Filed by Bowne Pure Compliance





Exhibit 10.2




	 	 	 	 	 	 	 
	MinnErgy, , LLC

	 	Winona National Bank	 	 	 	 
	8 N Front St NW

	 	204 Main St PO Box 499
	 	Loan Number
	 	 71490 
	PO Box 86

	 	Winona, MN 55987
	 	Date
	 	 06/06/08 
	 	 	 	 	 
	Eyota MN 55934

	 	 	 	Maturity Date
	 	 10/06/09 
	 

	 	 	 	Loan Amount
	 	 $2,040,000.00 
	 

	 	 	 	Renewal Of
	 	 71490 
	BORROWER’S NAME AND ADDRESS

	 	LENDER’S NAME AND ADDRESS	 	 	 	 
	“I” includes each borrower
above, jointly and
severally.

	 	“You” means the lender, its successors and assigns.	 	 	 	 






For value received, I promise to pay to you, or your order, at your address listed above the
PRINCIPAL sum of _____________ 

Two million forty thousand & no/100

 _______________________________________________________________
Dollars      $2,040,000.00     




			
	þ	 	Single Advance: I will receive all of this principal sum on      06/06/08     .
No additional advances are contemplated under this note.







			
	o	 	Multiple Advance: The principal sum shown above is the
maximum amount of principal I can borrow under this note. On ____________
I will receive the amount of $__________________ and future principal advances are contemplated.






	 	 	 	 	 
	 

	 	Conditions: The conditions for future advances are
	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 	 	 
	 

	 	 	 	 
	 	 	 






	 	 	 	 	 
	 

	 	o
	 	Open End Credit: You and I agree that I may borrow up to the maximum principal sum
more than one time This feature is subject to all other conditions and expires on
 ______________________________ 

	 

	 	þ
	 	Closed End Credit: You and I agree that I may borrow (subject to all other conditions) up
to the maximum principal sum only one time.







			
	INTEREST:	 	I agree to pay interest on the outstanding principal balance from      JUNE 06, 2008     
at the rate of      4.13%      per year until      OCTOBER 06, 2009     .







			
	o	 	Variable Rate: This rate may then change as stated below.






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	o
	 	Index Rate: The future rate will be	 	the following index rate:	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	o	 	No Index: The future rate will not be subject to any internal or external index. It will be entirely in your control.






	 	 	 	 	 	 	 
	 

	 	o
	 	Frequency and Timing: The rate on this note may change as often as
	 	 
	 

	 	 	 	 	 	 






	 	 	 	 	 
	 

	 	A change in the interest rate will take effect
	 	 
	 

	 	 	 	 






	 	 	 	 	 
	    
	 	o	 	Limitations: During the term of this loan, the applicable annual interest rate will not be more than
 _______________ 
% or less than ____________%. The rate may not change more than ____________
% each ____________

	 	 	Effect of Variable Rate: A change in the interest rate will have the following effect on the payments:
	 

	 	o
	 	The amount of each scheduled payment will change.
     
o The amount of the final payment will change.
	 

	 	o
	 	 
 







ACCRUAL METHOD: Interest will be calculated on a      Actual/365      basis.




POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note owing after
maturity, and until paid in full, as stated below:




	 	 	 	 	 
	 
	 	þ	 	on the same fixed or variable rate basis in effect before maturity (as indicated above).






	 	 	 	 	 	 	 
	 	 	o
	 	at a rate equal to	 	 
	 	 	 
	 	 	 	 







			
	þ	 	LATE CHARGE: If a payment is made more than
_____ days after it is due, I agree to pay a late charge of ____________







			
	þ	 	ADDITIONAL CHARGES: In addition to interest, I agree to pay the following charges which o are
þ are not included in the principal amount Above:      SEE DISBURSEMENT AUTHORIZATION     







			
	þ	 	AUTHORITY: The interest rate and other charges for this loan are authorized
by      Winona National Bank     






PAYMENTS: I agree to pay this note as follows:





			
	þ	 	Interest: I agree to pay accrued interest      Monthly Beginning — JULY 06, 2008     







			
	þ	 	Principal: I agree to pay the principal      At Maturity — OCTOBER 06, 2009     







			
	o	 	Installments: I agree to pay this note in _______ payments.
The first payment will be in the amount of $__________________ and will be due A payment of
$__________________ will be due ___________________
thereafter. The final payment of the entire
unpaid balance of principal and interest will be due ____________________.






PURPOSE: The purpose of this loan is RENEWAL OF NOTE USED TO PURCHASE LAND FOR CONSTRUCTION OF
ETHANOL PLANT

ADDITIONAL TERMS:




*** ANNUAL BUSINESS FINANCIAL STATEMENT OF MINNERGY, LLC




*** ANNUAL CORPORATE TAX RETURN OF MINNERGY, LLC.




*** REFER TO THE GUARANTIES OF DANIEL H. ARNOLD, CHRISTOPHER L. ARNOLD, DAVID H.
ARNOLD, TONY WASINGER, MICHAEL A. DALEY, DANIEL L. FLORNESS , BERTHA M. KOCH, RONALD L.
SCHERBRING, HARLAND P. KNIGHT, RICHARD J. MIKRUT AND ALL AMERICAN CO-OP ALL DATED
4/11/08.


 


 









 





SECURITY




SECURITY INTEREST: I give you a security interest in all of the Property described below that I own
or have sufficient rights in which to transfer an interest, now or in the future, wherever the
Property is or will be located, and all proceeds and products of the Property. “Property” includes
all parts, accessories, repairs, replacements, improvements, and accessions to the Property; any
original evidence of title or ownership; and all obligations that support the payment or
performance of the Property. “Proceeds” includes anything acquired upon the sale, lease, license,
exchange, or other disposition of the Property; any rights and claims arising from the Property;
and any collections and distributions on account of the Property.



o       Accounts and Other Rights to Payment: All rights to payment, whether or not earned by
performance, including, but not limited to, payment for property or services sold, leased, rented,
licensed, or assigned. This includes any rights and interests (including all liens) which I have by
law or agreement against any account debtor or obligor.



o       Inventory: All inventory held for ultimate sale or lease, or which has been or will be
supplied under contracts of service, or which are raw materials, work in process, or materials used
or consumed in my business.



o       Equipment: All equipment including, but not limited to, machinery, vehicles, furniture,
fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record
keeping equipment, parts, and tools. The Property includes any equipment described in a list or
schedule I give to you, but such a list is not necessary to create a valid security interest in all
of my equipment.



o       Instruments and Chattel Paper: All instruments, including negotiable instruments and
promissory notes and any other writings or records that evidence the right to payment of a monetary
obligation, and tangible and electronic chattel paper.



o       General Intangibles: All general intangibles including, but not limited to, tax refunds,
patents and applications for patents, copyrights, trademarks, trade secrets, goodwill, trade names,
customer lists, permits and franchises, payment intangibles, computer programs ,and all
supporting information provided in connection with a transaction relating to computer programs, and
the right to use my name.



o       Documents: All documents of title including, but not limited to bills of lading, dock
warrants and receipts, and warehouse receipts.



o       Farm Products and Supplies: All farm products including, but not limited to, all poultry
and livestock and their young, along with their produce, products, and replacements; all crops,
annual or perennial, and all products of the crops; and all feed, seed, fertilizer, medicines, and
other supplies used or produced in my farming operations.



o       Government Payments and Programs: All payments, accounts, general intangibles, and benefits
including, but not limited to, payments in kind, deficiency payments, letters of entitlement,
warehouse receipts, storage payments, emergency assistance and diversion payments, production
flexibility contracts, and conservation reserve payments under any preexisting, current, or future
federal or state government program.



o       Investment Property: All investment property including, but not limited to, certificated
securities, uncertificated securities, securities entitlements, securities accounts, commodity
contracts, commodity accounts, and financial assets.



o      Deposit Accounts: All deposit accounts including, but not
limited to, demand, time, savings, passbook, and similar accounts.




			
	þ	 	Specific Property Description: The Property includes, but is not limited by, the following:

     1ST MORTGAGE ON 175 ACRE PROPERTY LOCATED IN SECTION 15, EYOTA

     TOWNSHIP IN OLMSTEAD COUNTY, MN

     PARCEL NO’S #62.10.33.032684; 62.15.21.073955 AND 62.15.24.073956.






	 	 	 
	If this agreement covers timber to be cut, enter real estate description and record owner information:

	 	 
	 

	 	 
	 
	 	 
	 
	 
	 	 
	 
	 
	 	 
	 






The Property will be used for a o personal þ business o agricultural o
 ________________________________ 
purpose.




Borrower/Owner State of organization/registration (if applicable)      MINNESOTA     




ADDITIONAL TERMS OF THE SECURITY AGREEMENT




GENERALLY — This agreement secures this note and any other debt I have with you, now or later.
However, it will not secure other debts if you fail with respect to such other debts, to make any
required disclosure about this security agreement or if you fail to give any required notice of the
right of rescission. If property described in this agreement is located in another state, this
agreement may also, in some circumstances, be governed by the law of the state in which the
Property is located.



NAME AND LOCATION — My name indicated on page 1 is my exact legal name. If I am an individual, my
address is my principal residence. If I am not an individual, my address is the location of my
chief executive offices or sole place of business. If I am an entity organized and registered under
state law, my address is located in the state in which I am registered, unless otherwise indicated
on page 2. I will provide verification of registration and location upon your request. I will
provide you with at least 30 days notice prior to any change in my name, address, or state of
organization or registration,




OWNERSHIP AND DUTIES TOWARD PROPERTY — I represent that I own all of the Property, or to the extent
this is a purchase money security interest I will acquire ownership of the Property with the
proceeds of the loan. I will defend it against any other claim. Your claim to the Property is ahead
of the claims of any other creditor. I agree to do whatever you require to protect your security
interest and to keep your claim in the Property ahead of the claims of other creditors. I will not
do anything to harm your position. I will not use the Property for a purpose that will violate any
laws or subject the Property to forfeiture or seizure.




I will keep books, records and accounts about the Property and my business in general. I will
let you examine these records at any reasonable time. I will prepare any report or accounting you
request, which deals with the Property.



I will keep the Property in my possession and will keep it in good repair and use it only for
the purpose(s) described on page 1 of this agreement. I will not change this specified use without
your express written permission. I represent that I am the original owner of the Property and, if I
am not, that I have provided you with a list of prior owners of the Property.


 


 









 





I will keep the Property at my address listed on page 1 of this agreement, unless we agree I
may keep it at another location. If the Property is to be used in another state, I will give you a
list of those states. I will not try to sell the Property unless it is inventory or I receive your
written permission to do so. If I sell the Property I will have the payment made payable to the
order of you and me.



You may demand immediate payment of the debt(s) if the debtor is not a natural person and
without your prior written consent; (1) a beneficial interest in the debtor is sold or transferred,
or (2) there is a change in either the identity or number of members of a partnership, or (3) there
is a change in ownership of more than 25 percent of the voting stock of a corporation.



I will pay all taxes and charges on the Property as they become due. You have the right of
reasonable access in order to inspect the Property. I will immediately inform you of any loss or
damage to the Property.



If I fail to perform any of my duties under this security agreement, or any mortgage, deed of
trust, lien or other security interest, you may without notice to me perform the duties or cause
them to be performed. Your right to perform for me shall not create an obligation to perform and
your failure to perform will not preclude you from exercising any of your other rights under the
law or this security agreement.



PURCHASE MONEY SECURITY INTEREST — For the sole purpose of determining the extent of a purchase
money security interest arising under this security agreement: (a) payments on any nonpurchase
money loan also secured by this agreement will not be deemed to apply to the Purchase Money Loan,
and (b) payments on the Purchase Money Loan will be deemed to apply first to the nonpurchase money
portion of the loan, if any, and then to the purchase money obligations in the order which the
items of collateral were acquired or if acquired at the same time, in the order selected by you. No
security interest will be terminated by application of this formula. “Purchase Money Loan” means
any loan the proceeds of which, in whole or in part, are used to acquire any collateral securing
the loan and all extensions, renewals, consolidations and refinancing of such loan.



PAYMENTS BY LENDER — You are authorized to pay, on my behalf, charges I am or may become obligated
to pay to preserve or protect the secured property (such as property insurance premiums). You may
treat those payments as advances and add them to the unpaid principal under the note secured by
this agreement or you may demand immediate payment of the amount advanced.




INSURANCE — I agree to buy insurance on the Property against the risks and for the amounts you
require and to furnish you continuing proof of coverage. I will have the insurance company name you
as loss payee on any such policy. You may require added security if you agree that insurance
proceeds may be used to repair or replace the Property. I will buy insurance from a firm licensed
to do business in the state where you are located. The firm will be reasonably acceptable to you.
The insurance will last until the Property is released from this agreement. If I fail to buy or
maintain the insurance (or fail to name you as loss payee) you may purchase it yourself.




WARRANTIES AND REPRESENTATIONS — If this agreement includes accounts, I will not settle any account
for less than its full value without your written permission. I will collect all accounts until you
tell me otherwise. I will keep the proceeds from all the accounts and any goods which are returned
to me or which I take back in trust for you. I will not mix them with any other property of mine. I
will deliver them to you at your request. If you ask me to pay you the full price on any returned
items or items retaken by myself, I will do so. You may exercise my rights with respect to
obligations of any account debtors, or other persons obligated on the Property, to pay or perform,
and you may enforce any security interest that secures such obligations.




Any person who signs within this box does so to give you a security interest in the Property
described on this page. This person does not promise to pay the note. “I” as used in this
security agreement will include the borrower and any person who signs within this box.



	 	 	 	 	 	 	 
	Date

	 	 
	 	Signed
	 	 
	 

	 	 
	 	 	 	 






If this agreement covers inventory, I will not dispose of it except in my ordinary course of
business at the fair market value for the Property, or at a minimum price established between you
and me.



If this agreement covers farm products I will provide you, at your request, a written list of
the buyers, commission merchants or selling agents to or through whom I may sell my farm products.
In addition to those parties named on this written list, I authorize you to notify at your sole
discretion any additional parties regarding your security interest in my farm products. I remain
subject to all applicable penalties for selling my farm products in violation of my agreement with
you and the Food Security Act. In this paragraph the terms farm products, buyers, commission
merchants and selling agents have the meanings given to them in the Federal Food Security Act of
1985.



If this agreement covers chattel paper or instruments, either as original collateral or
proceeds of the Property, I will note your interest on the face of the chattel paper or
instruments.



REMEDIES — I will be in default on this security agreement if I am in default on any note this
agreement secures or if I fail to keep any promise contained in the terms of this agreement. If I
default, you have all of the rights and remedies provided in the note and under the Uniform
Commercial Code. You may require me to make the secured property available to you at a place which
is reasonably convenient. You may take possession of the secured property and sell it as provided
by law. The proceeds will be applied first to your expenses and then to the debt. I agree that 10
days written notice sent to my last known address by first class mail will be reasonable notice
under the Uniform Commercial Code. My current address is on page 1.



PERFECTION OF SECURITY INTEREST — I authorize you to file a financing statement covering the
Property. I will comply with, facilitate, and otherwise assist you in connection with obtaining
possession of or control over the Property for purposes of perfecting your security interest under
the Uniform Commercial Code.




ADDITIONAL TERMS OF THE NOTE




DEFINITIONS — As used on pages 1 and 2, “X” means the terms that apply to this loan. “I,” “me” or
“my” means each Borrower who signs this note and each other person or legal entity (including
guarantors, endorsers, and sureties) who agrees to pay this note (together referred to as “us”).
“You” or “your” means the Lender and its successors and assigns.



APPLICABLE LAW — The law of the state of Minnesota will govern this agreement. Any term of this
agreement which is contrary to applicable law will not be effective, unless the law permits you and
me to agree to such a variation. If any provision of this agreement cannot be enforced according to
its terms, this fact will not affect the enforceability of the remainder of this agreement. No
modification of this agreement may be made without your express written consent. Time is of the
essence in this agreement.




PAYMENTS — Each payment I make on this note will first reduce the amount I owe you for charges
which are neither interest nor principal. The remainder of each payment will then reduce accrued
unpaid interest, and then unpaid principal. If you and I agree to a different application of
payments, we will describe our agreement on this note. I may prepay a part of, or the entire
balance of this loan without penalty, unless we specify to the contrary on this note. Any partial
prepayment will not excuse or reduce any later scheduled payment until this note is paid in full
(unless, when I make the prepayment, you and I agree in writing to the contrary).




INTEREST — Interest accrues on the principal remaining unpaid from time to time, until paid in
full. If I receive the principal in more than one advance, each advance will start to earn interest
only when I receive the advance. The interest rate in effect on this note at any given time will
apply to the entire principal sum outstanding at that time. Notwithstanding anything to the
contrary, I do not agree to pay and you do not intend to charge any rate of interest that is higher
than the maximum rate of interest you could charge under applicable law for the extension of credit
that is agreed to in this note (either before or after
maturity). If any notice of interest accrual is sent and is in error, we mutually agree to correct
it, and if you actually collect more interest than allowed by law and this agreement, you agree to
refund it to me.



 


 









 





INDEX RATE — The index will serve only as a device for setting the interest rate on this note. You
do not guarantee by selecting this index, or the margin, that the interest rate on this note will
be the same rate you charge on any other loans or class of loans you make to me or other borrowers.



POST MATURITY RATE — For purposes of deciding when the “Post Maturity Rate” (shown on page 1)
applies, the term “maturity” means the date of the last scheduled payment indicated on page 1 of
this note or the date you accelerate payment on the note, whichever is earlier.




SINGLE ADVANCE LOANS — If this is a single advance loan, you and expect that you will make only one
advance of principal. However, you may add other amounts to the principal if you make any payments
described in the “PAYMENTS BY LENDER” paragraph on page 2.




MULTIPLE ADVANCE LOANS — If this is a multiple advance loan, you and I expect that you will make
more than one advance of principal. If this is closed end credit, repaying a part of the principal
will not entitle me to additional credit.




SET-OFF — I agree that you may set off any amount due and payable under this note against any right
I have to receive money from you. “Right to receive money from you” means:





	 	(1)	 	any deposit account balance I have with you;

	 
	 	(2)	 	any money owed to me on an item presented to you or in your possession for collection or
exchange; and

	 
	 	(3)	 	any repurchase agreement or other nondeposit obligation.






“Any amount due and payable under this note” means the total amount of which you are entitled
to demand payment under the terms of this note at the time you set off. This total includes any
balance the due date for which you properly accelerate under this note.



If my right to receive money from you is also owned by someone who has not agreed to pay this
note, your right of set-off will apply to my interest in the obligation and to any other amounts I
could withdraw on my sole request or endorsement. Your right of set-off does not apply to an
account or other obligation where my rights are only as a representative. It also does not apply to
any Individual Retirement Account or other tax-deferred retirement account.



You will not be liable for the dishonor of any check when the dishonor occurs because you set
off this debt against any of my accounts. I agree to hold you harmless from any such claims arising
as a result of your exercise of your right to set-off.



DEFAULT — I will be in default if any one or more of the following occur: (1) I fail to make a
payment on time or in the amount due; (2) I fail to keep the Property insured, if required; (3) I
fail to pay, or keep any promise, on any debt or agreement I have with you; (4) any other creditor
of mine attempts to collect any debt I owe him through court proceedings; (5) I die, am declared
incompetent, make an assignment for the benefit of creditors, or become insolvent (either because
my liabilities exceed my assets or I am unable to pay my debts as they become due); (6) I make any
written statement or provide any financial information that is untrue or inaccurate at the time it
was provided; (7) I do or fail to do something which causes you to believe you will have difficulty
collecting the amount I owe you; (8) any collateral securing this note is used in a manner or for a
purpose which threatens confiscation by a legal authority; (9) I change my name or assume an
additional name without first notifying you before making such a change; (10) I fail to plant,
cultivate and harvest crops in due season; (11) any loan proceeds are used for a purpose that will
contribute to excessive erosion of highly erodible land or to the conversion of wetland to produce
or to make possible the production of an agricultural commodity, further explained in 7 C.F.R. Part
1940, Subpart G, Exhibit M.




REMEDIES — If I am in default on this note you have, but are not limited to, the following
remedies:





	 	(1)	 	You may demand immediate payment of all I owe you under this note (principal, accrued
unpaid interest and other accrued unpaid charges).

	 
	 	(2)	 	You may set off this debt against any right I have to the payment of money from you,
subject to the terms of the “SET-OFF” paragraph herein.

	 
	 	(3)	 	You may demand security, additional security, or additional parties to be obligated to pay
this note as a condition for not using any other remedy.

	 
	 	(4)	 	You may refuse to make advances to me or allow purchases on credit by me.

	 
	 	(5)	 	You may use any remedy you have under state or federal law.

	 
	 	(6)	 	You may make use of any remedy given to you in any agreement securing this note.






By selecting any one or more of these remedies you do not give up your right to use later any other
remedy. By waiving your right to declare an event to be a default, you do not waive your right to
consider later the event a default if it continues or happens again.




COLLECTION COSTS AND ATTORNEY’S FEES — I agree to pay all costs of collection, replevin or any
other or similar type of cost if I am in . default. In addition, if you hire an attorney to collect
this note, I also agree to pay any fee you incur with such attorney plus court costs (except where
prohibited by law). To the extent permitted by the United States Bankruptcy Code, I also agree to
pay the reasonable attorney’s fees and costs you incur to collect this debt as awarded by any court
exercising jurisdiction under the Bankruptcy Code.



WAIVER — I give up my rights to require you to do certain things. I will not require you to:





	 	(1)	 	demand payment of amounts due (presentment);

	 
	 	(2)	 	obtain official certification of nonpayment (protest); or

	 
	 	(3)	 	give notice that amounts due have not been paid (notice of dishonor).






I waive any defenses I have based on suretyship or impairment of collateral.




OBLIGATIONS INDEPENDENT — I understand that I must pay this note even if someone else has also
agreed to pay it (by, for example, signing this form or a separate guarantee or endorsement). You
may sue me alone, or anyone else who is obligated on this note, or any number of us together, to
collect this note. You may without notice release any party to this agreement without releasing any
other party. If you give up any of your rights, with or without notice, it will not affect my duty
to pay this note. Any extension of new credit to any of us, or renewal of this note by all or less
than all of us will not release me from my duty to pay it. (Of course, you are entitled to only one
payment in full.) I agree that you may at your option extend this note or the debt represented by
this note, or any portion of the note or debt, from time to time without limit or notice and for
any term without affecting my liability for payment of the note. I will not assign my obligation
under this agreement without your prior written approval.




FINANCIAL INFORMATION — I agree to provide you, upon request, any financial statement or
information you may deem necessary. I warrant that the financial statements and information I
provide to you are or will be accurate, correct and complete




SIGNATURES: I AGREE TO THE TERMS OF THIS NOTE (INCLUDING THOSE ON PAGES 1 AND 2). I have received a
copy on today’s date.



	 	 	 
	MinnErgy, LLC
	 	 
	 
	 	 
	/s/ Daniel H. Arnold

	 	 
	 

	 	 
	DANIEL H. ARNOLD, CHAIR. OF THE BOARD
	 	 
	 

	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	 







			
	SIGNATURE FOR LENDER:	 	     /s/ David L. Vaselaar

 

     David L. Vaselaar

     SVP/Commercial Banking Manager