Exhibit 10.1


 


November 20, 2008


 


Ms. Carol Larson, HR


Mr. Luke Schneider


Heron Lake BioEnergy LLC


91246 390th Avenue


Heron Lake, MN 56137


 


Dear Carol and Luke:


 


On behalf of CFO Systems, we
appreciated the opportunity to meet you and your accounting team, and to
present our credentials and proposal.  It
has been a pleasure learning about Heron Lake BioEnergy, your organization, and
your culture.


 


This letter agreement
expresses the understanding between Heron Lake BioEnergy, LLC (“you” or the “Company”)
and CFO Systems, LLC (“we” or “CFO Systems”) regarding the consulting services
we will provide you.  If the provisions
of this agreement are acceptable to you, please sign one copy of this letter
and return it to me at your earliest convenience.  The second original copy is for your files.


 


As
a condition of giving any member of the CFO Systems team access to you or your
files, CFO Systems will require that such person agree to be bound by the terms
of this agreement.  CFO Systems also
agrees that it will be responsible for the breach of this agreement by any such
person.


 


At this time, CFO Systems
anticipates assigning Brett L. Frevert, CPA to this project and using our other
personnel on an as-needed basis.  The
services described in this agreement will be provided on an independent
contractor basis.  Neither CFO Systems
nor Mr. Frevert (or any other person assigned to your project) is an
employee, partner, or co-venturer of, or in any other service relationship
with, the Company.


 


We
understand that neither CFO Systems nor any member of its team is authorized to
speak for, represent, or obligate the Company in any manner without the prior
authorization from the Company’s Chief Executive Officer which authorization
may be oral, by email, or in writing.  We
will not hold ourselves out as having such authority to any other person and we
will not enter into any agreement or incur any obligations on the Company’s
behalf, or commit the Company in any manner without the Company’s prior written
consent.  Because of our independent
contractor relationship, you are not obligated and will not obtain any workers’
compensation insurance for any person providing services under this
agreement.  Further, we understand that
neither CFO Systems nor any member of its team is entitled to participate in or
receive benefits under any group benefit plan maintained or sponsored by you.
CFO Systems will be solely responsible for all payroll and other taxes


 

















 


arising
from compensation and other amounts paid to it under this agreement.


 


During
the term of our engagement, we will comply with all of the Company’s written
policies and procedures which have been provided to us, including the Company’s
Procedures and Guidelines Governing Insider Trading and Tipping, as well as
direction given by the Company’s Board of Governors.  CFO Systems and any member of its team will
report to the Company’s Board of Governors, but may receive direction from, and
work with, the CEO on a day to day basis.


 


We will perform the services
described in this letter either at your office or at a location we specify, as
the circumstances require.


 


We have agreed to provide
the following services in the following areas:


 


·                  day-to-day leadership and oversight  for the Heron Lake BioEnergy finance
department.  As part of this role, we
will coach, train and guide your full-time staff.


 


·                  CFO-level expertise in areas such as the
annual audit, SEC filings, reports to members, lender reporting and tax
filings.


 


·                  Strategic planning, forecasting, and
budgeting.


 


We currently estimate that
the total hours for these services will be between 500 and 800 hours; we will
review the services provided on a bi-weekly basis.


 


We
bill for our services on an hourly basis for actual hours of service
provided.  You will be billed a rate equal
to $130/hour regardless of which member of the CFO Systems team performs the
services.  We will submit invoices on a
bi-weekly basis and payment will be due within two weeks of receipt.  You will use these invoices as one means of
evaluating our progress, and to set future goals.  In addition, you agree to reimburse us for
all actual reasonable and necessary expenditures that are directly related to
the services provided to you.  These
expenditures may include expenses related to travel (i.e. mileage, hotel,
meals, etc.), telephone calls, postal expenditures, equipment or office supply
purchases; provided,  however, that any single expenditure which
exceeds two hundred fifty dollars ($250) must be authorized by the Company’s
CEO or Human Resources Manager in writing prior to the expenditure.  We understand that the Company reserves the
right to refuse to reimburse us for any expenses that do not receive the
required pre-approval.


 


The
term of this agreement shall extend from the signing of this letter by both
parties until terminated by mutual agreement or until terminated by either
party upon fourteen (14) days notice to the other.  After 500 hours of services have been
provided, the Company and CFO Systems will meet to determine the need for
additional services.  Further, the
Company may terminate this agreement immediately for “cause” which means one or
more of the following by CFO Systems or any member of the team providing the
Company services:


 

















 


(i) any
fraud, misappropriation, theft, embezzlement or other material act of
dishonesty against the Company; (ii) any conviction of, or nolo contendere
plea to, a felony or gross misdemeanor; (iii) intentional or malicious
misconduct or other willful or wanton misconduct in the performance of the
services described in this agreement; (iv) illegal or dishonest acts; (v) any
public conduct that has or can reasonably be expected to have a detrimental
effect on the Company; or (vi) any material breach of this agreement.


 


Upon
the expiration or earlier termination of this agreement, you will pay us for
the hours of service accrued and unpaid through the date of expiration or
termination, as well as for any reimbursable expenses incurred through such
date and for which we have not received reimbursement.


 


CFO Systems hereby
agrees to indemnify and hold the Company, its employees, governors and
affiliates, harmless from and against all claims, damages, costs,
expenses, fines, or liabilities (including, without limitation, reasonable
attorneys’ fees and expenses) directly arising out of material breach of this
agreement by CFO Systems or any person providing services to the Company under
this agreement (with the violation of any of the covenants in Exhibit A
constituting a material breach), material violation of law or violation of
any policy of the Company by any of the foregoing, or willful misconduct by any
of the foregoing.  CFO Systems will not
be liable to the Company for any special, consequential, indirect or punitive
damages, except as CFO Systems may otherwise be obligated to indemnify the
Company against the same pursuant to this paragraph.  Neither termination of, nor completion
of the services under, this agreement shall affect these indemnification
provisions, which shall survive any such termination or completion and remain
operative and in full force and effect.


 


The
provisions relating to non-solicitation and protection of your confidential
information, which are set forth on the attached Exhibit A, will survive
any termination of this agreement and remain in full force and effect
thereafter.  The provisions relating to
confidentiality supersede and replace any previous agreement between CFO
Systems and the Company relating to confidentiality and non-disclosure of
information.


 


Brett
L. Frevert, by countersigning this agreement, agrees to serve as the Company’s
Interim Chief Financial Officer when appointed by, and at the pleasure of, the
Company’s Board of Governors.  Mr. Frevert
further acknowledges and agrees that in the capacity as Interim Chief Financial
Officer he will serve as the “principal financial officer” and “principal
accounting officer” of the Company.


 


This
agreement constitutes the complete agreement of the parties, setting forth the
entire understanding and agreement of the parties as to the subject matter
contained therein and supersedes all prior discussions and understandings in
respect to the subject of this agreement, whether written or oral.  This agreement shall be governed by and
construed in accordance with the substantive laws of the State of Minnesota,
without regard to the rules or


 

















 


statutes
of any jurisdiction with respect to conflict of laws.


 


As always, please feel free
to contact us immediately with any issues, concerns, or questions.  We appreciate the opportunity to work with
you, and are looking forward to our relationship with Heron Lake BioEnergy.


 


Sincerely,


 


	
  CFO Systems, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Brett L. Frevert

  	
   

  
	
   

  	
   

  
	
  Brett L Frevert, CPA

  	
   

  
	
  Managing Director

  	
   

  
	
  402 884 0066 ext. 102

  	
   

  
	
  bfrevert@cfosystemsllc.com

  	
   

  



 


 


ACCEPTED AND AGREED:


 


	
  Heron Lake BioEnergy, LLC

  
	
   

  
	
   

  
	
  By:

  	
    /s/ Robert J.
  Ferguson

  	
   

  
	
   

  	
   

  
	
   

  	
    Robert J.
  Ferguson

  
	
   

  	
    Chief
  Executive Officer

  
	
   

  
	
  Dated:

  	
      11/25/08

  	
   

  
	
   

  
	
  ACCEPTED
  AND AGREED:

  
	
   

  
	
   

  
	
      /s/  Brett
  L. Frevert

  	
   

  
	
   

  	
  Brett L. Frevert

  
	
   

  
	
  Dated:

  	
      11/25/08

  	
   

  
						



 

















 


This
is Exhibit A to that certain letter agreement entered into between Heron
Lake BioEnergy, LLC and CFO Systems, LLC dated November 20, 2008.  Capitalized terms in this Exhibit which
are not otherwise defined have the meanings assigned to them in the letter agreement.


 


EXHIBIT
A


CONFIDENTIAL
INFORMATION AND OTHER COVENANTS


 


1.             Definition.  “Confidential Information” means information
not generally known whether presently existing or developed in the future,
including trade secrets, about the Company’s methods, processes, technology,
intellectual property, products or services, inventions, vendor names, customer
lists, management systems, capitalization or funding, compensation structure,
and sales and marketing plans.  All information
disclosed to CFO Systems or to which we have access or which we generate on
behalf of the Company during the term of this agreement shall be presumed to be
Confidential Information.


 


2.             Exceptions.  The burden of establishing that any
information possessed by CFO Systems is not Confidential Information shall be
CFO System’s.  This burden shall be met
only if we are able to establish by clear and convincing evidence that the
information, free of any obligations of confidentiality:


 


(a)           became generally known or available
to the public other than as a result of a disclosure by CFO Systems or anyone
to whom we transmitted the information;


 


(b)           was available to CFO Systems on a
non-confidential basis prior to the Company’s disclosure to us (as evidenced by
written records of CFO Systems in existence prior to a disclosure by the
Company of the information involved); or


 


(c)           became available to CFO Systems on a
non-confidential basis from a source other than one who is bound by a
nondisclosure or confidentiality agreement or other obligation of secrecy with
respect to such information.


 


3.             Non-Disclosure.  In performing the services described in the
agreement, CFO Systems may be exposed to and will be required to use certain
Confidential Information of the Company. 
We agree that we will not use directly or indirectly, such Confidential
Information for the benefit of any person, entity or organization other than
the Company, or disclose such Confidential Information without the written
authorization of the Chief Financial Officer of the Company, either during or
after the term of this agreement, for as long as such information retains the
characteristics of Confidential Information.


 


4.             Ownership and Use. We agree
that all materials developed by CFO Systems on behalf of the Company in
connection with the services, or provided by or on behalf of the Company to CFO
Systems, whether or not conceived or provided by or on behalf of the Company
during our affiliation therewith, are and shall remain the exclusive property
of the Company, and we shall not copy, summarize or remove from the Company’s
premises such Confidential Information or material in whole or in part at any
time prior to or after termination except as permitted in writing by an officer
of the Company.  Promptly upon the
expiration or termination of this agreement, or upon the request of the
Company, we shall return to the Company all documents and tangible items,
including samples, provided to CFO Systems or


 

















 


created
by CFO Systems for use in connection with the services, including without
limitation all Confidential Information, together with all copies and abstracts
thereof.


 


5.             Use of Information.  Confidential Information furnished by the
Company to CFO Systems under this agreement shall be used by CFO Systems solely
for the purpose and furtherance of the services described in the agreement and
will be treated by CFO Systems with at least the same degree of care as we
accord our own confidential and proprietary information.  We shall not disclose Confidential
Information except to those employees and representatives of the Company who
are required to have the Confidential Information in order to perform their
respective duties in connection with the services.


 


6.             Non-Solicitation Covenant.  In consideration of CFO System’s engagement
as a consultant of the Company and the compensation to be paid to CFO Systems
pursuant to the terms of this agreement, we covenant that we will not, during
the term of this agreement and for one (1) year following the termination
of this agreement, without the Company’s prior written consent, either directly
or indirectly, on CFO System’s own behalf or in the service or on behalf of
others, solicit, divert, or hire away, or attempt to solicit, divert, or hire
away any person employed by or who is a consultant of the Company, whether or
not such employee is a full-time, or part time employee or consultant of the
Company.


 


7.             Return of Property.  On termination of this agreement, (i) we
shall deliver promptly to the Company all records, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data, tables,
calculations or copies thereof, which are the property of the Company or which
relate in any way to the services, the business, products, practices or
techniques of the Company, and all other property, trade secrets and
Confidential Information (as defined above), including, but not limited to, all
documents which in whole or in part contain any trade secrets or Confidential
Information or relating to the services, which in any of these cases are in CFO
Systems’ possession or under its control; and (ii) the Company shall
return to CFO Systems all property and information, if any, in the possession
of the Company or any of its employees, representatives or agents not furnished
to the Company in connection with the services on the request of CFO Systems.


 


8.             Injunctive Relief.  The parties acknowledge it would be
impossible or inadequate to measure and calculate the damages to the Company
from any breach of the covenants set forth on this Exhibit.  Accordingly, in the event of a breach of any
of those sections by CFO Systems, the Company shall be entitled, in addition to
any other right or remedy available to it, to obtain an injunction from a court
of competent jurisdiction restraining or preventing that breach or threatened
breach and to specific performance of any such provision of this
agreement.  No bond or other security
shall be required of the Company in obtaining any such equitable relief.