Document:

exv10w2

 

Exhibit 10.2

PROMISSORY NOTE

$3,500,000.00                 
                            
                             
                            Effective Date: October 27, 2006

     FOR VALUE RECEIVED, Siouxland Ethanol, LLC (“Maker”), promises to pay to the order of Farm
Credit Service of America, PCA (“FCSA”) at its office at 5015 South 118th St., Omaha,
Nebraska 68137, or such other place as FCSA shall direct in writing, the principal sum of Three
Million Five Hundred Thousand Dollars ($3,500,000.00) or, if less, the amount outstanding under
this Note for Advances pursuant to the Credit Agreement dated as of May 4,, 2006, by and between
FCSA and Maker (as it may be amended from time to time in the future, the “Credit Agreement”) and
any indebtedness related thereto. This Note is issued and delivered to FCSA pursuant to the Credit
Agreement. All capitalized terms used in this Note and not otherwise defined herein shall have the
same meanings as set forth in the Credit Agreement.

     The unpaid balance of this Note from time to time outstanding shall bear interest as set forth
in the Credit Agreement. Principal and interest shall be payable as provided in the Credit
Agreement. The amount of each principal an interest payment shall be determined as provided in the
Credit Agreement. This Note has been issued by Maker to FCS/ pursuant to the Credit Agreement and
reference is made thereto for specific terms and conditions under which this Note i made and to
which this Note is subject.

     Upon the occurrence of an Event of Default, Maker agrees that FCSA (including its assignee,
“Holder”) shall have all rights and remedies set forth in the Credit Agreement, including without
limitation the rights of acceleration set forth in the Credit Agreement. In addition, Holder shall
have the right to recover all costs of collection and enforcement of this Note as provided in the
Credit Agreement.

     Maker and any endorser, guarantor, surety or assignor hereby waives presentment for payment,
demand, protest, notice of protest, and notice of dishonor and nonpayment of this Note, and all
defenses on the ground of delay, suretyship, impairment of collateral, or of extension of time at
or after maturity for the payment of this Note.

     This Note shall be governed in all respects by the law of the State of Nebraska.

Maker:

SIOUXLAND ETHANOL, LLC

	 	 	 	 	 
	 

	 	By: /s/ Thomas Lynch

	 	 
	 

	 	 	 	 
	 

	 	Name: Thomas Lynch

Title: President	 	 

	 	 	 	 	 
	 

	 	By: /s/ Shennen Saltzman
	 	 
	 

	 	 	 	 
	 

	 	Name: Shennen Saltzman

Title: Directorexv10w3

 

Exhibit 10.3

Farm Credit Services of America

SECURITY AGREEMENT AND ASSIGNMENT OF HEDGING ACCOUNT

	 	 	 	 	 
	Debtors:
Siouxland Ethanol, LLC

	 	 	 	Customer No.: 138039

WHEREAS, the undersigned, Siouxland Ethanol, LLC hereinafter called “Debtor”, whose address is
Post Office Box 147, Jackson, NE 68743-0147, carries an account (No. 29340) with FC Stone as
Broker, hereinafter called the “Broker”, whose address is Post Office Box 4887, Des Moines, Iowa
50306 for trading in commodities and contracts relating thereto;

WHEREAS, Debtor is now and/or may hereafter become indebted to FARM CREDIT SERVICES OF AMERICA,
PCA, hereinafter called the “Secured Party”, whose address is 5015 South 118th Street,
Omaha, NE 68137.

NOW, THEREFORE, it is agreed by and between the parties hereto as follows:

	1.	 	Secured Party hereby may advance to Debtor certain sums of money for the purpose of hedging
Debtor’s inventory of certain commodities. Debtor agrees to deposit said sums in an account
with Broker (“Account”) and agrees to employ said funds for the sole purpose of making hedging
transactions to protect Debtor’s commodity inventory and shall not employ said funds for
transactions of speculation or investment in commodities futures.

	2.	 	To secure payment and performance of Debtor’s obligations to Secured Party, and for the
payment of all monies which Secured Party may hereafter loan or advance to Debtor, Debtor
hereby grants a security interest in and assigns and transfers to Secured Party all funds
which may hereafter accumulate or become withdrawable from, or paid out of the Account,
including any balance which may remain to the credit of the Account upon the closing thereof;
subject, however, to the prior payment of all indebtedness of Debtor to Broker, as such may
exist from time to time, including fees and commissions, which may have been incurred in
connection with Debtor’s transactions with Broker, and to Broker’s lien, and the right of
foreclosure thereof in connection with the indebtedness of Debtor to Broker (including, but
not limited to, any right of Broker to close out open positions without prior demand for
additional margin and without prior notice).

	3.	 	As additional security for the obligations of Debtor to Secured Party, and for the payment of
all monies which Secured Party may hereafter loan or advance to Debtor, Debtor hereby grants
to Secured Party a continuing security interest in and to all commodities futures contracts
which Broker transacts for Debtor and all proceeds thereof; subject, however, to the prior
payment of all indebtedness of Debtor to Broker, as such may exist from time to time,
including fees and commissions, which may have been incurred in connection with Debtor’s
transactions with Broker, and to Broker’s lien, and the right of foreclosure thereof in
connection with any indebtedness of Debtor to Broker (including, but not limited to, any right
of Broker to close out open positions without prior demand for additional margin and without
prior notice). Debtor shall execute and deliver to Secured Party all financing statements and
other documents as Secured Party may reasonably request, in a form satisfactory to Secured
Party to perfect and maintain perfected the security interests granted and assignments made by
Debtor to Secured Party in this Agreement.

	4.	 	Broker is hereby authorized and directed to pay to Secured Party upon Secured Party’s demand
all funds that may hereafter be withdrawable or payable out of the Account, and Debtor agrees
that Debtor will not withdraw or attempt to withdraw any funds or other property from the
Account except as permitted by this Agreement. Secured Party is hereby authorized and fully
empowered without further authority from Debtor to request Broker to remit to Secured Party
any funds that may be due to Debtor, and Broker is hereby authorized and directed to pay to
Secured Party such sums as Secured Party shall so request or demand without the consent of or
notice to Debtor.

	5.	 	If at any time during the continuance of any such contract or contracts, Broker requires
additional funds in order to protect such contract or contracts, Secured Party may, at Secured
Party’s sole and exclusive discretion, pay to Broker on behalf of Debtor such amounts as may
be required to protect such contracts; provided, however, that Debtor shall in all respects
remain liable to Secured Party for any amounts so advanced pursuant to the terms of any
agreement entered into between Secured Party and Debtor in connection with the transactions
covered by this Agreement.

	6.	 	Debtor hereby constitutes and appoints Secured Party Debtor’s true, lawful and irrevocable
attorney to demand, receive and enforce payments and to give receipts, releases, satisfactions
for, and to sue for all monies payable to Debtor, and this may be done in the name of Secured
Party with the same force and effect as Debtor could do had this Agreement not been made. Any
and all monies or payments which may be received by Debtor to which Secured Party is entitled
under and by reason of the Agreement, will be received by Debtor as trustee for Secured Party,
and will be immediately delivered in kind to Secured Party without commingling.

	7.	 	Nothing herein contained shall be construed so as to prevent Debtor from remaining the owner,
subject to the interest of Secured Party of the Account with Broker. Until Secured Party
elects to the contrary and delivers notice of such election in writing to Broker, Debtor may
make such additional transactions in the Account with Broker as Broker shall be willing to
accept for execution. In the event Secured Party does make such election and does deliver
notice to Broker, Debtor shall not thereafter execute any transactions in the Account and
Broker shall not accept for execution any such transactions without the concurrence of Secured
Party except transactions in liquidation of any then outstanding commodity or futures
positions.

	8.	 	Whenever Secured Party deems it necessary for its protection, it shall be entitled, without
the consent or concurrence of, or prior notice to Debtor, to direct Broker to liquidate any
and all then outstanding open positions in the Account and to direct Broker to pay to Secured
Party the credit balance as shall exist in the Account after such liquidation and after the
payment to Broker of all the indebtedness of Debtor to Broker in connection with transactions
in the Account.

	9.	 	Any sums paid by Broker from the Account to Secured Party under this Agreement shall be
applied by Secured Party to the payment of any indebtedness owing by Debtor to Secured Party.
The balance remaining after the payment of said indebtedness shall be paid by Secured Party to
Debtor. The receipt or receipts of Secured Party for such funds

 

 

	 	 	so paid to it by Broker shall, as to Broker, operate as the receipt
of Debtor as fully and as completely as if funds had been paid to Debtor in person and receipted for by Debtor.

	 
	 	 
	10.	 	Secured Party is hereby authorized and empowered to receive from Broker, and Broker is authorized and directed to deliver
to Secured Party, copies of confirmations on all contracts executed for the Account of Debtor, copies of the monthly position and
ledger account of Debtor, and copies of any and all matters pertaining to the Account of Debtor with Broker.

	11.	 	As between Debtor and Secured Party, this Agreement shall remain in full force and effected until canceled in writing by
Secured Party, or by Debtor when and if Debtor no longer is indebted to Secured Party. Any cancellation of this Agreement shall
be without effect as to Broker until Broker is notified at the above address in writing by secured Party.

	12.	 	Debtor hereby represents and warrants to Secured Party that the Account, accounts or security interests above
assigned or granted have not heretofore been alienated or assigned except for the security interests previously granted by Debtor
to Broker.

	13.	 	This Agreement shall be binding upon Debtor, Debtor’s executors, administrators or assigns, and it shall be binding upon
and inure to the benefit of any successors of Secured Party and Broker.

	 	 	 
	Date:
	 	 
	 
	 	 
	Siouxland Ethanol, LLC
	 
	 	 
	/s/ Thomas Lynch,

	 	 
	 
	 	 
	Thomas
Lynch, President
	 	 
	 
	 	 
	/s/ Shennen Saitzman,
 

	 	  
	Shennen
Saitzman, Director
	 	 

	 	 	 
	 

	 	FARM CREDIT SERVICES OF AMERICA, PCA

(Secured Party)
	 
	 	 
	Date:   October 27, 2006

	 	By:   /s/ Shane Frahm

	 

	 	 
	 

	 	Shane Frahm, Vice President

ACKNOWLEDGMENT

TO: FARM CREDIT SERVICES OF AMERICA, PCA (Secured Party):

The
undersigned FC Stone, whose address is Post Office Box 4887, Des
Moines, Iowa, hereby acknowledges receipt of
a copy of the above mentioned Security Agreement and Assignment of
Hedging Account and agrees to abide by the provisions thereof.
No previous assignment or claims against the above described Account or accounts have been received by the undersigned.

	 	 	 	 	 	 	 
	This copy received	 	 , 20	 	.	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(BROKER)
	 	 	 	 	 	 	 
	 	 	 	 	 	By: 	 
	 	 	 	 	 	 	(Title)

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