exv10w1






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.



 









 





     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.







 









 








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.




 









 






	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




 









 






	 	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;




 









 






	 	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




 









 






	 	 	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.









 









 








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	%