Exhibit 10.1


 


THIRD
AMENDMENT TO CONSTRUCTION LOAN AGREEMENT


 


This Third Amendment to
Construction Loan Agreement is dated as of the 23rd day of April, 2004, and is
by and between DAKOTA ETHANOL, L.L.C., a South Dakota limited liability company
(“BORROWER”) and FIRST NATIONAL BANK OF OMAHA (“BANK”), a national banking
association established at Omaha, Nebraska.


 


WHEREAS, BANK and BORROWER
executed a Construction Loan Agreement dated as of September 25, 2000 (the
Construction Loan Agreement, together with all amendments thereto is herein
called the “AGREEMENT”);


 


WHEREAS, BORROWER has
requested, and BANK has agreed to make available to BORROWER, a $3,000,000.00
revolving credit line (“REVOLVING LOAN”);


 


WHEREAS, BORROWER and BANK
agree the REVOLVING LOAN is hereby included in the definition of OBLIGATIONS
and is subject to all terms and conditions of the AGREEMENT;


 


WHEREAS, BORROWER and BANK
acknowledge BORROWER has satisfied all requirements of CONSTRUCTION LOAN, by
funding three term notes, TERM NOTE 2, TERM NOTE 4, and TERM NOTE 5.  The existing balance of TERM NOTE 2 is
$11,714,399.77.  The existing balance of
TERM NOTE 4 is $2,252,136.63.  The
existing commitment on TERM NOTE 5 is $5,000,000.00; and


 


WHEREAS, the parties desire to
further amend the AGREEMENT.


 


Now, therefore, for valuable
consideration, receipt and adequacy of which is acknowledged, the parties agree
as follows:


 


1.             All capitalized terms
herein that are not otherwise defined shall have the meanings assigned to them
in the AGREEMENT. Any requirements, covenants and obligations of BORROWER
pursuant to the AGREEMENT with regard to the CONSTRUCTION LOAN also apply to
the TERM NOTES and REVOLVING LOAN;


 


2.             Effective
immediately, Section 1.16 of the LOAN AGREEMENT is hereby amended to read:


 


1.16         “LOAN
TERMINATION DATE” means the earliest to occur of the following:  (i) as to TERM NOTE 2, TERM NOTE 4, and TERM
NOTE 5, September 1, 2011; as to the REVOLVING NOTE, April 22, 2005; (ii) the
date the OBLIGATIONS are accelerated pursuant to this AGREEMENT, and (iii) the
date BANK receives (a) notice in writing from BORROWER of BORROWER’s election
to terminate this AGREEMENT and


 

















 


(b)
indefeasible payment in full of the OBLIGATIONS.


 


3.             Effective
immediately, additional paragraphs shall be added to the AGREEMENT, following
existing paragraph 1.28, which additional paragraphs shall read:


 


1.29         “REVOLVING NOTE” means that promissory note of
BORROWER to BANK evidencing the revolving credit facility described in Section
2.7 of this AGREEMENT, its renewals, modifications and extensions.


 


1.30         “BORROWING BASE” means the lesser of:


 


A.            $3,000,000.00, less
the amount of any Letters of Credit issued and outstanding on BORROWER’s
account, or


 


B.            The aggregate of (i)
75% of BORROWER’s Inventory of corn or milo, at current value on the date
reported, plus (ii) 75% of BORROWER’s Finished Goods - Distiller’s Grains
Inventory, at current value on the date reported, plus (iii) 75% of BORROWER’s
Finished Goods-Ethanol Inventory, valued at the lower of cost or market on the
date reported, plus (iv) 75% of the amount of BORROWER’s Ethanol or Distiller’s
Grains Accounts aged thirty days or less, and (v) 75% of the amount of
BORROWER’s current State or Federal Incentives Accounts Receivable aged less
than 120 days, excluding any Accounts reasonably deemed ineligible by BANK.


 


4.             Effective
immediately, Section 2 of the AGREEMENT is hereby replaced in its entirety as
follows:


 


SECTION 2 Amount
and Terms of the LOANS.


 


2.1           TERM NOTES.  The BORROWER has previously delivered to
BANK three term promissory notes, referred to herein as TERM NOTE 2, TERM NOTE
4, and TERM NOTE 5 (collectively called “TERM NOTES”).  Principal and interest shall be payable
according to the repayment schedule and interest rate accrual as described in
the TERM NOTES attached hereto, as Exhibits 3-A, 3-B, and 3-C, respectively.
The balance of each TERM NOTE will be due and payable on LOAN TERMINATION DATE.


 


2.2           REVOLVING LOAN.  BANK agrees to lend $3,000,000.00 to
BORROWER pursuant to this facility. 
BANK will credit proceeds of this revolving loan (“REVOLVING LOAN”) to
BORROWER’s deposit account with the BANK, bearing number 22673981.


 


2.7.1        Subject
to the terms hereof, the BANK will lend the BORROWER, from time to time until
the LOAN TERMINATION DATE such sums in integral multiples of $10,000.00 as the
BORROWER may request by reasonable same day notice to the BANK, received by the
BANK not later than 11:00 A.M. of such day, but which shall not exceed in the
aggregate principal amount at any one time outstanding,


 


2

















 


$3,000,000.00 (the “LOAN COMMITMENT”).  The BORROWER may borrow, repay without
penalty or premium and reborrow hereunder, from the date of this AGREEMENT
until the LOAN TERMINATION DATE, either the full amount of the LOAN COMMITMENT
or any lesser sum which is $10,000.00 or an integral multiple thereof.  It is the intention of the parties that the
outstanding balance of the REVOLVING LOAN shall not exceed the BORROWING BASE,
and if at any time said balance exceeds the BORROWING BASE, BORROWER shall
forthwith pay BANK sufficient funds to reduce the balance of the REVOLVING LOAN
until it is in compliance with this requirement.


 


2.3           THE
REVOLVING NOTE.  The LOAN COMMITMENT
shall be evidenced by a REVOLVING NOTE, in the form attached hereto as Exhibit
3-D.  Principal and interest shall be
payable according to the repayment schedule and interest rate accrual as
described in the REVOLVING NOTE.  The
balance will be due and payable on LOAN TERMINATION DATE.


 


2.4           Payments.  All principal, interest and fees due under
this AGREEMENT, the REVOLVING NOTE, the TERM NOTES and the LOAN DOCUMENTS shall
be paid in immediately available funds and no later than the payment due date
set forth in the monthly statement mailed to the BORROWER by the BANK.  Should a payment come due on a day other
than a BANKING DAY, then the payment shall be made no later than the next
BANKING DAY and interest shall continue to accrue during the extended period.


 


2.5           Fees.  BORROWER agrees to pay BANK unused
commitment fees equal to 37.5 basis points of the average unused portion of the
REVOLVING LOAN and of TERM NOTE 5, each fee payable quarterly in arrears.  BORROWER agrees to pay BANK a placement fee
of $5,000.00 at the time REVOLVING LOAN is executed.


 


2.6           Incentive
Pricing.  The interest rates
applicable to the TERM NOTE 4, TERM NOTE 5 and the REVOLVING LOAN are subject
to adjustment as set forth in the NOTES.


 


5.             Effective
immediately, Paragraph 6.1.2 of the AGREEMENT is hereby amended to read:


 


6.1.2        The
BORROWER will furnish to the BANK within thirty-(30) days after the end of each
calendar month, consolidated financial statements of the BORROWER for such
period and year to date all in reasonable detail, except for the absence of
financial footnotes.  Such financial
statements shall be accompanied by a calculation of BORROWER’s compliance with
covenants contained in Section 6.2 of this AGREEMENT, certified by a manager of
BORROWER.


 


6.             Effective
immediately, Paragraph 6.1.3 of the AGREEMENT is hereby amended to read:


 


6.1.3        For
each full calendar quarter, BORROWER will deliver to BANK, within thirty-(30)
days of each calendar quarter end, a certificate in a form reasonably
acceptable to


 


3

















 


BANK that has
been signed by an officer or manager of BORROWER, which: 1) certifies that the
statements required by section 6.1.1 and 6.1.2 have been accurately prepared in
accordance with GAAP applied consistently (except for the absence of financial
footnotes to the statements furnished under Section 6.1.2); 2) certifies that
the officer or manager has no knowledge of any EVENT OF DEFAULT under this
AGREEMENT or the LOAN DOCUMENTS, or of any event which would, after the lapse
of time or the giving of notice, or both, constitute an event of default under
this AGREEMENT or the LOAN DOCUMENTS.


 


7.             Effective
immediately, the following shall be added as Section 6.1.8 to the AGREEMENT,:


 


6.1.8        BORROWER shall provide monthly borrowing base
certificates in a form reasonably acceptable to BANK, calculating advance rates
under the REVOLVING LOAN pursuant to the BORROWING BASE.


 


8.             Effective
immediately, paragraph 6.2.1 of the AGREEMENT is hereby amended to read:


 


6.2.1   The BORROWER shall maintain a DEBT SERVICES
COVERAGE RATIO, measured on a trailing four quarters basis at the end of each
full calendar quarter, of no less than 1.25 : 1.0, for all periods following
COMPLETION DATE.   For purposes of
this covenant, to determine such ratio, OPERATING CASH FLOW shall be compared
to DEBT SERVICE.


 


9.             The
BANK’s address as stated in Section 8.7 is hereby amended to read, effective
immediately:


 


	
  If to the
  BANK:

  	
   

  	
  First
  National Bank of Omaha

  
	
   

  	
   

  	
  1620 Dodge
  St., STOP 1050

  
	
   

  	
   

  	
  Omaha,
  NE  68197

  
	
   

  	
   

  	
  Attention:  Brian Thome

  



 


10.           BORROWER certifies by
its execution hereof that the representations and warranties set forth in
Section 5.1. of the AGREEMENT are true as of this date, and that no EVENT OF
DEFAULT under the AGREEMENT, and no event which, with the giving of notice or
passage of time or both, would become such an EVENT OF DEFAULT, has occurred as
of this date.


 


11.           Except as amended
hereby the parties ratify and confirm as binding upon them all of the terms of
the AGREEMENT.


 


IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be
executed by their respective officers or managers thereunto duly authorized, as
of the date first above written.


 


4

















 


	
  Dakota Ethanol, L.L.C.

  	
   

  	
  First National Bank of Omaha

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Doug Van Duyn

  	
   

  	
   

  	
  By:

  	
  /s/ Omer Sagheer

  	
   

  
	
   

  	
  Doug Van Duyn

  	
   

  	
   

  	
  Omer Sagheer, Commercial Loan Officer

  
	
  Chairman of the Board of Governors

  	
   

  	
   

  	
   

  
								



 


 


 


	
  NOTARY ACKNOWLEDGMENT

  
	
  STATE OF
  SOUTH DAKOTA

  
	
   

  	
  ) ss.

  
	
  COUNTY OF
  LAKE

  



 


On this 23rd
day of April 2004, before me, the undersigned, a Notary Public, personally
appeared Doug Van Duyn, the Chairman of the Board of Governors of Dakota
Ethanol, L.L.C., who executed the foregoing instrument, and acknowledged that
he executed the same as his voluntary act and deed, as well as that of the
company.


 


	
   

  	
  /s/ Alan May

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
   

  
	
  Exhibits –

  	
   

  
	
  Revolving
  Promissory Note

  	
   

  
	
  TERM NOTE 2

  	
   

  
	
  TERM NOTE 4

  	
   

  
	
  TERM NOTE 5

  	
   

  



 


5

















 


Exhibit 3-D


 


REVOLVING PROMISSORY NOTE


 


	
  Omaha,
  Nebraska

  	
   

  	
  $3,000,000.00

  
	
  Note
  Date:  April 23, 2004

  	
   

  	
  Maturity Date:  April 22, 2005

  



 


On or before April 22, 2005, Dakota
Ethanol, L.L.C., a South Dakota limited liability company
(“BORROWER”) promises to pay to the order of First
National Bank of Omaha (“BANK”) at any of its offices in Omaha,
Nebraska the principal sum hereof, which shall be Three Million and no
hundredths Dollars ($3,000,000.00) or so much thereof as may have been advanced
by BANK and shown on the records of the BANK to be outstanding, under this Note
and the Construction Loan Agreement executed by the BANK and BORROWER dated as
of September 25, 2000, as it may, from time to time, be amended.


 


Interest on
the principal amount outstanding shall accrue from time to time at a rate (the
“RATE”) equal to fifty (50) basis points higher than the BASE RATE in effect
from time to time until maturity, and three per cent (3%) above the BASE RATE
in effect from time to time after maturity, whether by acceleration or
otherwise.  Provided, however, at no
time shall the RATE be less than five (5%) percent per annum.  For purposes hereof, BASE RATE shall mean
the rate announced by BANK from time to time as its “National Base Rate”. Each
time the BASE RATE shall change, the RATE shall change contemporaneously with
such change in the BASE RATE.  Interest
shall be calculated on the basis of a 360-day year, counting the actual number
of days elapsed.  Interest on the
REVOLVING LOAN shall be payable quarterly.


 


INCENTIVE PRICING.  The interest rate applicable to this
promissory note is subject to reduction In the event that BORROWER maintains,
as measured quarterly, the following ratios, the interest rates will be reduced
accordingly, for the subsequent quarter:


 


	
  If the
  Ratio of INDEBTEDNESS to

  NET WORTH is:

  	
   

  	
  Interest rate will be:

  
	
   

  	
   

  	
   

  
	
  Equal to or
  greater than 1.01 : 1.00

  	
   

  	
  BASE RATE
  plus 50 basis points

  
	
  Greater than
  .75 : 1.00, but less than 1.01 : 1.00

  	
   

  	
  BASE RATE
  plus 25 basis points

  
	
  Less than or
  equal to .75 : 1.00

  	
   

  	
  BASE RATE
  plus 0 basis points

  



 


This note is
executed pursuant to a Construction Loan Agreement dated as of September 25,
2000, between BANK and BORROWER (the “AGREEMENT”) as it may be amended from
time to time.  The AGREEMENT contains
additional terms of this Note, including, but not limited to enumerated events
of default, and the granting of liens to secure BORROWER’s performance. All
capitalized terms not otherwise defined herein shall have the same meanings as
set forth in the AGREEMENT.


 


As provided in
the AGREEMENT, upon any such enumerated default, BANK may accelerate the due
date of this Note and declare all obligations set forth herein immediately due
and payable,


 


6

















 


and BANK shall also have such
other remedies as are described in the AGREEMENT and are provided by law. All
makers and endorsers hereby waive presentment, demand, protest and notice of
dishonor, consent to any number of extensions and renewals for any period
without notice; and consent to any substitution, exchange or release of
collateral, and to the addition or releases of any other party primarily or
secondarily liable.


 


Executed as of
the 23rd day of April, 2004.


 


 


	
  Dakota Ethanol, L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Doug Van Duyn

  	
   

  	
   

  
	
   

  	
  Doug Van Duyn, Chairman of the Board of
  Governors

  
	
   

  	
   

  
	
   

  	
   

  
	
  NOTARY
  ACKNOWLEDGMENT

  
	
  STATE OF SOUTH DAKOTA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF LAKE

  	
  )

  
						



 


On this 23rd
day of April 2004, before me, the undersigned, a Notary Public, personally
appeared Doug Van Duyn, the Chairman of the Board of Governors of Dakota
Ethanol, L.L.C., who executed the foregoing instrument, and acknowledged that
he executed the same as his voluntary act and deed, as well as that of the
company.


 


	
   

  	
  /s/ Alan May

  	
   

  
	
   

  	
  Notary
  Public

  



 


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