Exhibit
10.3


SECOND
SUPPLEMENT

TO THE

MASTER AMENDED AND RESTATED CREDIT AGREEMENT

(Term Revolver)


THIS
SECOND SUPPLEMENT TO THE MASTER AMENDED AND RESTATED CREDIT AGREEMENT (“Second Supplement”) is made and entered into
as of June     , 2006, by and between EAST KANSAS
AGRI-ENERGY, L.L.C., a Kansas limited
liability company, and HOME
FEDERAL SAVINGS BANK, a federally chartered stock savings bank.  This First Supplement supplements the Master
Amended and Restated Credit Agreement between the Lender and the Borrower dated
as of even date herewith (as the same may be amended, restated, or otherwise
modified (other than by Supplements entered into pursuant to Section 1.02
thereof) from time to time, the “Master Agreement”).


RECITAL:


The purpose of this Second Supplement is to establish
a $4,000,000 term revolving credit line in favor of Borrower under the
Agreement.


AGREEMENT:


1.             Definitions.  Capitalized terms used and not otherwise
defined in this Second Supplement have the meanings attributed to them below or
in the Master Agreement.  Definitions in
this Second Supplement control over inconsistent definitions in the Master
Agreement, but only to the extent the defined terms apply to Loans under this
Second Supplement.  Definitions set forth
in the Master Agreement control for all other purposes.  As used in this Second Supplement, the
following terms have the following meanings:


“Prime Rate” means the
rate of that name as published in the “Money Rates” Section of the Wall Street Journal as of the applicable Determination Date;
provided, if Lender determines that the foregoing source is unavailable,
Lender will determine the Prime Rate based on comparable information.


“Revolving Loan” means
a Loan made under the Revolving Term Facility.


“Revolving Commitment Amount” means (a)
$4,000,000 from the date hereof through and including December 31, 2007, (b)
$3,600,000 from January 1, 2008, through and including December 31, 2008, (c)
$3,200,000 from January 1, 2009, until December 31, 2009, and (d) $2,800,000
from January 1, 2010, through and including September 30, 2010, at which time
the Revolving Term Facility will expire.


“Revolving Term Facility” means the revolving
credit facility established pursuant to this Second Supplement.









 



“Revolving Term Facility
Maturity Date” means the earlier of (a) October 1,
2010, and (b) the date on which the principal amount outstanding under the
Revolving Term Facility has been declared or has automatically become due and
payable, whether by acceleration or otherwise.


“Revolving Term Note” means the
Revolving Term Note made by Borrower payable to the order of Lender, dated the
date hereof, in the initial aggregate principal amount of $4,000,000 in
substantially the form of Exhibit 2A attached hereto.


2.             Conditions Precedent.  Lender will have no obligation under this
Second Supplement, the Agreement, or any Amendment Document until each of the
following conditions is satisfied or waived in accordance with Section 8.02
of the Master Agreement:


(a)                                  Lender
has received a one-time origination fee of $5,000;


(b)                                 Lender
has received all other fees and amounts due and payable on or prior to the date
hereof, including the fees and amounts for reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by Borrower pursuant
to any Loan Document or any other agreement with Lender;


(c)                                  Lender
has received this Second Supplement, and the Revolving Term Note, each duly
executed and delivered by Borrower;


(d)                                 Lender
has received Borrower’s counterparts of the Master Agreement and all Amendment
Documents contemplated thereby, in each case duly executed and delivered by
Borrower, as well as all other duly executed and delivered instruments,
agreements, opinion letters, and documents as Lender may require;


(e)                                  the
representations and warranties set forth in the Master Agreement are true and
correct in all material respects as of the date hereof;


(f)                                    all
conditions precedent in the Master Agreement and each other Loan Document have
been satisfied or waived; and


(g)                                 no
Default or Event of Default has occurred and is continuing.


3.             Establishment
of Revolving Term Facility.  Lender hereby establishes in favor of
Borrower a revolving credit facility in the amount of the Revolving Term
Commitment Amount.  Subject to the terms,
conditions, and limitations herein, Borrower may borrow, prepay and re-borrow
Revolving Loans from time to time in amounts up to the Revolving Commitment
Amount then in effect.  The aggregate
principal amount of Revolving Loans may not exceed the Revolving Commitment
Amount at any time.  To request a
Revolving Loan, Borrower will give Lender written notice (or telephonic notice
promptly confirmed in writing) of each request for a Revolving Loan
substantially in the form of Exhibit 2B attached hereto (a “Revolving Draw Request”) prior to
11:00 a.m. (Rochester, Minnesota Time) five Business Days prior to the 



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requested date of
each Revolving Advance.  Each Revolving
Draw Request will be irrevocable and will specify: (a) the aggregate
principal amount to be borrowed and (b) the requested funding date (which must
be a Business Day). The aggregate principal amount of each Revolving Draw
Request shall be at least and in multiples of $100,000.  Revolving Loans will be advanced in accordance
with Section 1.10 of the Master Agreement.


4.             Conditions to Each Advance.  The obligation of Lender to make a Revolving
Loan is subject to the satisfaction of the following conditions precedent,
unless waived by Lender in accordance with Section 8.02 of the Master
Agreement:


(a)           Lender has received a timely Draw
Request;


(b)                                 at
the time of and immediately after giving effect to such Loan, no Default or
Event of Default exists;


(c)                                  all
representations and warranties of Borrower set forth in the Loan Documents are
true and correct in all material respects on and as of the date of such Loan
before and after giving effect thereto, except to the extent such
representations and warranties relate solely to an earlier period; and


(d)                                 since
the date of the most recent audited financial statements of Borrower delivered
to Lender, there has been no change which has had or could reasonably be
expected to result in a Material Adverse Effect.


5.             Repayment.  Any amount of Revolving Loans outstanding
that is greater than the Revolving Commitment Amount is due and payable
immediately.  All remaining principal and
accrued interest outstanding on Revolving Loans will be due and payable on the
Revolving Term Facility Maturity Date.


6.             Interest.  Interest on the unpaid principal amount of
Revolving Loans will accrue on a simple interest basis at the floating Prime
Rate in effect from time to time.


7.             Reaffirmation of Representations and Warranties.  Borrower’s request for a Revolving Loan will
be deemed Borrower’s reaffirmation of its representations and warranties under
the Loan Documents, except to the extent such representations and warranties
relate solely to an earlier period.


8.             Early
Termination.  In
the event Borrower terminates the revolving line of credit established hereby
in connection with a refinancing prior to December 31, 2008, Borrower will pay
to Lender an early termination fee of $15,000.


[SIGNATURE PAGE
FOLLOWS]



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IN WITNESS WHEREOF, the parties have caused
this Second Supplement to be duly executed by their respective authorized
officers as of the day and year first written above.


	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EAST KANSAS AGRI-ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William R. Pracht

  
	
   

  	
  Name:

  	
  William R. Pracht

  
	
   

  	
  Title:

  	
  Chairman and President

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  HOME FEDERAL SAVINGS BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Oftedahl

  
	
   

  	
  Name:

  	
  Eric Oftedahl

  
	
   

  	
  Title:

  	
  Vice President

  



 


[SIGNATURE
PAGE FOR SECOND SUPPLEMENT TO

MASTER AMENDED AND RESTATED CREDIT
AGREEMENT]



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EXHIBIT 2A

FORM OF REVOLVING TERM NOTE


	
  $4,000,000

  	
  Rochester, Minnesota

  
	
   

  	
  June
      , 2006

  



 


FOR VALUE
RECEIVED, the undersigned, East Kansas Agri-Energy, L.L.C., a Kansas limited
liability company (“Borrower”), hereby promises
to pay to the order of Home Federal Savings Bank (together with any subsequent
holder hereof, “Lender”)
or its successors and assigns, at Post Office Box 6947, 1016 Civic Center Drive
N.W., Rochester, Minnesota 55903-6947, (a) on the Revolving Term Facility
Maturity Date (as defined in the Master Amended and Restated Credit Agreement
between Borrower and Lender dated as of June     , 2006 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”))
and the Second Supplement to the Master Amended and Restated Credit Agreement
(Term Revolver) between Borrower and Lender, dated the same date, the principal
sum of Four Million and No/100 Dollars ($4,000,000.00) or so much of the unpaid
principal amount of Revolving Loans (as defined in the Credit Agreement) as has
advanced by Lender, and (b) on each date specified in the Credit Agreement
prior to the Revolving Term Facility Maturity Date, the aggregate unpaid
principal amount of all Revolving Loans made by Lender pursuant to the
Revolving Term Credit Facility, in lawful money of the United States of America
in immediately available funds, and to pay interest from the date hereof on the
unpaid principal amount of Revolving Loans from time to time outstanding, in
like funds, at said office, at the rate or rates per annum and payable on such
dates as provided in the Credit Agreement. Borrower also promises to pay
Default Interest and Additional Interest (each as defined in the Credit
Agreement), on demand, on the terms and conditions set forth in the Credit
Agreement. In addition, should legal action or an attorney-at-law be utilized
to collect any amount due hereunder, Borrower further promises to pay all costs
of collection, including the reasonable attorneys’ fees of Lender.


All borrowings
evidenced by this Revolving Term Note and all payments and prepayments of the
principal hereof and the date thereof shall be recorded by Lender in its
internal records; provided, that the failure of Lender to make such a
notation or any error in such notation will not affect the obligations of
Borrower to make the payments of principal and interest in accordance with the
terms of this Revolving Term Note and the Credit Agreement.


This Revolving
Term Note is issued in connection with, and is entitled to the benefits of, the
Credit Agreement which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, and
for the amendment or waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions therein specified.


THIS REVOLVING
TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF MINNESOTA AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


	
  

  	
  EAST KANSAS AGRI-ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 



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EXHIBIT
2B


REVOLVING DRAW REQUEST


[Date]


Home Federal Savings Bank

Post Office Box 6947

1016 Civic Center Drive NW

Rochester, Minnesota 55903

Facsimile: (515) 283-0231


Attention:  Eric N. Oftedahl


Dear
Sir:


Reference is made
to the Master Amended and Restated Credit Agreement dated as of June     ,
2006 (as amended and in effect on the date hereof, the “Credit
Agreement”), between the undersigned, as Borrower, and Home
Federal Savings Bank, as Lender.  Terms
defined in the Credit Agreement are used herein with the same meanings.  This notice constitutes a Revolving Draw
Request, and Borrower hereby requests a Revolving Loan under the Credit
Agreement, and in that connection Borrower specifies the following information
with respect to the Revolving Loan requested hereby:


(A)          Aggregate principal amount of
Revolving Loan requested(1):


(B)           Date of requested advance (which is a
Business Day):


Borrower
hereby represents and warrants that the conditions specified in Subsections
4(a) through (d), inclusive, of the Second Supplement are satisfied.  Borrower hereby reaffirms its representations
and warranties under the Loan Documents, except to the extent such
representations and warranties relate solely to an earlier period.


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  EAST KANSAS AGRI-ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 






(1)             Not
less than $100,000 and an integral multiple of $100,000.



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