Document:

Exhibit 10.7

 

SECOND AMENDMENT

 

TO THE

 

CREDIT AGREEMENT

 

dated as of January
16, 2004

 

between

 

GOLDEN GRAIN ENERGY,
LLC
as Borrower

 

and

 

HOME FEDERAL SAVINGS
BANK
as Lender

 

January 30, 2006

 

 

SECOND AMENDMENT

to the

CREDIT AGREEMENT

 

THIS SECOND AMENDMENT
(the “Amendment”) to the CREDIT AGREEMENT dated January 16, 2004, as amended by
the First Amendment to the Credit Agreement dated May 17, 2004 (the “Agreement”), is made
and entered into as of January 30, 2006, by and between by and between GOLDEN
GRAIN ENERGY, LLC, an Iowa limited liability company (“Borrower”) and HOME
FEDERAL SAVINGS BANK (“Lender”).

 

WHEREAS, pursuant to Section 9.02(b) of the Agreement, Lender and
Borrower agree to amend the Agreement subject to the terms and conditions set
forth herein.

 

NOW, THEREFORE, in consideration of the terms and conditions set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender agree as follows:

 

1.             Definitions.   Except
as otherwise provided herein, capitalized terms used herein without definition
shall have the meanings provided for in the Agreement.

 

2.             Definition of Revolving Commitment Amount.
  The definition of Revolving Commitment
Amount contained in Section 1.01 of the Agreement is deleted in its
entirety and replaced with the following:

 

“Revolving Commitment Amount” shall mean $6,500,000.

 

3.             Extension of Revolving Credit Availability Period.   Lender hereby extends the Revolving Credit
Availability Period to April 1, 2007, as permitted pursuant to Section 2.05
of the Credit Agreement.

 

4.             Letter of Credit Facilities.   Section 2.08 of the Agreement is
deleted in its entirety and replaced with the following language:

 

Section 2.08         Letters of Credit

 

Hartland Fuel
Products Facility.   Lender establishes in favor of Borrower a
letter of credit facility of $5,000,000 (“Hartland LC Facility”) as a sub-credit
facility of the Revolving Commitment under Section 2.05 of the Agreement.
Pursuant to Borrower’s request in the form of Exhibit A, Lender will, if
no Default or Event of Default has occurred and is continuing, issue up to five
individual letters of credit in favor of Hartland Fuel Products, L.L.C. (“Hartland”) in the
form attached hereto as Exhibit B. Amounts owing under the Hartland LC
Facility will be evidenced by the Amended and Restated Revolving Credit Note. The
amount available for borrowing under the Revolving Commitment Amount is hereby

 

 

reduced by $5,000,000, which amount shall be
reinstated and available for borrowing under the Revolving Commitment upon
cancellation of one or more letters of credit by the amount of such cancelled
letters of credit. The letters of credit issued under the Hartland LC Facility
shall each expire not more than 364 days following the issuance date. All
amounts drawn on the letters of credit issued under the Hartland LC Facility
shall be due and payable the earlier of one year from the date of the draw or
the Maturity Date. For amounts drawn on any letter of credit issued under the
Hartland LC Facility, Borrower shall pay in arrears, not later than the first
day of each month, interest at the Prime Rate plus 100 basis points (1.00%)
based on the daily principal balance of the amount outstanding during the
related monthly period. Borrower shall pay to Lender, on the date hereof, an
fee of $37,500, which shall be deemed to be fully earned on the date hereof.

 

5.             Revolving Credit Note.   The form of Revolving Credit Note attached as
Exhibit B to the Credit Agreement is deleted in its entirety and replaced with
the Amended and Restated Revolving Credit Note attached hereto as Exhibit C
(the “Amended and Restated Revolving Credit Note”). Lender will deliver the
original executed Revolving Credit Note of Borrower in favor of Lender dated
January 16, 2004, (the “Original Note”) to Borrower marked “replaced.”  The Amended and Restated Revolving Credit
Note is not issued or accepted in payment or satisfaction of, but as a
replacement of the Original Note. The indebtedness under the Original Note
remains outstanding (and as increased under this Amendment), and nothing herein
shall be considered a novation of the Original Note or the indebtedness
thereunder. All references in the Agreement to the “Revolving Credit Note”
shall hereafter be deemed to be a reference to the Amended and Restated
Revolving Credit Note.

 

6.             Interest Rates.   Section 2.07(a) of the Agreement is
deleted in its entirety and replaced with the following:

 

(a)           Revolving Loans.   Interest on Revolving Loans shall accrue at
the Prime Rate plus 65 basis points (0.65%) as determined on the applicable
Determination Date.

 

7.             Readvances.   In addition to any other authority to make
loans, including protective advances, Lender may, in its sole discretion, make
additional loans to Borrower, make additional credit facilities available to
Borrower, or renew, extend, or increase any loan or credit facility. Unless
otherwise deemed appropriate by Lender, no amendment to any deed of trust or
mortgage or similar instrument will be required to the extent the aggregate
principal amount outstanding hereunder (including any amount outstanding under
any future loan or credit facility) does not exceed $38,500,000.

 

8.             Borrower’s Address for Notices.   Borrower’s
address under Section 9.01 of the Agreement is deleted in its entirety
and replaced with the following address:

 

2

 

	
  To Borrower:

  	
  Golden Grain Energy, LLC

  
	
   

  	
  Attn:  Walter Wendland

  
	
   

  	
  1822 43rd Street SW

  
	
   

  	
  Mason City, IA  50401

  

 

9.             Conditions to Effectiveness.   This Amendment will not be effective until
Lender has received:

 

(a)           a
counterpart of this Amendment duly executed and delivered;

 

(b)           the
duly executed and delivered First Amendment to the Mortgage covering all of the
Real Estate owned or leased by Borrower and duly executed counterparts of the
other Real Estate Documents together with: (A) an endorsement to the title
insurance policy; and (B) evidence that counterparts of the First Amendment to
the Mortgage have been recorded in all places to the extent necessary or
desirable, in the judgment of Lender, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on the fee simple estate of
each parcel of Real Estate in favor of Lender for the benefit of Lender;

 

(c)           the
Amended and Restated Revolving Credit Note, duly executed by Borrower payable
to the order of Lender; and

 

(d)           such
other certificates, instruments and documents as Lender may request.

 

10.           Representations; Certifications. Borrower
hereby:

 

(a)   makes
and renews to Lender the representations and warranties set forth in Article
IV of the Agreement; and

 

(b)  certifies to Lender that no Default or Event
of Default has occurred under the Agreement.

 

11.           Expenses.   The
Borrower shall pay or reimburse Lender for all of Lender’s out-of-pocket costs
in connection with this Amendment, including but not limited to fees, charges
and disbursements of Lender’s counsel related to the negotiation, documentation
and closing of this Amendment, and all taxes and fees payable in connection
with the execution, delivery, filing or recording of the First Amendment to the
Mortgage dated as of the date hereof.

 

12.           General.   On and after the effectiveness of this
Amendment, each reference in the Agreement to “this Agreement,” “hereunder,” “hereof”
or words of like import referring to the Agreement, and each reference in the
Loan Documents to the Agreement, shall mean the Agreement as amended by this
Amendment. The Agreement, as amended by this Amendment, is and shall continue
to be in full force and effect and is hereby ratified and confirmed in all
respects.

 

3

 

13.           Counterpart Signatures.   This Amendment may be executed by each party
in one or more counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one binding document.

 

 

[SIGNATURE PAGE FOLLOWS]

 

4

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  GOLDEN GRAIN ENERGY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  Walter Wendland

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Walter Wendland

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  HOME FEDERAL SAVINGS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  Eric N. Oftedahl

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Eric N. Oftedahl

  
	
   

  	
   

  	
  Title:

  	
  Vice President 

  
											

 

 

Exhibit
A

 

Request
for Irrevocable Standby Letter of Credit for the benefit 

of Hartland Fuel Products L.L.C.

 

Golden Grain Energy, LLC hereby requests
issuance on [date , of an Irrevocable Standby Letter of Credit in the amount of
$                                 
for the benefit of the Beneficiary named below. Lender has full authority to
disburse funds to the beneficiary without notice or approval from Borrower.

 

Beneficiary:

 

Hartland Fuel Products, L.L.C.

Attention: Ken Simpson

1530 Greenview Drive SW, Suite 118

Rochester, MN 55902

 

 

	
  Date:

  	
   

  	
   

  

 

 

	
  GOLDEN GRAIN
  ENERGY, LLC

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
				

 

 

Exhibit
B

 

FORM OF IRREVOCABLE STANDBY
LETTER OF CREDIT NO.               

[Date]

 

BENEFICIARY:

 

Hartland Fuel Products L.L.C.

1530 Greenview Dr. SW, Suite 118

Rochester, MN 55901

 

To Ken Simpson,

 

We establish our Irrevocable Standby Letter of Credit in your favor for
the account of our customer Golden Grain Energy, LLC available by drafts drawn
on us payable at site for any sum of money not to exceed a total of United
States $1,000,000.00, when accompanied by the following documents:

 

Each sight draft drawn under this letter of credit must be marked “Drawn
Under Home Federal Savings Bank Letter of Credit                    ”.
(See Exhibit “A” attached).

 

Drafts are to be submitted with a certified copy of a resolution from
Beneficiary that the proceeds of this letter are to be used solely for margin
calls as they pertain to the trading account in the name of Golden Grain
Energy, LLC. Partial drawings are permitted.

 

All sight drafts drawn under and in compliance with the terms of this
Irrevocable Standby Letter of Credit shall be honored if presented and
delivered to Home Federal Savings Bank after [Issuance Date] and no later than
[364 days after issuance date].

 

NOTWITHSTANDING
THE EXPIRATION DATE SPECIFIED ABOVE, THIS IRREVOCABLE LETTER OF CREDIT WILL BE
EXTENDED AUTOMATICALLY FOR A 364 DAY PERIOD UPON THE EXPIRATION DATE SET FORTH
HEREIN AND UPON EACH ANNIVERSARY OF SUCH DATE, UNLESS AT LEAST THIRTY (30) DAYS
PRIOR TO SUCH EXPIRATION DATE, OR PRIOR TO ANY ANNIVERSARY OF SUCH DATE, WE
NOTIFY YOU IN WRITING THAT WE ELECT NOT TO SO EXTEND THIS IRREVOCABLE LETTER OF
CREDIT. IF SUCH A NOTICE IS RECEIVED, WE AGREE THAT YOU MAY DRAW ON THE ENTIRE
UNDRAWN AMOUNT AVAILABLE UNDER THIS IRREVOCABLE LETTER OF CREDIT WITHIN THE
APPLICABLE EXPIRATION DATE.

 

Except as far as otherwise expressly stated, this credit is subject to
the “Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publications No. 500.”

 

 

	
   

  	
  Yours very truly,

  
	
   

  	
   

  
	
   

  	
  Home Federal Savings Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  [Bank Officer Name]

  
	
   

  	
   

  	
  [Bank Officer Title]

  
					

 

 

EXHIBIT A

 

FORM OF SIGHT DRAFT

 

IRREVOCABLE STANDBY LETTER OF

CREDIT NO.               

 

DATE:

 

AT SIGHT

 

PAY TO THE ORDER OF                                                                                                                                               .
THE

 

SUM OF U.S. $                                                                                                                                DOLLARS

 

($                                 ).

 

DRAWN UNDER IRREVOCABLE CREDIT NO.                  

 

 

	
   

  	
  Hartland Fuel Products L.L.C.

  
	
   

  	
  1530 Greenview Dr. SW

  
	
   

  	
  Suite 118

  
	
   

  	
  Rochester, MN 55901

  
	
   

  	
  (OR ITS SUCCESSORS OR ASSIGNS)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  	
   

  

 

 

Exhibit
C

 

AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

	
  $6,500,000

  	
  Rochester, Minnesota

  
	
   

  	
                                  ,
  20     

  

 

FOR VALUE RECEIVED, the undersigned, Golden Grain Energy, LLC, an Iowa
limited liability company (“Borrower”), hereby promises to pay to 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 on the Revolving Commitment
Termination Date (as defined in the Credit Agreement dated as of January 16,
2004, as amended by the First Amendment to the Credit Agreement dated May 17,
2004 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), between
Borrower and Lender, the lesser of the principal sum of Six Million Five
Hundred Thousand Dollars ($6,500,000) or so much thereof as shall be advanced
by Lender to Borrower pursuant to the Credit Agreement, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount thereof 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. 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.

 

Borrower promises to pay Default Interest (as defined in the Credit
Agreement), on demand, on the terms and conditions set forth in the Credit
Agreement.

 

All borrowings evidenced by this Amended and Restated Revolving Credit
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 shall not affect the obligations of Borrower to make the payments of
principal and interest in accordance with the terms of this Amended and
Restated Revolving Credit Note and the Credit Agreement.

 

This Amended and Restated Revolving Credit 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, for prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Credit Agreement, all upon the terms and conditions therein
specified. THIS AMENDED AND RESTATED REVOLVING CREDIT 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.

 

	
   

  	
  GOLDEN GRAIN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.8

 

AMENDED AND RESTATED REVOLVING CREDIT NOTE

 

	
  $6,500,000

  	
  Rochester, Minnesota

  
	
   

  	
  January 30 , 2006

  

 

FOR VALUE RECEIVED, the undersigned, Golden Grain
Energy, LLC, an Iowa limited liability company (“Borrower”),
hereby promises to pay to Home Federal Savings Bank, (together with any
subsequent holder thereof, “Lender”),
or its successors and assigns, at Post Office Box 6947, 1016 Civic Center Drive
N.W., Rochester, Minnesota 55903-6947 on the Revolving Commitment Termination
Date (as defined in the Credit Agreement date as of January 16, 2004, as
amended by the First Amendment to the Credit Agreement dated May 17, 2004, and
the Second Amendment to the Credit Agreement dated as of the date hereof (as
same may be amended, restated, supplemented or otherwise modified form time to
time, the “Credit Agreement”), between
Borrower and Lender, the lesser of the principal sum of Six Million Five
Hundred Thousand Five Hundred Dollars ($6,500,000) or so much thereof as shall
be advanced by Lender to Borrower pursuant to the Credit Agreement, in lawful money
of the United States and in immediately available funds, and to pay interest
form the date hereof on the rates per annum and payable on such dates as
provided in the Credit Agreement. In addition, should legal action or an
attorney-at-law be utilized to collect any amount due hereunder, Borrower
further promise to pay all costs of collection,
including the reasonable attorney’s fees of Lender.

 

Borrower promises to pay Default Interest (as defined
in the Credit Agreement), on demand, on the terms and conditions set forth in
the Credit Agreement.

 

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

 

This Amended and Restated Revolving Credit Note is issued
in connection with, and is entitled to the benefits of, the Credit Agreement
which, among other things, contains provisions of the principal hereof prior to
the maturity hereof and for the amendment or waiver of certain provisions of
the Credit Agreement, all upon the terms and conditions therein specified. THIS
AMENDED AND RESTATED REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA AN ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.

 

	
   

  	
  GOLDEN GRAIN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Walter Wendland

  	
   

  
	
   

  	
  Name:  Walter
  Wendland

  
	
   

  	
  Title:   President

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