. HGF may seek acceptance of the Plan before the commencement of the
Chapter 11 Case as permitted by section 1126(b) of the Bankruptcy Code based on
“adequate information” HGF will provide to holders of claims entitled to vote on
the Plan (“Prepetition Disclosure”). In the alternative, HGF may file the Plan
with a disclosure statement (“Disclosure Statement”) as provided in section 1125
of the Bankruptcy Code shortly after the filing of the Chapter 11 Case. HGF
intends to use its commercially reasonable efforts to have the Plan confirmed by
the United States Bankruptcy Court for the District of Minnesota (the
“Bankruptcy Court”) as expeditiously as possible under the Bankruptcy Code and
the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). In the
course of the Chapter 11 Case, HGF intends to use its commercially reasonable
efforts to have the Prepetition Disclosure approved as meeting the requirements
of section 1126(b) or the Disclosure Statement approved under section 1125(b) of
the Bankruptcy Code.
     G. In order to expedite the implementation of the Restructuring, the Senior
Secured Creditors that have executed this Agreement (the “Executing Senior
Secured Creditors”) and the Bondholder are prepared to commit, on the terms and
subject to the conditions of this Agreement, to consummate the Restructuring and
the transactions contemplated by the Term Sheet and, if necessary, when properly
solicited to do so, to vote their claims (as such term is defined in the
Bankruptcy Code) to accept the Plan.
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
     1. Voting. The Executing Senior Secured Creditors represent and warrant
that, as of the date hereof, they collectively hold at least two-thirds in
amount and are more than fifty percent of the number of the holders of Senior
Secured Claims (the “Controlling Senior Secured Claims”), with the power to vote
and dispose of such claims. The Bondholder represents and warrants that, as of
the date hereof, it is the holder of 100% of the claims based on Bonds (together
with the Controlling Senior Secured Claims, the “Relevant Claims”) with the
power to vote and dispose or the power to direct the Trustee to vote and dispose
of such claims. The Executing Senior Secured Creditors and the Bondholder agree
that, so long as this Agreement shall remain in effect, when properly solicited
to do so, they will (a) support, and otherwise use their commercially reasonable
efforts to take, all actions required or otherwise necessary to consummate the
Restructuring and the transactions contemplated by the Term Sheet and execute
such instruments, documents and agreements, including the Definitive Documents
(as defined in the Term Sheet), necessary to consummate the Restructuring, or
(b) timely vote their Relevant Claims (and not revoke or withdraw such vote) to
accept the Plan and shall restructure the obligations of HGF consistent with the
terms and conditions of the Term Sheet and this Agreement, provided, however,
that the terms of the Plan and the Prepetition Disclosure or the Disclosure
Statement are substantially the terms set forth in the Term Sheet and include
such other terms as are acceptable to the Parties.
     2. Consummation of the Restructuring. The Parties agree that, so long as
this Agreement remains in effect, they will support, and otherwise use their
commercially reasonable efforts to take, all actions required or otherwise
necessary to consummate the Restructuring and the transactions contemplated by
the Term Sheet. The foregoing obligation includes, but is not

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limited to, (a) executing the Definitive Documents, (b) assisting, as necessary,
in the preparation and negotiation of the Definitive Documents, (b) voting in
favor of the Plan, and (c) otherwise taking such actions as are necessary to be
able to consummate the Restructuring and the transactions contemplated by the
Term Sheet as expeditiously as possible, provided, however, that the Plan is
consistent with the Term Sheet and contains such other terms as are acceptable
to the Parties.
     3. Restriction on Transfer. The Bondholder and each Executing Senior
Secured Creditor hereby agrees that, so long as this Agreement shall remain in
effect, it shall not sell, transfer or assign any of its Relevant Claims or any
option thereon or any right or interest therein, unless the transferee thereof
agrees in writing to be bound by all the terms of this Agreement by executing a
counterpart signature page of this Agreement and the transferor promptly
provides HGF and ABE with a copy thereof.
     4. HGF and ABE Agreements. In the event that the Restructuring is being
implemented through the Plan, HGF and ABE hereby agree to use commercially
reasonable efforts to have the Prepetition Disclosure or Disclosure Statement
approved by the Bankruptcy Court, and thereafter to use commercially reasonable
efforts to obtain an order of the Bankruptcy Court confirming the Plan, in each
case, as expeditiously as possible under the Bankruptcy Code and the Bankruptcy
Rules, and consistent with the terms and conditions set forth in the Term Sheet
and this Agreement. Upon confirmation of the Plan, ABE agrees to make the cash
contributions to HGF required by paragraph 4 of the Term Sheet and on the terms
contained therein.
     5. Support of the Restructuring. As long as this Agreement remains in
effect, (x) the Parties will, on the terms and subject to the conditions of the
Term Sheet and this Agreement, support the Restructuring, and (y) the Bondholder
and each Executing Senior Secured Creditor will, when properly solicited to do
so, (i) support, and otherwise use their commercially reasonable efforts to
take, all actions required or otherwise necessary to consummate the
Restructuring and the transactions contemplated by the Term Sheet and execute
such instruments, documents and agreements, including the Definitive Documents,
necessary to consummate the Restructuring, or (ii) vote for the Plan, provided,
however, that the Plan implements a restructuring consistent with the Term Sheet
and containing such other terms as are acceptable to the Bondholder and
Executing Senior Secured Parties. As long as this Agreement remains in effect,
none of the Parties will (a) object to confirmation of the Plan or otherwise
commence any proceeding to oppose or alter the Plan or any other reorganization
related documents or agreements (the “Plan Documents”), (b) vote for, consent
to, support or participate in the formulation of any other plan of
reorganization or liquidation proposed or filed or to be proposed or filed in
any chapter 11 or chapter 7 case commenced in respect of HGF, (c) directly or
indirectly seek, solicit, support or encourage any other plan, sale, proposal or
offer of dissolution, winding up, liquidation, reorganization, merger or
restructuring of HGF that could reasonably be expected to prevent, delay or
impede the successful restructuring of HGF as contemplated by the Term Sheet,
the Plan or the Plan Documents, (d) object to approval of the Prepetition
Disclosure or the Disclosure Statement or the solicitation of consents to the
Plan, except to the extent that it believes, in good faith, that the Prepetition
Disclosure or the Disclosure Statement contains a material misstatement or
omission of a material fact, or (e) take

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any other action with respect to HGF that is inconsistent with, or that would
delay confirmation of, the Plan.
     6. Acknowledgement. This Agreement is not a solicitation for consents to
the Plan. HGF will not solicit acceptance of the Plan by the Bondholder or the
Senior Secured Creditors until the Bondholder and each Senior Secured Creditor
has received the Prepetition Disclosure or the Disclosure Statement.
     7. Termination of Agreement. The Bondholder and each Executing Senior
Secured Creditor may terminate its obligations hereunder and, if applicable,
rescind its vote on the Plan (which vote shall be null and void and have no
further force and effect), but only if (a) in the event that HGF, ABE, the
Bondholder and all of the Senior Secured Creditors execute this Agreement, the
Restructuring does not occur within 55 days after the effective date of this
Agreement, or (b) the effective date of the Plan does not occur on or before
July 9, 2010, or (c) HGF does not file the Chapter 11 Case by April 26, 2010 or
(d) the Restructuring is consummated. Upon such termination, ABE and HGF will be
estopped from opposing any efforts by the Bondholder or an Executing Senior
Secured Creditor to withdraw its vote pursuant to Bankruptcy Rule 3018 or under
other applicable law, including, without limitation, applicable securities law.
     8. Effectiveness. This Agreement will not become effective and binding on
the parties hereto unless and until the ABE, HGF, the Bondholder and Senior
Secured Creditors holding Controlling Senior Secured Claims have executed and
delivered counterpart signature pages hereto.
     9. Representations and Warranties. Each of the Parties represents and
warrants to each other that the following statements are true, correct and
complete as of the date hereof:

  (a)   Corporate Power and Authority. It has all requisite corporate,
partnership or LLC power and authority to enter into this Agreement and to carry
out the transactions contemplated by, and perform its respective obligations
under, this Agreement.     (b)   Authorization. The execution and delivery of
this Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary corporate, partnership or LLC action on its part.  
  (c)   Binding Obligation. Subject to the provisions of sections 1125 and 1126
of the Bankruptcy Code, if applicable, this Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms,
except to the extent that enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to the rights of a
creditor against a debtor, or by equitable principles relating to
enforceability.

     10. Further Acquisition of Claims. This Agreement shall in no way be
construed to preclude any Executing Senior Secured Creditor from acquiring
additional claims based on obligations owed under the Senior Credit Agreement.
However, any such additional claims so

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acquired will automatically be deemed to be Relevant Claims and to be subject to
the terms of this Agreement.
     11. Amendments. This Agreement may not be modified, amended or supplemented
without the prior written consent of HGF, ABE, the Bondholder and the Executing
Senior Secured Creditors.
     12. Impact of Appointment to Creditors Committee. If any official creditors
committee is appointed by the United States Trustee in the Chapter 11 Case and
the United States Trustee appoints the Bondholder or any Executing Senior
Secured Creditor to be a member of such official committee pursuant to section
1102 of the Bankruptcy Code, then the fact of such service on such committee
shall not otherwise affect the continuing obligations of the Bondholder or such
Executing Senior Secured Creditor under this Agreement or the validity or
enforceability of this Agreement; provided, however, that nothing contained
herein shall prevent the Bondholder or such Executing Senior Secured Creditor,
in its capacity as a member of such official committee, from acting in a manner
consistent with its fiduciary duties as a member of such official committee.
     13. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision that would require the application of
the law of any other jurisdiction. By its execution and delivery of this
Agreement, each of the Parties hereby irrevocably and unconditionally agrees for
itself that any legal action, suit or proceeding against it with respect to any
matter under or arising out of or in connection with this Agreement or for
recognition or enforcement of any judgment rendered in any such action, suit or
proceeding, may be brought in the United States District Court for the Southern
District of New York. By execution and delivery of this Agreement, each of the
Parties hereby irrevocably accepts and submits itself to the nonexclusive
jurisdiction of such court, generally and unconditionally, with respect to any
such action, suit or proceeding. Notwithstanding the foregoing consent to New
York jurisdiction, upon the commencement of the Chapter 11 Case, each of the
Parties hereby agrees that the Bankruptcy Court shall have exclusive
jurisdiction over all matters arising out of or in connection with this
Agreement.
     14. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
     15. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives.
     16. Prior Negotiations. This Agreement and the Term Sheet supersede all
prior negotiations with respect to the subject matter hereof.
     17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement. This Agreement may be executed by
facsimile, pdf or other electronic transmission of signatures.

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     18. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties and no other person or
entity shall be a third-party beneficiary hereof.
     19. Consideration. It is hereby acknowledged by the parties hereto that no
consideration shall be due or paid to the Bondholder or the Executing Senior
Secured Creditors for their agreement to vote to accept the Plan in accordance
with the terms and conditions of this Agreement other than ABE’s and HGF’s
agreement to use commercially reasonable efforts to obtain approval of the
Prepetition Disclosure or the Disclosure Statement and commercially reasonable
efforts to confirm the Plan in accordance with the terms and conditions of this
Agreement and the Term Sheet.
     20. No Waiver of Participation and Reservation of Rights. Except as
expressly provided in this Agreement, nothing contained herein is intended to,
or does, in any manner waive, limit, impair or restrict the ability of the
Bondholder or the Executing Senior Secured Creditors to protect or preserve
their rights, remedies and interests, including, without limitation, their
claims against HGF or their full participation in any case filed by or against
HGF or any of its affiliates under the Bankruptcy Code. If the Restructuring and
the transactions contemplated by this Agreement, including, without limitation,
the Plan, are not consummated, or if this Agreement is terminated for any
reason, then the Bondholder and the Executing Senior Secured Creditors, as well
as the other Parties, fully reserve any and all of their rights, remedies,
interests and claims against the other Parties.
[Remainder of this page is blank]

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
and delivered by its duly authorized officer as of the date first above written.

            HEARTLAND GRAIN FUELS, L.P.
      By:   Dakota Fuels, Inc.         Its general partner            By:   /s/
Richard R. Peterson         Name:   Richard R. Peterson        Title:  
CEO/President            ADVANCED BIOENERGY, LLC
      By:   /s/ Richard R. Peterson         Name:   Richard R. Peterson       
Title:   CEO/President       BANCO SANTANDER, S.A., NEW YORK BRANCH,
as Senior Secured Creditor             By:   /s/ Jorge Saavedra        Name:
Jorge Saavedra        Title:   Executive Director              By:   /s/ Jesus
Lopez         Name:   Jesus Lopez        Title:   Senior Vice President   

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            COÖPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH,
as Senior Secured Creditor
      By:   /s/ Andrew Sherman        Name:   Andrew Sherman        Title:  
Executive Director              By:   /s/ John McMahon         Name:   John
McMahon        Title:   Managing Director        FARM CREDIT BANK OF TEXAS,
as Senior Secured Creditor
      By:   /s/ Alan Robinson        Name:   Alan Robinson        Title:   Vice
President        KEB NY FINANCIAL CORP.,
as Senior Secured Creditor
      By:   /s/ Yeon Hak Jeong        Name:   Yeon Hak Jeong        Title:  
President              By:   /s/ Seung Bum Woo         Name:   Seung Bum Woo   
    Title:   Senior Vice President   

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            MARSHALL FINANCIAL GROUP, LLC,
a Delaware limited liability company,
as Senior Secured Creditor
      By:   OUTSOURCE SERVICES  MANAGEMENT, LLC,
a Nevada  limited liability company, as Attorney-In-Fact for Marshall Financial
Group, LLC            By:           Name:           Title:           NORDKAP
BANK AG,
as Senior Secured Creditor
      By:   /s/ Gerig        Name:   Gerig        Title:   CIO             
By:   /s/ Alig         Name:   Alig        Title:   CFO        WESTLB AG, NEW
YORK BRANCH,
as Senior Secured Creditor
      By:   /s/ E. Keith Min        Name:   E. Keith Min        Title:  
Managing Director              By:   /s/ Dominick D’Ascoli         Name:  
Dominick D’Ascoli        Title:   Director   

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            OPPENHEIMER ROCHESTER NATIONAL
MUNICIPALS, as Bondholder
      By:   /s/ Richard Stein         Name:   Richard Stein        Title:   Vice
President   

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Exhibit A
Term Sheet
Terms of Restructuring of HGF Senior Credit Agreement with Senior Secured
Creditors and HGF Subordinate Solid Waste Facilities Revenue Bonds
The following sets forth the terms of a restructuring of the obligations of
Heartland Grain Fuels, L.P. under (a) the Senior Credit Agreement, dated as of
October 1, 2007, among Heartland Grain Fuels, L.P. as Borrower, the Lenders
referred to therein and WestLB AG, New York Branch, as Administrative Agent for
the Lenders (the “Administrative Agent”), Collateral Agent for the Senior
Secured Parties (the “Collateral Agent”), Issuing Bank with respect to the
Letters of Credit, and Lead Arranger, Sole Bookrunner and Syndication Agent (as
amended and supplemented, the “Senior Credit Agreement”), and (b) the
Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P.
Ethanol Plant Project) Series 2007A (the “Bonds”) issued by Brown County, South
Dakota (the “Issuer”) under that certain Bond Trust Indenture, dated as of
October 1, 2007 (the “Indenture”), between the Issuer and Wells Fargo Bank,
National Association, in its capacity as trustee of the Bonds (the “Trustee”).
Capitalized terms used herein but not otherwise defined have the meanings given
to them in the Senior Credit Agreement.
Definitions
“ABE” means Advanced BioEnergy, LLC, a Delaware limited liability company.
“Bondholder” means the sole holder of the Bonds.
“Closing” means the closing of the restructuring contemplated by this Term
Sheet.
“Definitive Documents” has the meaning given in paragraph 15 below.
“HGF” means Heartland Grain Fuels, L.P., a Delaware limited partnership, which
prior to the Closing will be converted to a Delaware limited liability company.
“Monthly Date” means the last business day of each month.
“Quarterly Payment Date” means each of March 31, June 30, September 30 and
December 31.
“Restructuring Agreement” has the meaning given in paragraph 1 below.
“Senior Secured Creditors” means WestLB and the other lenders and agents
referred to in the Senior Credit Agreement (for themselves and, in certain
cases, on behalf of the interest rate protection providers referred to in the
Senior Credit Agreement).
“WestLB” means WestLB AG, New York Branch.

 

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Terms and Conditions

1.   Restructuring Agreement. The Senior Secured Creditors, the Issuer, the
Trustee, the Bondholder, ABE and HGF would enter into a restructuring agreement
(which may be in the form of a plan of reorganization in the event that HGF
files a chapter 11 petition) consistent with the terms and conditions described
herein and such other terms and conditions as may be agreed to by the parties
(the “Restructuring Agreement”). The Restructuring Agreement would contemplate a
release and discharge of the Indenture, Bonds and all related agreements and an
amendment of the Senior Credit Agreement on terms consistent with those set
forth below. If the parties are unable to obtain the requisite approval of the
Senior Secured Creditors and the Bondholder to the Restructuring Agreement,
then, on or before April 26, 2010, and provided that a lock-up agreement has
been entered into in accordance with paragraph 14 below, HGF will file a
voluntary petition commencing a prepackaged or prenegotiated case under
Chapter 11 of Title 11 of the U.S. Code (the “Bankruptcy Code”).   2.  
Conversion to LLC. HGF will be converted into a Delaware limited liability
company at or prior to the Closing. ABE, either directly or through one or more
of its subsidiaries, will be the sole member of HGF.   3.   Payments by HGF. As
a condition to the Closing, HGF would be required (a) to apply an amount equal
to the sum of $10.0 million in cash (to be contributed by ABE to HGF in
accordance with paragraph 4 below) plus $5 million from its existing cash
reserves to pay Outstanding Principal Obligations in accordance with paragraph
7(a) below, and (b) if the Closing has not occurred before April 1, 2010, to pay
to the Lenders a fee of $10,000 per day, which will accrue starting on April 1,
2010 until the Closing and will be payable at the Closing (such amount and fee
collectively, the “Closing Payments”).   4.   Payments by ABE. As a condition to
the Closing, ABE will contribute to HGF an amount equal to the sum of (a)
$10.0 million in cash, which HGF will apply in accordance with paragraph 3
above, plus (b) $2.25 million, which HGF will apply in accordance with paragraph
5 below.   5.   Payment on Bonds and Satisfaction. At the Closing, (a) the
Bondholder would receive a payment from HGF of $2.25 million in full
satisfaction of the debt owed under the Bonds and all related financing
documents, as well as payment of certain other funds held by Trustee, (b) the
Trustee would transfer to the Administrative Agent for the account of the
Lenders an amount equal to $172,948.56, representing 50% of certain disputed
interest payments that HGF previously transferred to the Trustee and such amount
shall be applied towards interest accrued and unpaid under the Senior Credit
Agreement prior to the Closing, and (c) the Bonds and all related financing
documents, and all obligations of HGF, ABE, Dakota Fuels, Inc. and ABE
Heartland, LLC thereunder, shall be terminated and cancelled.

 

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6.   Restructuring Fee. On the earlier of the Final Maturity Date and the date
on which the Loans are repaid in full, HGF would be required to pay a $3 million
restructuring fee to the Lenders (the “Restructuring Fee”).   7.   Adjustments
to Indebtedness under Senior Credit Agreement. The outstanding obligations under
the Senior Credit Agreement immediately before the Closing Payments are made
consist of Term Loans in an aggregate principal amount of $87,979,000, Working
Capital Loans in an aggregate principal amount of $7,100,000 and Swap
Termination Value under outstanding Interest Rate Protection Agreements in an
aggregate amount of $4,212,550 (such amounts collectively, the “Outstanding
Principal Obligations”). In consideration for the Closing Payments and the
Restructuring Fee:

  a.   at the Closing, the Closing Payments would be applied to repay the
Outstanding Principal Obligations on a pro rata basis;     b.   the remaining
amount of Outstanding Principal Obligations following such repayments, i.e.,
$84,291,550, would be deemed Term Loans and would be allocated to each of the
Lenders on a pro rata basis based on the amount of such remaining Outstanding
Principal Obligations held by that Lender or its Affiliate that is an Interest
Rate Protection Provider as set forth on Annex I hereto;     c.   interest
accrued through the Closing on outstanding Term Loans and Working Capital Loans,
and any Net Swap Payments owing to any Interest Rate Protection Provider, would
be reduced to zero;     d.   interest rates applicable to the Loans would be
amended as follows:

  i.   for the period from the Closing through the second anniversary of the
Closing, interest would be payable at a rate of 150 basis points per annum plus
LIBOR;     ii.   for the period from the second anniversary of the Closing
through the third anniversary of the Closing, interest would be payable at a
rate of 300 basis points per annum plus LIBOR; and     iii.   after the third
anniversary of the Closing, interest would be payable at a rate of 400 basis
points per annum plus LIBOR;

  e.   the Borrower would be permitted to enter into a prepaid interest rate cap
for the Term Loans on terms acceptable to the Required Lenders;     f.   the
Final Maturity Date would be extended to March 31, 2016; and

 

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  g.   commencing on the first Quarterly Payment Date after the Closing,
outstanding principal on the Loans would be repaid pursuant to quarterly
scheduled payments of $750,000, quarterly cash sweeps as provided in the Revenue
Account Waterfall described below and a payment on the final maturity date of
all remaining amounts.

8.   Debt Service Reserve Account. The Debt Service Reserve Account will be
funded and replenished in accordance with the Revenue Account Waterfall
described below. If, on any date, amounts are withdrawn from the Debt Service
Reserve Account to cover any shortfall in the amounts available at
sub-paragraphs (c), (d) or (e) of the Revenue Account Waterfall to pay the
obligations described therein, then, no later than the second Quarterly Payment
Date following such date, the Borrower shall ensure that the Debt Service
Reserve Account is fully funded to the Debt Service Reserve Required Amount
(which will not be less than $3 million).   9.   Working Capital Reserve
Account. The Working Capital Reserve Account will be funded with up to
$4 million (the “WCR Required Amount”) and replenished in accordance with the
Revenue Account Waterfall described below. In addition, at the Closing the
Working Capital Reserve Account will also be funded, in accordance with the
Revenue Account Waterfall described below, with up to an additional $2 million
to pay costs of the Huron rail project that is currently anticipated to be
completed in the spring of 2010.   10.   Revenue Account Waterfall. All revenues
shall be applied in the following order (the “Revenue Account Waterfall”):

  a.   At the Closing and on each Monthly Date (or, with respect to the cost of
corn and natural gas, on any date), an amount equal to the budgeted operation
and maintenance expenses that are then due and payable or (except with respect
to the cost of corn and natural gas) will become due and payable during the
immediately succeeding calendar month (or, in the case of the Closing, during
the remainder of the then-current calendar month, if any), subject in each case
(other than with respect to the cost of corn and natural gas) to an agreed
budget variance, will be transferred to a dedicated project account to pay such
expenses;     b.   On each Monthly Date, an amount equal to the maintenance
capital expenses that are or will become due and payable during the immediately
succeeding calendar month (subject to Independent Engineer approval for expenses
that would exceed $500,000 during the then current Fiscal Year) will be
transferred to a dedicated project account to pay such expenses;     c.   On any
date, to pay fees, costs and expenses that are then due and payable in
accordance with the Senior Credit Agreement;

 

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  d.   On any date, to pay interest on the Loans that is then due and payable in
accordance with the Senior Credit Agreement and on the Closing Date to pay the
cost of any interest rate cap;     e.   On each Quarterly Payment Date, to make
scheduled principal payments on the Loans in accordance with the Senior Credit
Agreement;     f.   On the Closing Date and each Quarterly Payment Date, to fund
the Debt Service Reserve Account up to the Debt Service Reserve Required Amount;
    g.   On the Closing Date and each Quarterly Payment Date, to fund the
Working Capital Reserve Account to the WCR Required Amount and, on the Closing
Date only, to fund the Working Capital Reserve Account in an additional amount
up to $2 million to pay costs of the Huron rail project;     h.   On each
Quarterly Payment Date, provided no Default or Event of Default has occurred and
is continuing, to release a tax distribution to equity holders;     i.   On each
Quarterly Payment Date, to prepay the Loans in an amount equal to (x) 100% of
the cash remaining after item (h) or (y) after the outstanding principal on the
Loans is paid down to $25 million, 75% of the cash remaining after item (h); and
    j.   On or within 30 days following each Quarterly Payment Date, immediately
upon the satisfaction of the Release of Equity Distributions conditions
described below, all cash available may be used to make equity distributions.

11.   Release of Equity Distributions. On a quarterly basis, equity
distributions (excluding the tax distribution permitted in item (h) of the
Revenue Account Waterfall) may be made subject to, without limitation, (i) no
Default or Event of Default existing or resulting from the equity distribution,
(ii) the Debt Service Reserve Account being fully funded, (iii) the Working
Capital Reserve Account being funded to the WCR Required Amount, (iv) each of
the Historical Debt Service Coverage Ratio and the Prospective Debt Service
Coverage Ratio (as each such term is defined in the Senior Credit Agreement)
being greater than or equal to 1.5:1.0 and (v) no more than $25 million of
principal being outstanding on the Loans.   12.   Management Agreement. At the
Closing, HGF would enter into a management agreement with ABE to provide
management services to HGF for $80,000 per month during the first full twelve
months after Closing, and for each month thereafter, two cents per gallon
multiplied by the actual number of gallons of denatured ethanol produced for the
calendar month most recently ended, in each

 

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    case payable in arrears, and containing such other terms as may be agreed to
by ABE, HGF and the Senior Secured Creditors.   13.   Claims of Other Creditors.
All undisputed, liquidated and matured claims of HGF’s creditors other than the
claims of the Bondholder and the Senior Secured Creditors will be paid in full
in the ordinary course of business or pursuant to the Restructuring Agreement in
the event of a bankruptcy filing by HGF.   14.   Lock-Up Agreement. As soon as
practicable after the acceptance of this term sheet by ABE, HGF, the Bondholder
and a simple majority of the Lenders holding at least two-thirds of the amounts
outstanding under the Senior Credit Agreement, the parties will work in good
faith to enter into a binding agreement (the “Lock-Up Agreement”) which will
obligate ABE, HGF, the Bondholder and such Lenders, subject to appropriate
exceptions, to work in good faith to effectuate the transactions contemplated by
this term sheet and to vote for a plan of reorganization that contains the terms
set forth in this term sheet.   15.   Definitive Documents. The transactions
contemplated by the above terms would be effected by mutually agreed agreements,
instruments and other documents as may be deemed reasonably necessary by ABE,
HGF, the Administrative Agent, the Senior Secured Creditors, the Trustee, the
Issuer and the Bondholder to consummate the foregoing transactions (such
agreements, instruments and other documents collectively, the “Definitive
Documents”).   16.   Approvals. The Definitive Documents are subject to the
internal credit approvals of each of the Senior Secured Creditors and board
approval by each of the other parties.

This Term Sheet is subject to negotiation and execution of the Definitive
Documents described above. Unless and until such Definitive Documents are
executed by and delivered to the parties thereto, none of the parties shall have
any obligations with respect to the above-referenced terms or the transactions
contemplated herein except as set forth in the Lock-Up Agreement.

 

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ANNEX I

                      PRINCIPAL     % OF TOTAL   LENDER   AMOUNT     FACILITIES
 
WESTLB AG, NEW YORK BRANCH.
    21,440,570       25.4362 %
BANCO SANTANDER, S.A.
    14,682,240       17.4184 %
FARM CREDIT BANK.OF TEXAS
    8,234,619       9.7692 %
KEB NY FINANCIAL CORP.
    1,646,924       1.9538 %
MARSHALL FINANCIAL GROUP, LLC
    7,164,118       8.4992 %
NORDKAP BANK AG
    8,234,619       9.7692 %
RABOBANK NEDERLAND,NEW YORK BRANCH
    22,888,461       27.1539 %
 
           
Total
    84,291,550       100.0000 %