Document:

EXHIBIT 10.1

 

AMENDMENT NO. 3 TO

FIFTH SUPPLEMENT

TO THE MASTER LOAN AGREEMENT

(REVOLVING LINE OF CREDIT LOAN)

 

This
Amendment No. 3 to the Master Loan Agreement (Revolving Line of Credit
Loan) (this “Amendment”) is effective as of May 29,
2009, by and between HERON LAKE BIOENERGY, LLC,
a Minnesota limited liability company (“Borrower”) and AGSTAR FINANCIAL SERVICES, PCA (“Lender”).

 

RECITALS

 

A.            Lender has extended various credit
facilities to Borrower for the purposes of acquiring, constructing, equipping,
furnishing and operating an ethanol production facility in Jackson County,
Minnesota, pursuant to that certain Fourth Amended and Restated Master Loan
Agreement dated as of October 1, 2007, as the same may be amended,
supplemented, modified, extended or restated from time to time (the “MLA”); that certain Third Supplement to the Master Loan
Agreement (Term Loan) dated as of October 1, 2007, as the same may be
amended, supplemented, modified, extended or restated from time to time (the “Third Supplement”); that certain Fourth Supplement to the
Master Loan Agreement (Term Revolving Loan) dated as of October 1, 2007,
as the same may be amended, supplemented, modified, extended or restated from
time to time (the “Fourth Supplement”);
and that certain Fifth Supplement to the Master Loan Agreement (Revolving Line
of Credit Loan) dated as of November 19, 2007, as amended by that certain
Amendment No. 1 to Fifth Supplement to the Master Loan Agreement dated November 17,
2008, as further amended by that certain Amendment No. 2 to Fifth
Supplement to the Master Loan Agreement dated February 1, 2009, as the
same may be amended, supplemented, modified, extended or restated from time to
time (collectively, the “Fifth Supplement”).  The MLA, Third Supplement, Fourth Supplement
and Fifth Supplement are referred to collectively hereinafter as the “Loan Agreement”).

 

B.            Borrower has requested that Lender
amend certain provisions of the Fifth Supplement, and Lender has agreed to such
amendments upon the terms and conditions set forth herein.

 

C.            Unless otherwise expressly defined
herein, capitalized terms used herein shall have the same meaning ascribed to
them in the MLA or the Fifth Supplement, as applicable.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises herein contained, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto herby agree as follows:

 

 

1.             Amendments
to Fifth Supplement.

 

(a)           Section 1:  The following defined terms in the Fifth
Supplement are hereby amended and restated to read as follows:

 

“Borrowing
Base” means, at any time, the lesser of: 
(a) $6,750,000.00; or (b) the sum of:  (i) 75% of Borrower’s Eligible Accounts
Receivable; plus (ii) 75% of Borrower’s Eligible Inventory.

 

“Revolving
Line of Credit Loan Maturity Date” shall mean November 1, 2009.

 

(b)         Section #2 of the Fifth Supplement
is hereby amended and restated to read as follows:

 

Revolving Loan
Commitment.  On the terms and conditions set forth in the
MLA and this Fifth Supplement, Lender agrees to make one or more advances
(collectively, the “Revolving Line of Credit
Loan”) to the Borrower, during the period beginning on the
Availability Date (as defined in Section 5 of this Fifth Supplement) and
ending on the Business Day immediately preceding the Revolving Line of Credit
Loan Maturity Date (as hereinafter defined in this Section 2) (the “Revolving Line of Credit Loan Termination Date”), in an aggregate principal amount outstanding at any one
time not to exceed $6,750,000.00 (the “Revolving
Line of Credit Loan Commitment”) provided, however, that at no time shall the Outstanding
Revolving Advance exceed the Borrowing Base. 
The Revolving Line of Credit Loan Commitment shall expire at 12:00 noon
Central time on the Revolving Line of Credit Loan Maturity Date.  Subject to Section 7 of this Fifth Supplement, under
the Revolving Line of Credit Loan Commitment amounts borrowed and repaid or
prepaid may be reborrowed at any time prior to and including the Revolving Line
of Credit Loan Termination Date.

 

(c)          Section #6(f) of the Fifth
Supplement is hereby amended by the addition of the following subsection:

 

(iv)        Deposit Accounts.  The Borrower shall have established and shall
maintain all of its primary deposit accounts at Home Federal Savings Bank.

 

(d)         Section #8 of the Fifth Supplement
is hereby amended and restated to read as follows:

 

Interest Rate.  Subject to the
provisions of Sections 9 and 11 of this Fifth Supplement, the Revolving Line of
Credit Loan shall bear interest at a rate equal to the LIBOR Rate plus 325
basis points.  The computation of
interest, amortization, maturity and other terms and conditions of the
Revolving Line of Credit Loan shall be as provided in the Revolving Line of
Credit Note, provided, however, in no event shall the applicable rate exceed
the maximum nonusurious interest rate, if any, that at any time, or from time
to time, may be contracted for, taken, reserved, charged, or received under
applicable state or federal laws (the “Maximum Rate”).  Notwithstanding the foregoing, in no event
shall the rate of interest under the Revolving Line of Credit Loan be less than
six (6.0%) percent per annum until paid in full.

 

2

 

2.             Conditions to Effectiveness of this Amendment.  This Amendment shall become effective as
of the date hereof upon the satisfaction of the conditions precedent stated in
that certain Amendment No. 1 to Fourth Amended and Restated Master Loan
Agreement of even date herewith.

 

3.             Representations
and Warranties.  Borrower
hereby represents to Lender that, after giving effect to this Amendment:

 

(a)           All of the representations and
warranties of Borrower contained in the MLA and in each other Loan Document are
true and correct in all material respects as though made on and as of the date
hereof.

 

(b)           As the date hereof, except as
otherwise specifically stated herein, no Event of Default has occurred and is
continuing.

 

4.             Miscellaneous.

 

(a)           Effect; Ratification.  The amendments set forth herein are effective
solely for the purposes set forth herein and shall be limited precisely as
written, and shall not be deemed to (i) be a consent to, or an
acknowledgment of, any amendment, waiver or modification of any other term or
condition of the Loan Agreement or (ii) prejudice any right or remedy
which Lender may now have or may have in the future under or in connection with
the Loan Agreement, as amended hereby, or any other instrument or agreement
referred to therein. It is further understood and agreed by and between the
Borrower and the Lender that all other terms and provisions of the Loan
Agreement shall remain in full force and effect, enforceable by the Lender
against the Borrower as fully as though no amendments had been made hereby, and
this Amendment shall not be deemed to hinder, compromise or lessen the
enforceability of the Loan Agreement, the Notes, or any mortgage, security
interest, or guaranty securing repayment of the Loans, in any way.  Each reference in the Loan Agreement and in
any other Loan Document to the “Fifth Supplement” shall mean the Fifth
Supplement, as amended hereby.

 

(b)           Loan Documents.  This Amendment is a Loan Document executed
pursuant to the MLA and shall be construed, administered and applied in
accordance with the terms and provisions thereof.

 

(c)           Defined Terms.  All terms used and
not otherwise defined herein shall have the meanings assigned to them in the
MLA or the Fifth Supplement, as applicable.

 

(d)           Counterparts.  This Amendment may be executed in any number
of counterparts, each such counterpart constituting an original and all of
which when taken together shall constitute one and the same instrument.

 

(e)           Severability.  Any provision contained in this Amendment
which is held to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable or invalid
without affecting the remaining provisions of this Amendment in that
jurisdiction or the operation, enforceability or validity of such provision in
any other jurisdiction.

 

3

 

(f)            GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA.

 

(g)           WAIVER OF JURY TRIAL.  THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT TO WHICH IT IS A
PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.

 

{SIGNATURE PAGE FOLLOWS}

 

4

 

SIGNATURE PAGE TO

AMENDMENT NO. 3 TO

FIFTH SUPPLEMENT TO THE MASTER LOAN AGREEMENT

(REVOLVING LINE OF CREDIT LOAN)

BY AND BETWEEN

HERON LAKE BIOENERGY, LLC

AND

AGSTAR FINANCIAL SERVICES, PCA

DATED AS OF:  May 29, 2009

 

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

 

BORROWER:

 

HERON
LAKE BIOENERGY, LLC,

a
Minnesota limited liability company

 

 

	
  By:

  	
  /s/
  Robert J. Ferguson

  	
   

  
	
   

  	
   Robert J.
  Ferguson

  	
   

  
	
   

  	
   Its:
  President

  	
   

  

 

LENDER:

 

AGSTAR
FINANCIAL SERVICES, PCA,

a
United States corporation

 

 

	
  By:

  	
  /s/
  Mark Schmidt

  	
   

  
	
   

  	
   Mark
  Schmidt

  	
   

  
	
   

  	
   Its:  Vice President

  	
   

  

 

5EXHIBIT
10.2

 

AMENDED
AND RESTATED REVOLVING LINE OF CREDIT NOTE

 

	
  $6,750,000.00

  	
  May 29, 2009

  

 

1.             FOR
VALUE RECEIVED, HERON LAKE BIOENERGY, LLC, a
Minnesota limited liability company (the “Borrower”), hereby promises to pay to
the order of AGSTAR FINANCIAL SERVICES, PCA, an
United States instrumentality (the “Lender”), the principal sum of Six Million
Seven Hundred Fifty Thousand and No/100ths ($6,750,000.00) Dollars, or so much
thereof as may be advanced to, or for the benefit of, the Borrower and be outstanding,
with interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein pursuant to that certain Fourth Amended and
Restated Master Loan Agreement  dated October 1,
2007, by and between the Lender and the Borrower (as it may be amended,
modified, supplemented, extended or restated from time to time, collectively,
the “MLA”), and in that certain Fifth
Supplement to the MLA, dated November 1, 2007, by and between the Lender
and the Borrower, as amended by that certain Amendment No. 1 to Fifth
Supplement dated November 17, 2008, as further amended by that certain
Amendment No. 2 to Fifth Supplement dated February 1, 2009, and as
further amended by that certain Amendment No. 3 to Fifth Supplement of
even date herewith  (as it may be
amended, modified, supplemented, extended or restated from time to time,
collectively, the “Fifth Supplement”),
and which remains unpaid, in lawful money of the United States and immediately
available funds.  This Amended and
Restated Revolving Line of Credit Note (the “Note”)
is issued pursuant to the terms and provisions of the MLA and the Fifth
Supplement and is entitled to all of the benefits provided for in the MLA and
the Fifth Supplement.  All capitalized
terms used and not defined herein shall have the meanings assigned to them in
the MLA and the Fifth Supplement.

 

2.             The outstanding principal balance
of this Note shall bear interest at a variable rate determined by Lender to be
three and one-quarter percent (3.25%) above the LIBOR Rate in effect on the
first Advance pursuant to this Note, provided, however, at
no time shall the rate of interest under this Note be less than six (6.0%)
percent per annum until paid in full. 
Notwithstanding the foregoing, the rate of interest under this Note may
be adjusted by Lender pursuant to the provisions of the MLA and the Fifth
Supplement.

 

3.             The “LIBOR Rate” means
the rate (rounded upward to the nearest sixteenth and adjusted for reserves
required on Eurocurrency Liabilities (as hereinafter defined) for banks subject
to FRB Regulation D (as hereinafter defined) or required by any other federal
law or regulation, quoted by the British Bankers Association (the “BBA”) at
11:00 a.m. London time two Banking 
Days (as hereinafter defined) before the commencement of the Interest
Period for the offering of U.S. Dollar deposits in the London interbank market
for am Interest Period  of one month, as
published by Bloomberg or another major information vendor listed on BBA’s
official website.  “Banking Day”
shall mean a day on which Lender is open for business, dealings in U.S. dollar
deposits are being carried out in the London interbank market, and banks are
open for business in New York City and London, England.  “Eurocurrency Liabilities”
has the meaning as set forth in FRB Regulation D.  “FRB Regulation D”
means Regulation D as promulgated by the Board of Governors of the Federal
Reserve System, 12 CFR Part 204, as amended from time to time.

 

 

4.             The
rate of interest due hereunder shall initially be determined as of the date
hereof and shall thereafter be adjusted, as and when, and on the same day that,
the LIBOR Rate changes. All such adjustments to the rate of interest shall be
made and become effective as of the date of any change in the LIBOR Rate and shall
remain in effect until and including the day immediately preceding the next
such adjustment (each such day hereinafter being referred to as an “Adjustment Date”). 
All such adjustments to said rate shall be made and become effective as
of the Adjustment Date, and said rate as adjusted shall remain in effect until
and including the day immediately preceding the next Adjustment Date.  Interest hereunder shall be computed on the
basis of a year of three hundred sixty-five or three hundred sixty-six (365 or
366) days, but charged for actual days principal is outstanding.

 

5.             Beginning
on the first (1st) day of May,
2009, and continuing on the first (1st) day of each succeeding month thereafter until the
Maturity Date, the Borrower shall make monthly payments of accrued interest.

 

6.             The
outstanding principal balance hereof, together with all accrued interest, if
not paid sooner, shall be due and payable in full on November 1, 2009 (the
“Maturity Date”).

 

7.             All
payments and prepayments shall, at the option of the Lender, be applied first
to any costs of collection, second to any late charges, third to accrued
interest and the remainder thereof to principal.

 

8.             This
Note may be prepaid at any time, at the option of the Borrower, either in whole
or in part, subject to the obligation of the Borrower to compensate the Lender
for any loss, cost or expense as a result of such prepayment as set forth in
the Fifth Supplement.  This Note is
subject to mandatory prepayment, at the option of the Lender, as provided in the
MLA and the Fifth Supplement.

 

9.             In addition to the
rights and remedies set forth in the MLA and the Fifth Supplement: (i) if
the Borrower fails to make any payment to Lender when due (including, without
limitation, any purchase of equity of Lender when required ) under this Note,
then at Lender’s option in each instance, such obligation or payment shall bear
interest from the date due to the date paid at 2% per annum in excess of the
rate of interest that would otherwise be applicable to such obligation or
payment under this Note; (ii) upon the occurrence and during the
continuance of an Event of Default beyond any applicable cure period, if any,
at Lender’s option in each instance, the unpaid balances under this Note shall
bear interest from the date of the Event of Default or such later date as
Lender shall elect at 2% per annum in excess of the rate(s) of interest
that would otherwise be in effect under the terms of this Note; (iii) after
the Maturity Date, whether by reason of acceleration or otherwise, the unpaid
principal balance of this Note (including without limitation, principal,
interest, fees and expenses) shall automatically bear interest at 2% per annum
in excess of the rate of interest that would otherwise be in effect under this
Note.  Interest payable at the Default
Rate shall be payable from time to time on demand or, if not sooner demanded,
on the last day of each calendar month.

 

10.           If the Borrower
fails to make any payment to Lender within ten (10) days of the due date
thereof (including, without limitation, any purchase of equity of Lender when
required), the Borrower shall, in addition to such amount, a late charge equal
to five percent (5%) of the amount of such payment.

 

2

 

11.           Upon
the occurrence at any time of an Event of Default or at any time thereafter,
the outstanding principal balance hereof plus accrued interest hereon plus all
other amounts due hereunder shall, at the option of the Lender, be immediately
due and payable, without notice or demand and Lender shall be entitled to
exercise all remedies provided in this Note, the MLA, the Fifth Supplement, or
any of the Loan Documents.

 

12.           The
occurrence at any time of an Event of Default or at any time thereafter, the
Lender shall have the right to set off any and all amounts due hereunder by the
Borrower to the Lender against any indebtedness or obligation of the Lender to
the Borrower.

 

13.           The
Borrower promises to pay all reasonable costs of collection of this Note,
including, but not limited to, reasonable attorneys’ fees paid or incurred by
the Lender on account of such collection, whether or not suit is filed with
respect thereto and whether or not such costs are paid or incurred, or to be
paid or incurred, prior to or after the entry of judgment.

 

14.           Demand,
presentment, protest and notice of nonpayment and dishonor of this Note are
hereby waived.

 

15.           This
Note shall be governed by and construed in accordance with the laws of the
State of Minnesota.

 

16.           The Borrower hereby
irrevocably submits to the jurisdiction of any Minnesota state court or federal
court over any action or proceeding arising out of or relating to this Note,
the MLA, the Fifth Supplement and any instrument, agreement or document related
hereto or thereto, and the Borrower hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such
Minnesota state or federal court. The Borrower hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.   Nothing in this Note shall affect the right
of the Lender to bring any action or proceeding against the Borrower or its
property in the courts of any other jurisdiction to the extent permitted by
law.

 

17.           The
execution and delivery of this Amended and Restated Revolving Line of Credit
Note shall supercede and replace that certain Revolving Line of Credit Note
dated November 19, 2007, which shall be of no force or effect.

 

{SIGNATURE PAGE TO IMMEDIATELY FOLLOW}

 

3

 

SIGNATURE PAGE TO

AMENDED AND RESTATED REVOLVING LINE OF CREDIT
NOTE

EXECUTED BY

HERON LAKE BIOENERGY, LLC

IN FAVOR OF

AGSTAR FINANCIAL SERVICES, PCA

DATED: 
May 29, 2009

 

	
   

  	
  HERON LAKE BIOENERGY, LLC

  
	
   

  	
  a Minnesota limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert J. Ferguson

  
	
   

  	
  By: Robert J. Ferguson

  
	
   

  	
    Its: President

  

 

4

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