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

  






 

















 


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:

  	 

						






 


2

















 




	
   

  	
   

  	
  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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