Exhibit 10.2


 


EIGHTH
AMENDMENT TO CONSTRUCTION LOAN AGREEMENT


This Eighth Amendment to Construction Loan Agreement
is dated as of the 30th day of June, 2006, 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’s only members are Lake Area Corn
Processors, LLC (“LACP”) and Jeff Broin, Rob Broin, Todd Broin, Lowell Broin
and Judy Broin (collectively “the BROINS”);


WHEREAS, BORROWER has requested, and BANK has agreed
to make available to BORROWER, a $19,100,000.00 loan which BORROWER will loan
to LACP to purchase the BORROWER’s units owned by the BROINS (“MEMBER LOAN”);


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


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, REVOLVING
LOAN and MEMBER LOAN.


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


1.16         “LOAN
TERMINATION DATE” means the earliest to occur of the following: (i) as to TERM
NOTE 2 and TERM NOTE 5, September 1, 2011; as to the REVOLVING NOTE, April 20,
2007; as to the MEMBER NOTE, the earlier of LACP’s resale of the units it
purchases from the BROINS or 120 days from the date of this Amendment; (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.             Section 1.28 of the LOAN AGREEMENT is hereby amended to
read, effective immediately:


1.28         “WORKING
CAPITAL” means current assets (less investments in or other amounts due from
any member, employee or any other person or entity related to or affiliated
with the BORROWER and prepayments) less current liabilities (less any portion
of such current liabilities that constitute debt that is expressly subordinated
to the BANK in a writing acceptable to the BANK or the MEMBER LOAN) plus the
amount available to BORROWER for drawing under TERM NOTE 5.


4.             Effective immediately, an additional paragraph shall be
added to the AGREEMENT, following existing paragraph 1.30, which additional
paragraph shall read:


1.31 “MEMBER NOTE” means that promissory note of
BORROWER to BANK evidencing the member loan described in Section 2.3.2 of this
AGREEMENT, its renewals, modifications and extensions.


5.             Effective immediately, additional paragraphs shall be
added to the AGREEMENT, following existing paragraph 2.3, such additional
paragraphs shall read:


2.3.1 MEMBER
LOAN.  BANK agrees to lend
$19,100,000.00 to BORROWER pursuant to this facility which BORROWER will in
turn loan to LACP, it majority member, to purchase the units owned by the
BROINS, the minority members.


2.3.2 THE
MEMBER NOTE. The LOAN COMMITMENT shall be evidenced by a MEMBER NOTE, in
the form attached hereto as Exhibit 8-A. Principal and interest shall be
payable according to the repayment schedule and interest rate accrual as
described in the MEMBER NOTE. The balance will be due and payable on LOAN
TERMINATION DATE.


6.             Effective immediately, Section 2.5 of the AGREEMENT is
hereby replaced in its entirety as follows:


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. In addition, BORROWER shall pay to the BANK upon execution of this
AMENDMENT a commitment fee of $143,250.00, which fee BORROWER agrees and
acknowledges has been earned by BANK.


7.             Effective immediately, an additional paragraph shall be
added to the AGREEMENT, following existing paragraph 6.2.4, which additional
paragraph shall read:


6.2.5  The
BORROWER shall maintain a debt ratio measured at the end of each calendar month
of no more than 1.50 : 10, for all periods following COMPLETION



 2
 






 



 


DATE.  For purposes of this covenant, to determine
such ratio, INDEBTEDNESS shall be compared to NET WORTH.


8.             BANK and BORROWER waive any prohibition to BORROWER
lending funds to its members as it relates to the MEMBER LOAN identified
herein. BANK further waives any violation of Section 6.4.5 and 6.4.10 of the
AGREEMENT as it relates to LACP purchasing the units owned by the BROINS and
subsequently selling such units.


9.             Section 6.4.12 of the AGREEMENT is hereby amended to
read, effective immediately:


6.4.12  Make or
pay, without the prior written consent of BANK, in any fiscal year,
distributions to members or shareholders of the BORROWER except as provided in
this paragraph.  BORROWER may make
distributions to members or shareholders of BORROWER if the following
conditions are met:


i.              The
MEMBER LOAN has been repaid in full to the BANK.


ii.             At
the time of, and immediately after, a distribution BORROWER must be in
compliance with each of the OBLIGATIONS and covenants set forth in this AGREEMENT.


iii.            Any
such distributions shall be made based upon the most current financials
statements furnished by BORROWER to BANK, as well as the most recent compliance
statements are required herein, and only on the additional condition that
BORROWER retains a minimum of $1,000,000 of available cash following any such
distributions.


iv.            In
such events, BORROWER may distribute up to 100% of EXCESS CASH FLOW, if after
such distribution, NET WORTH equals more than 55% of BORROWER’s Total
Assets.  BORROWER may distribute up to
75% of EXCESS CASH FLOW, if after such distribution, NET WORTH equals between
45% and 55% of BORROWER’s Total Assets. 
If any distribution or distributions by BORROWER result in NET WORTH
being less than 55% of BOWRROWER’s Total Assets following such distribution,
BORROWER shall provide prompt notice of such fact to BANK.  After notice to BANK, and receipt of BANK’S
approval, not to be unreasonably withheld, BORROWER may distribute up the
aggregate of 50% of EXCESS CASH FLOW in multiple distributions up to four times
per calendar year, if after such distribution(s), NET WORTH equals less than
45% of BORROWER’s Total Assets.


10.           BORROWER has had all of its members
acknowledge and consent to this Amendment.


11.           BORROWER certifies by its execution
hereof that the representations and warranties set forth in Section 5. 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.



 3
 






 



 


12.           This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts of each instrument or
agreement, taken together, shall constitute but one and the same instrument.


13.           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.


	
  Dakota Ethanol, L.L.C.

  	
   

  	
  First National Bank of Omaha

  
	
  By:

  	
  /s/Brian Woldt

  	
   

  	
   

  	
  By:

  	
  /s/Chris M. Reiner

  	
   

  
	
  Name:

  	
  Brian Woldt

  	
   

  	
   

  	
  Name: Chris M. Reiner

  
	
  Title:

  	
  Chairman

  	
   

  	
   

  	
  Title: Commercial Loan Officer

  
									



 


NOTARY ACKNOWLEDGMENT


	
  STATE OF South Dakota

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF Lake

  	
  )

  



 


On this 30 day of June 2006, before me,
the undersigned, a Notary Public, personally appeared Brian Woldt, the Chairman
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 E. May

  	
   

  
	
  Notary Public

  



 



 4
 






 



 


Exhibit 8-A

Member Note


 



 5















 


MEMBER
NOTE


	
  Note Date: June 30, 2006

  	
   

  	
  $19,100,000.00

  
	
  Maturity Date:
  October 28, 2006

  	
   

  	
   

  



 


FOR VALUE RECEIVED, 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 its
principal office or such other address as BANK or holder may designate from
time to time, the principal sum of Nineteen Million One Hundred Thousand and
00/100 Dollars ($19,100,000.00), or the amount shown on the BANK’s records to
be outstanding, plus interest (calculated on the basis of actual days elapsed
in a 360-day year) accruing each day on the unpaid principal balance at the
annual interest rates defined below. Absent manifest error, the BANK’s records
shall be conclusive evidence of the principal and accrued interest owing
hereunder.


This promissory note is executed pursuant to a
Construction Loan Agreement (“CONSTRUCTION LOAN AGREEMENT”) between BORROWER
and BANK dated as of September 25, 2000, (the Construction Loan Agreement,
together with all amendments thereto is called the “AGREEMENT”). All
capitalized terms not otherwise defined in this note shall have the meanings
provided in the AGREEMENT.


INTEREST ACCRUAL. Interest
on the principal amount outstanding shall accrue at the BASE RATE in effect
from time to time until maturity (the “RATE”), and three per cent (3%) above
the BASE RATE in effect from time to time after maturity, whether by
acceleration or otherwise. 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.


REPAYMENT TERMS. Interest
on the outstanding principal balance shall be due and payable monthly, in
arrears, with the first payment commencing on July 30, 2006. Principal and any
outstanding interest shall be due and payable upon the earlier of (i) Lake Area
Corn Processors, LLC reselling the units purchased from BORROWER’s minority
members; or (ii) 120 days from the Note Date identified above.


PREPAYMENT. The
BORROWER may prepay this promissory note in full or in part at any time. Such
prepayment shall not excuse the BORROWER from making subsequent payments
provided for herein until the indebtedness is paid in full.


ADDITIONAL TERMS AND CONDITIONS. The
AGREEMENT, and any amendments or substitutions, contains additional terms and
conditions, including default and acceleration provisions, which are
incorporated into this promissory note by reference. The BORROWER agrees to pay
all costs of collection, including reasonable attorneys fees and legal expenses









 



 


incurred by the BANK if this promissory note is not
paid as provided above. This promissory note shall be governed by the
substantive laws of the State of Nebraska.


WAIVER OF PRESENTMENT AND NOTICE OF
DISHONOR. BORROWER and any other person who signs, guarantees
or endorses this promissory note, to the extent allowed by law, hereby waives
presentment, demand for payment, notice of dishonor, protest, and any notice
relating to the acceleration of the maturity of this promissory note.


	
  

  	
  DAKOTA
  ETHANOL, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Brian Woldt

  	
   

  
	
   

  	
  Name:

  	
  Brian Woldt

  	
   

  
	
   

  	
  Title:

  	
  Chairman

  	
   

  
						



 


	
  STATE OF South Dakota

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF Lake

  	
  )

  



 


On this 30 day of June,
2006, before me, the undersigned, a Notary Public, personally appeared Brian
Woldt the Chairman of Dakota Ethanol, L.L.C., on behalf of said
entity, who executed the foregoing instrument, and acknowledged that he
executed the same as his voluntary act and deed and that of the Company.


	
  

  	
  /s/Alan E. May

  	
   

  
	
   

  	
  Notary Public

  



 



 2