**EXHIBIT 10.1**

 

**AMENDMENT NO. 3 TO**

**FIFTH SUPPLEMENT**

**TO THE MASTER LOAN AGREEMENT**

**(REVOLVING LINE OF CREDIT LOAN)**

 

ThisAmendment No. 3 to the Master Loan Agreement (Revolving Line of CreditLoan) (this “**Amendment**”) is effective as of May 29,2009, by and between**HERON LAKE BIOENERGY, LLC**,a Minnesota limited liability company (“**Borrower**”) and **AGSTAR FINANCIAL SERVICES, PCA** (“**Lender**”).

 

**RECITALS**

 

A.            Lender has extended various creditfacilities to Borrower for the purposes of acquiring, constructing, equipping,furnishing and operating an ethanol production facility in Jackson County,Minnesota, pursuant to that certain Fourth Amended and Restated Master LoanAgreement dated as of October 1, 2007, as the same may be amended,supplemented, modified, extended or restated from time to time (the “**MLA**”); that certain Third Supplement to the Master LoanAgreement (Term Loan) dated as of October 1, 2007, as the same may beamended, supplemented, modified, extended or restated from time to time (the “**Third Supplement**”); that certain Fourth Supplement to theMaster Loan Agreement (Term Revolving Loan) dated as of October 1, 2007,as the same may be amended, supplemented, modified, extended or restated fromtime to time (the “**Fourth Supplement**”);and that certain Fifth Supplement to the Master Loan Agreement (Revolving Lineof Credit Loan) dated as of November 19, 2007, as amended by that certainAmendment No. 1 to Fifth Supplement to the Master Loan Agreement dated November 17,2008, as further amended by that certain Amendment No. 2 to FifthSupplement to the Master Loan Agreement dated February 1, 2009, as thesame may be amended, supplemented, modified, extended or restated from time totime (collectively, the “**Fifth Supplement**”).  The MLA, Third Supplement, Fourth Supplementand Fifth Supplement are referred to collectively hereinafter as the “**Loan Agreement**”).

 

B.            Borrower has requested that Lenderamend certain provisions of the Fifth Supplement, and Lender has agreed to suchamendments upon the terms and conditions set forth herein.

 

C.            Unless otherwise expressly definedherein, capitalized terms used herein shall have the same meaning ascribed tothem in the MLA or the Fifth Supplement, as applicable.

 

**AGREEMENT**

 

NOW,THEREFORE, in consideration of the premises herein contained, and for othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties hereto herby agree as follows:

 

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1.             **Amendmentsto Fifth Supplement.**

 

(a)           Section 1:  The following defined terms in the FifthSupplement are hereby amended and restated to read as follows:

 

“BorrowingBase” means, at any time, the lesser of: (a) $6,750,000.00; or (b) the sum of:  (i) 75% of Borrower’s Eligible AccountsReceivable; plus (ii) 75% of Borrower’s Eligible Inventory.

 

“RevolvingLine of Credit Loan Maturity Date” shall mean November 1, 2009.

 

(b)         Section #2 of the Fifth Supplementis hereby amended and restated to read as follows:

 

# **Revolving LoanCommitment**.  On the terms and conditions set forth in theMLA and this Fifth Supplement, Lender agrees to make one or more advances(collectively, the “**Revolving Line of CreditLoan**”) to the Borrower, during the period beginning on theAvailability Date (as defined in Section 5 of this Fifth Supplement) andending on the Business Day immediately preceding the Revolving Line of CreditLoan Maturity Date (as hereinafter defined in this Section 2) (the “**Revolving Line of Credit Loan****Termination Date**”), in an aggregate principal amount outstanding at any onetime not to exceed $6,750,000.00 (the “**RevolvingLine of Credit Loan****Commitment**”) *provided, however,*that at no time shall the OutstandingRevolving Advance exceed the Borrowing Base. The Revolving Line of Credit Loan Commitment shall expire at 12:00 noonCentral time on the Revolving Line of Credit Loan Maturity Date.  Subject to Section 7 of this Fifth Supplement, underthe Revolving Line of Credit Loan Commitment amounts borrowed and repaid orprepaid may be reborrowed at any time prior to and including the Revolving Lineof Credit Loan Termination Date.

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(c)          Section #6(f) of the FifthSupplement is hereby amended by the addition of the following subsection:

 

(iv)        Deposit Accounts.  The Borrower shall have established and shallmaintain all of its primary deposit accounts at Home Federal Savings Bank.

 

(d)         Section #8 of the Fifth Supplementis hereby amended and restated to read as follows:

 

**Interest Rate****. **Subject to theprovisions of Sections 9 and 11 of this Fifth Supplement, the Revolving Line ofCredit Loan shall bear interest at a rate equal to the LIBOR Rate plus 325basis points.  The computation ofinterest, amortization, maturity and other terms and conditions of theRevolving Line of Credit Loan shall be as provided in the Revolving Line ofCredit Note, provided, however, in no event shall the applicable rate exceedthe maximum nonusurious interest rate, if any, that at any time, or from timeto time, may be contracted for, taken, reserved, charged, or received underapplicable state or federal laws (the “**Maximum Rate**”).  Notwithstanding the foregoing, in no eventshall the rate of interest under the Revolving Line of Credit Loan be less thansix (6.0%) percent per annum until paid in full.

 

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# 2.             **Conditions to Effectiveness of this Amendment. **This Amendment shall become effective asof the date hereof upon the satisfaction of the conditions precedent stated inthat certain Amendment No. 1 to Fourth Amended and Restated Master LoanAgreement of even date herewith.

#  

3.             **Representationsand Warranties. **Borrowerhereby represents to Lender that, after giving effect to this Amendment:

 

(a)           All of the representations andwarranties of Borrower contained in the MLA and in each other Loan Document aretrue and correct in all material respects as though made on and as of the datehereof.

 

(b)           As the date hereof, except asotherwise specifically stated herein, no Event of Default has occurred and iscontinuing.

 

4.             **Miscellaneous.**

 

(a)           Effect; Ratification.  The amendments set forth herein are effectivesolely for the purposes set forth herein and shall be limited precisely aswritten, and shall not be deemed to (i) be a consent to, or anacknowledgment of, any amendment, waiver or modification of any other term orcondition of the Loan Agreement or (ii) prejudice any right or remedywhich Lender may now have or may have in the future under or in connection withthe Loan Agreement, as amended hereby, or any other instrument or agreementreferred to therein. It is further understood and agreed by and between theBorrower and the Lender that all other terms and provisions of the LoanAgreement shall remain in full force and effect, enforceable by the Lenderagainst the Borrower as fully as though no amendments had been made hereby, andthis Amendment shall not be deemed to hinder, compromise or lessen theenforceability of the Loan Agreement, the Notes, or any mortgage, securityinterest, or guaranty securing repayment of the Loans, in any way.  Each reference in the Loan Agreement and inany other Loan Document to the “Fifth Supplement” shall mean the FifthSupplement, as amended hereby.

 

(b)           Loan Documents.  This Amendment is a Loan Document executedpursuant to the MLA and shall be construed, administered and applied inaccordance with the terms and provisions thereof.

 

(c)           Defined Terms.** **All terms used andnot otherwise defined herein shall have the meanings assigned to them in theMLA or the Fifth Supplement, as applicable.

 

(d)           Counterparts.  This Amendment may be executed in any numberof counterparts, each such counterpart constituting an original and all ofwhich when taken together shall constitute one and the same instrument.

 

(e)           Severability.  Any provision contained in this Amendmentwhich is held to be inoperative, unenforceable or invalid in any jurisdictionshall, as to that jurisdiction, be inoperative, unenforceable or invalidwithout affecting the remaining provisions of this Amendment in thatjurisdiction or the operation, enforceability or validity of such provision inany other jurisdiction.

 

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(f)            GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA.

 

(g)           WAIVER OF JURY TRIAL.  THE BORROWER AND THE LENDER HEREBYIRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING ORCOUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS APARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

 

{SIGNATURE PAGE FOLLOWS}

 

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**SIGNATURE PAGE TO**

**AMENDMENT NO. 3 TO**

**FIFTH SUPPLEMENT TO THE MASTER LOAN AGREEMENT**

**(REVOLVING LINE OF CREDIT LOAN)**

**BY AND BETWEEN**

**HERON LAKE BIOENERGY, LLC**

**AND**

**AGSTAR FINANCIAL SERVICES, PCA**

**DATED AS OF:  May 29, 2009**

 

INWITNESS WHEREOF, the parties hereto have caused this Amendment to be executedand delivered by their respective duly authorized officers as of the date firstwritten above.

 

**BORROWER:**

 

**HERONLAKE BIOENERGY, LLC,**

aMinnesota limited liability company

 

 
| By:    | /s/  Robert J. Ferguson   |   |
|--------|---------------------------|--------|
|   |  Robert J.  Ferguson |   |
|   |  Its:  President     |   |

 

**LENDER:**

 

**AGSTARFINANCIAL SERVICES, PCA,**

aUnited States corporation

 

 
| By:    | /s/  Mark Schmidt               |   |
|--------|---------------------------------|--------|
|   |  Mark  Schmidt             |   |
|   |  Its:  Vice President |   |

 

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