Document:

Exhibit
10.2

 

FIRST
AMENDMENT OF

CONSTRUCTION LOAN AGREEMENT

 

THIS FIRST AMENDMENT OF CONSTRUCTION LOAN AGREEMENT
(“Amendment”) is made this 11th day of August, 2009 between FIRST NATIONAL BANK
OF OMAHA, a national banking association as a Bank and as the Administrative
Agent and Collateral Agent for the Banks (in such capacities, “Bank”), the
other Banks a party to the Loan Agreement referenced below and HIGHWATER
ETHANOL, LLC, a Minnesota limited liability company (“Borrower”). This
Amendment amends that certain Construction Loan Agreement dated April 24,
2008 between Bank, Banks and Borrower (“Loan Agreement”).

 

WHEREAS, pursuant to the Loan Agreement and the
other Loan Documents, the Banks extended the Construction. Loan, Revolving Loan and other financial
accommodations and extensions of credit described in the Loan Agreement to
Borrower, all as more fully described in the Loan Agreement;

 

WHEREAS, the Loan
Termination Date applicable to the Revolving Promissory Notes is April 24,
2009, and the Borrower has requested, and under the terms and conditions of
this Amendment, the Banks have agreed, to extend the Loan Termination Date of
the Revolving Promissory Notes to February 28, 2010, amend the interest
rate applicable to the Revolving Loan and otherwise amend the Loan Agreement as
provided for in this Amendment;
and

 

WHEREAS, the parties hereto
agree to amend the Loan Agreement as provided for in this Amendment.

 

NOW, THEREFORE, in
consideration of the mutual covenants herein and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, the parties agree
to amend the Loan Agreement as follows:

 

1.             Capitalized terms used herein shall
have the meaning given to such terms in the Loan Agreement, unless specifically
defined herein.

 

2.             Effective April 24, 2009, Section 1.32
of the Loan Agreement is hereby amended to delete the reference to April 24,
2009 as the Loan Termination Date of the Revolving Promissory Notes and
inserting in lieu thereof February 28, 2010. To further evidence such
extension, Borrower shall execute in favor of each Bank with a Revolving Loan
Commitment and deliver to Bank First Amended and Restated Revolving Promissory
Notes dated of even date with this Amendment. From and after the date of this Amendment,
any reference to the Revolving Notes in the Loan Agreement and the other Loan
Documents shall be amended to refer to such First Amended and Restated
Revolving Promissory Notes.

 

3.             Section 2.10 of the Loan Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:

 

 

2.10          INTEREST ON THE REVOLVING NOTES. Prior to maturity
and subject to the incentive pricing provisions contained in Section 2.15
of this AGREEMENT and the minimum interest rate of 5.5% applicable to the
REVOLVING LOAN, interest on the principal balance outstanding on the REVOLVING
NOTES shall accrue at a rate equal to the greater of (1) the 90 day LIBOR
RATE plus 450 hundred basis points and (ii) 5.5%. The interest rate on the
REVOLVING NOTES shall initially be set on the date of the REVOLVING NOTES, and
shall adjust on the 1st day of every third month thereafter to a rate
equal to the greater of (i) the 90 day LIBOR RATE plus 450 basis points or
(ii) 5.5%. If the date of the REVOLVING NOTES is a day other than the
first day of the month, then the initial 90 day LIBOR RATE shall be that 90 day
LIBOR RATE in effect on the date of the REVOLVING NOTES. After the applicable
LOAN TERMINATION DATE, whether by acceleration or otherwise, interest shall
accrue on the REVOLVING NOTES at a rate equal to the 90 day LIBOR RATE plus one
thousand fifty (1050) basis points. Interest on the REVOLVING NOTES shall be
paid monthly, in arrears.

 

4.             Section 1.29 of the Loan Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:

 

1.29 “INTEREST PERIOD” means for the FIXED RATE
NOTES, VARIABLE RATE NOTES, CONSTRUCTION NOTES and LONG TERM REVOLVING NOTES a
period of one (1) month, and for the REVOLVING NOTES a period of 90 days;
provided that:

 

1.29.1 subject to clause
1.29.2 below, any INTEREST PERIOD which would otherwise end on a day which is
not a EURODOLLAR BUSINESS DAY shall be extended to the next succeeding
EURODOLLAR BUSINESS DAY; and

 

1.29.2 no INTEREST PERIOD
shall extend beyond the LOAN TERMINATION DATE applicable to such NOTE.

 

5.              Section 2.15 of the Loan Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:

 

2.15 Incentive Pricing. The interest rate
applicable to the REVOLVING LOAN, VARIABLE RATE NOTES and the LONG TERM
REVOLVING LOAN is subject to reduction commencing six months subsequent to
CONSTRUCTION LOAN TERMINATION DATE, based on the most recent interim financial
statements delivered by or on behalf of BORROWER to ADMINISTRATIVE AGENT; provided,
however, that in no event shall the interest rate be less than 4% with respect
to the VARIABLE RATE NOTES and the LONG TERM REVOLVING LOAN and 5.5% with
respect to the REVOLVING LOAN. In the event that BORROWER maintains the
following ratios, measured quarterly, the interest rate will be reduced
accordingly:

 

 

	
  If INDEBTEDNESS to NET WORTH is less than:

  	
   

  	
  Interest rate will be:

  
	
   

  	
   

  	
   

  
	
  1.25 : 1.00

  	
   

  	
  The one month LIBOR RATE plus 350 basis points with respect to the
  VARIABLE RATE NOTES and the LONG TERM REVOLVING LOAN and with respect to the
  REVOLVING LOAN, the 90 day LIBOR RATE plus 450 basis points

  
	
  1.05 : 1.00

  	
   

  	
  The one month LIBOR RATE plus 325 basis points with respect to the
  VARIABLE RATE NOTES and the LONG TERM REVOLVING LOAN and with respect to the
  REVOLVING LOAN, the 90 day LIBOR RATE plus 425 basis points

  
	
  0.85 : 1.00

  	
   

  	
  The one month LIBOR RATE plus 300 basis points with respect to the
  VARIABLE RATE NOTES and the LONG TERM REVOLVING LOAN and with respect to the
  REVOLVING LOAN, the 90 day LIBOR RATE plus 400 basis points

  
	
  0.65 : 1.00

  	
   

  	
  The one month LIBOR RATE plus 275 basis points with respect to the
  VARIABLE RATE NO’T’ES and the LONG TERM REVOLVING LOAN and with respect to
  the REVOLVING LOAN, the 90 day LIBOR RATE plus 375 basis points

  

 

6.               Section 2.13 of the Loan
Agreement is hereby deleted in its entirety and the following is inserted in
lieu thereof:

 

2.13 Fees. BORROWER shall pay to ADMINISTRATIVE
AGENT the fees and other amounts described and provided for in that certain fee
letter of even date with this AGREEMENT between BORROWER and ADMINISTRATIVE
AGENT (as it may be amended or modified and in effect from time to time, the “FEE
LETTER”) in accordance with the terms of the FEE LETTER.

 

BORROWER agrees to pay ADMINISTRATIVE AGENT for the
account of BANKS in proportion to their respective COMMITMENTS in the REVOLVING
LOAN an unused commitment fee equal to 50 basis points of the average unused
portion of the REVOLVING LOAN COMMITMENT and unused portion of the LONG TERM
REVOLVING LOAN available at such time, calculated and payable on a quarterly
basis in arrears; provided, however, the unused commitment fees on same shall
not begin accruing or be payable by BORROWER on the LONG TERM REVOLVING LOAN
until the CONSTRUCTION LOAN TERMINATION DATE. BORROWER shall pay ADMINISTRATIVE
AGENT commitment fees equal to 1.75% per annum of issued and outstanding
Letters of Credit 

 

 

issued at BORROWER’s request and on BORROWER’s
account with such fee payable quarterly, together with such other fees as are
consistent with FNBO’s then current International Trade Services Fee Schedule.

 

7.               Section 6.1.9 of the Loan
Agreement is hereby deleted in its entirety and the following is inserted in
lieu thereof:

 

6.1.9          On
the 15th and 31st days of each month, or the first BANKING DAY after such days
if the 15th and 31st of a month are not BANKING DAYS, BORROWER shall provide
BORROWING BASE certificates in form reasonably acceptable to ADMINISTRATIVE
AGENT, calculating advance rates under the REVOLVING LOAN pursuant to the BORROWING
BASE beginning with the certificate with respect to the fourth month following
CONSTRUCTION LOAN TERMINATION DATE or at the time of any request for an advance
on the REVOLVING LOAN.

 

8.             Section 6.1.2 of the Loan
Agreement is hereby amended by deleting “After the CONSTRUCTION LOAN
TERMINATION DATE,” from the beginning of such Section.

 

9.             Section 613 of the Loan
Agreement is hereby amended by deleting “ending after the CONSTRUCTION LOAN
TERMINATION DATE” from the beginning of such Section.

 

10.           Section 6.1.4 of the Loan
Agreement is hereby amended by deleting “After the CONSTRUCTION LOAN
TERMINATION DATE,” from the beginning of such Section.

 

11.            The opening clause of Section 6.2.4
of the Loan Agreement is hereby deleted and the following is inserted in lieu
thereof:

 

“Until the first day of the fourth month after the
CONSTRUCTION LOAN TERMINATION DATE, BORROWER will maintain at all times WORKING
CAPITAL of not less than $1,000,000.00 (measured at the end of each fiscal
quarter), and thereafter BORROWER shall maintain the following minimum WORKING
CAPITAL during the periods stated below, measured continuously:

 

12.           Until the CONSTRUCTION LOAN
TERMINATION DATE, BORROWER will maintain at all times an Interest Coverage
Ratio, as determined and calculated in accordance with GAAP, of not less than
1.10:1.0.

 

13.           Except as modified and amended herein, all other terms,
provisions, conditions and obligations imposed under the terms of the Loan
Agreement, the Revolving Notes and the other Loan Documents shall remain in
full force and effect and are hereby ratified and affirmed by Borrower. To the
extent necessary, the other Loan Documents are hereby amended to be consistent
with the terms of this Amendment. The modifications and amendments contained in
this Amendment will become effective on the date of this Amendment except as
otherwise specifically provided for above.

 

 

14.           Borrower certifies and reaffirms by
its execution hereof that the representations and warranties set forth in the
Loan Agreement and the other Loan Documents are true as of this date, and that
no Event of Default under the Loan Agreement or any other Loan Document, and no
event which, with the giving of notices or passage of time or both, would
become such an Event of Default, has occurred as of execution hereof.

 

15.           This Amendment may be executed simultaneously in several
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.

 

{SIGNATURE PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, the parties
have executed and delivered this Amendment on the date first written above.

 

	
   

  	
  HIGHWATER ETHANOL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Kletscher

  
	
   

  	
   

  	
  Brian
  Kletscher, CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  NATIONAL BANK OF OMAHA,

  
	
   

  	
  In
  its capacity as a BANK, ADMINISTRATIVE

  
	
   

  	
  AGENT
  and COLLATERAL AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Fallon Savage

  
	
   

  	
   

  	
  Fallon
  Savage, Second Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGSTAR
  FINANCIAL SERVICES, PCA

  
	
   

  	
  as
  a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeanne M. Scharf

  
	
   

  	
  Name:

  	
  Jeanne
  M. Scharf

  
	
   

  	
  Title:

  	
  VP
  Credit ABC & Capital Markets

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNITED
  FCS, as a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Petersen

  
	
   

  	
  Name:

  	
  Chris Petersen

  
	
   

  	
  Title:

  	
  VP Agribusiness Analyst

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  BANK & TRUST, as a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin A. Eichacker

  
	
   

  	
  Name:

  	
  Kevin
  A. Eichacker

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANITE
  FALLS BANK, as a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Craig A. Bakkelund

  
	
   

  	
  Name:

  	
  Craig
  A. Bakkelund

  
	
   

  	
  Title:

  	
  Vice
  President

  
				

 

 

	
   

  	
  HERITAGE
  BANK, as a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Don Mathews

  
	
   

  	
  Name:

  	
  Don
  Mathews

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEERE
  CREDIT, INC., as a BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark A. Thompson

  
	
   

  	
  Name:

  	
  Mark
  A. Thompson

  
	
   

  	
  Title:

  	
  Vice
  PresidentExhibit
10.3

 

FIRST
AMENDED AND RESTATED REVOLVING PROMISSORY NOTE

 

	
  Omaha, Nebraska

  	
   

  	
  $1,354,000.00

  
	
  Note Date: April 24, 2009

  	
   

  	
   

  
	
  Maturity Date: February 28, 2010

  	
   

  	
   

  

 

On or before February 28, 2010, HIGHWATER
ETHANOL, LLC (“BORROWER”), promises to pay to the order of Deere Credit, Inc.
(“BANK”) in care of FIRST NATIONAL BANK OF OMAHA at its headquarters in Omaha,
Nebraska and in its capacity as the ADMINISTRATIVE AGENT for the BANKS under
the AGREEMENT (as defined below), the principal sum hereof, which shall be One
Million Three Hundred Fifty-Four Thousand and No/100 Dollars ($1,354,000.00) or
so much thereof as may have been advanced by BANK and shown on the records of
the ADMINISTRATIVE AGENT to be outstanding under this FIRST AMENDED AND
RESTATED REVOLVING PROMISSORY NOTE (“REVOLVING PROMISSORY NOTE”). This
REVOLVING PROMISSORY NOTE amends and restates that certain REVOLVING PROMISSORY
NOTE dated April 24, 2008 executed in favor of and delivered to BANK, but
is not a novation thereof. Interest on the principal balance from time to time
outstanding will accrue at the rate provided for in the AGREEMENT, adjusting as
provided for in the AGREEMENT. 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 monthly, in arrears.

 

The interest rate applicable to this REVOLVING NOTE
is subject to reduction as provided for in Section 2.15 of the AGREEMENT.

 

This REVOLVING PROMISSORY NOTE is executed pursuant
to that certain Construction Loan Agreement dated April 24, 2008 between
BANKS and BORROWER (the Construction Loan Agreement, together with all
amendments, modifications and supplements thereto and all restatements and
replacements thereof is called the (“AGREEMENT”). The AGREEMENT, and any
amendments or substitutions thereof or thereto, contains additional terms and
conditions, including default and acceleration provisions, which are
incorporated into this REVOLVING PROMISSORY NOTE by reference. All capitalized
terms not otherwise defined herein shall have the same meanings as set forth in
the AGREEMENT.

 

The aggregate unpaid principal amount hereof plus
interest shall become immediately due and payable without demand or further
action on the part of the ADMINISTRATIVE AGENT or BANK upon the occurrence of
an EVENT OF DEFAULT as set forth under the AGREEMENT or any other LOAN
DOCUMENT. If the maturity date of this REVOLVING PROMISSORY NOTE is accelerated
as a consequence of an EVENT OF DEFAULT, then the AGENT shall have all the
rights and remedies provided for in the AGREEMENT, the other LOAN DOCUMENTS or
otherwise available at law or in equity. The rights, powers, privileges,
options and remedies of AGENT provided in the AGREEMENT, the other LOAN
DOCUMENTS or otherwise available at law or in equity shall be cumulative and
concurrent,

 

 

and may be pursued singly, successively or together at the sole
discretion of AGENT, and may be exercised as often as occasion therefor shall
occur. No delay or discontinuance in the exercise of any right, power,
privilege, option or remedy shall be deemed a waiver of such right, power,
privilege, option or remedy, nor shall the exercise of any right, power,
privilege, option or remedy be deemed an election of remedies or a waiver of
any other right, power, privilege, option or remedy. Without limiting the
generality of the foregoing, the ADMINISTRATIVE AGENT’s waiver of an EVENT OF
DEFAULT shall not constitute a waiver of acceleration in connection with any
future EVENT OF DEFAULT. The ADMINISTRATIVE AGENT may rescind any acceleration
of this REVOLVING PROMISSORY NOTE without in any way waiving or affecting any
acceleration of this REVOLVING PROMISSORY NOTE in the future as a consequence
of an EVENT OF DEFAULT. The ADMINISTRATIVE AGENT’s acceptance of partial
payment or partial performance shall not in any way affect or rescind any
acceleration of this REVOLVING PROMISSORY NOTE made by the ADMINISTRATIVE
AGENT.

 

Unless prohibited by law, BORROWER will pay on
demand all reasonable costs of collection, reasonable legal expenses and
reasonable attorneys’ fees and costs incurred or paid by BANK in collecting
and/or enforcing this REVOLVING PROMISSORY NOTE. Furthermore, BANK reserves the
right to offset without notice all funds held by BANK against debts owing to
BANK by BORROWER.

 

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.

 

[SIGNATURE PAGE FOLLOWS]

 

 

Executed as of the Note Date set forth above.

 

 

	
   

  	
  HIGHWATER ETHANOL, LLC, a

  
	
   

  	
  Minnesota limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Brian Kletscher

  
	
   

  	
   

  	
      Brian Kletscher, CEO

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