Exhibit 10.27

 

PROMISSORY NOTE

(Renewal Note)

(Fixed Rate)

 

Not to Exceed $15,800,000.00

 

Sioux Falls, South Dakota

 

 

March 30, 2005

 

FOR VALUE RECEIVED, NORTHERN LIGHTS ETHANOL, LLC, a South Dakota Limited
Liability Company (“Borrower’), hereby promises to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, a national banking association (“Lender”, which term shall
include any future holder hereof), at 141 N. Main Avenue, Sioux Falls, South
Dakota, or at such other place as Lender may from time-to-time designate in
writing, in lawful money of the United States of America, the principal sum of
Fifteen Million Eight Hundred Thousand & 00/100 Dollars ($15,800,000.00) or so
much thereof as may be advanced hereunder, including all amounts due or incurred
by Borrower in accordance with the terms of the Loan Agreement between Borrower
and Lender dated as of July 11, 2001, or due or incurred by Borrower under the
terms of any other Loan Document as defined in such Loan Agreement.

 

PARTIAL RENEWAL OF N0TE. This Promissory Note partially supercedes and replaces
those Promissory Notes dated January 1, 2003, in the original principal amounts
of $15,000,000.00 and $11,100,000.00 which Borrower delivered to Lender pursuant
to the Loan Agreement between Borrower and Lender dated as of January 1, 2003
(the “Prior Notes”). This Promissory Note and the $3,900,000.00 Note dated this
same date represent an aggregate $18,667,631.25 principal amount outstanding
under the Prior Notes, plus an additional $1,032,368.75 in new credit extended
the date of this Promissory Note.

 

REPAYMENT. Borrower agrees to pay to the order of Lender interest at the fixed
annual rate of Six and Thirty-eight Hundredths percent (6.38%) on all
outstanding amounts hereunder. The principal amount of this Promissory Note
shall be amortized over a period of ten (10) years (120 months) commencing
March 30, 2005. Payments of all interest accrued hereunder and amortized
principal shall be made June 30, September 30, December 31 and March 31 of each
year unless such day is not a Business Day as defined in the Loan Agreement (in
which case the Business Day which immediately follows such day shall apply) (the
“Quarterly Payment Date”). The first Quarterly Payment Date shall be June 30,
2005, and each Quarterly Payment Date thereafter until March 31, 2012 (the
“Maturity Date”). Interest shall be calculated on a 365/360 simple basis; that
is, by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balanced, multiplied by the actual
number of days the principal balance is outstanding. Each such quarterly payment
if timely made shall be in the amount of $537,500.00, except for the payment
made on the Maturity Date. In addition to the foregoing payments, Borrower shall
pay Lender all interest accrued (or prepay interest which shall accrue) under
the Prior Notes, as well as any non-principal item accrued under such Prior
Notes, if any, through March 30, 2005, not later than the close of such Business
Day.

 

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PAYMENT IN FULL AT MATURITY. The total unpaid principal amount and all interest
thereon and any other amount due hereunder shall be payable on the Maturity
Date. THIS NOTE REQUIRES A BALLOON PAYMENT.

 

PAYMENTS. All payments under this Note shall be made in immediately available
funds. In the event there is no outstanding Event of Default, all payments made
hereunder shall be credited to amounts due hereunder (including principal,
accrued interest, and late payment charges), in such order as U.S. Bank may
elect

 

BREAKFUNDING PREPAYMENT INDEMNITY.

 

Prepayment: There shall be no prepayments of this Note, provided that Lender may
consider requests for its consent with respect to prepayment of this Note,
without incurring an obligation to do so, and Borrower acknowledges that in the
event that such consent is granted, Borrower shall be required to pay Lender,
upon prepayment of all or part of the principal amount before final maturity, a
prepayment indemnity (“Prepayment Fee”) equal to the greater of zero, or that
amount, calculated on any date of prepayment (‘Prepayment Date”), which is
derived by subtracting: (a) the principal amount of the Note or portion of the
Note to be prepaid from (b) the Net Present Value of the Note or portion of the
Note to be prepaid on such date of Prepayment Date; provided, however, that the
Prepayment Fee shall not in any event exceed the maximum prepayment fee
permitted by applicable law.

 

“Net Present Value” shall mean the amount which is derived by summing the
present values of each prospective payment of principal and interest which,
without such full or partial prepayment, could otherwise have been received by
Lender over the shorter of the remaining contractual life of the Note or next
repricing date if Lender had instead initially invested the Note proceeds at the
Initial Money Market Rate. The individual discount rate used to present value
each prospective payment of interest and/or principal shall be the Money Market
Rate at Prepayment for the maturity matching that of each specific payment of
principal and/or interest.

 

“Initial Money Market Rate’ shall mean the rate per annum, determined solely by
Lender, on the first day of the term of this Note or the most recent repricing
date or as mutually agreed upon by Borrower and Lender, as the rate at which
Lender would be able to borrow funds in Money Markets for the amount of this
Note and with an interest payment frequency and principal repayment
schedule equal to this Note and for a term as may be arranged and agreed upon by
Borrower and Lender, adjusted for any reserve requirements and any subsequent
costs arising from a change in government regulation. Borrower acknowledges that
Lender is under no obligation to actually purchase and/or match funds for the
Initial Money Market Rate of this Note.

 

‘Money Market Rate At Prepayment” shall mean that zero-coupon rate, calculated
on the Prepayment Date, and determined solely by Lender, as the rate in which
Lender would be able to borrow funds in Money Markets for the prepayment amount
matching the maturity of a

 

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specific prospective Note payment or repricing date, adjusted for any reserve
requirements and any subsequent costs arising from a change in government
regulation. A separate Money Market Rate at Prepayment will be calculated for
each prospective interest and/or principal payment date.

 

“Money Markets” shall mean one or more wholesale funding markets available to
Lender, including negotiable certificates of deposit, commercial paper,
eurodollar deposits, bank notes, federal funds, interest rate swaps, or others.

 

In calculating the amount of such Prepayment Fee, Lender is hereby authorized by
Borrower to make such assumptions regarding the source of finding, redeployment
of funds and other related matters, as Lender may deem appropriate. If Borrower
fails to pay any Prepayment Fee when due, the amount of such Prepayment Fee
shall thereafter bear interest until paid at the Default Rate specified in this
Note (computed on the basis of a 360-day year, actual days elapsed). Any
prepayment of principal shall be accompanied by a payment of interest accrued to
date thereon; and such prepayment shall be applied to the principal installments
in the inverse order of their maturities. All prepayments shall be in an amount
of at least $100,000.00 or, if less, the remaining entire principal balance of
this Note.

 

COLLATERAL; COORDINATION WITH LOAN AGREEMENT. This Note is within the definition
of the “Note” in the Loan Agreement, and is subject to the additional terms and
conditions set forth in the Loan Agreement and the Loan Documents referred to
therein. This Note is secured by a Mortgage, Security Agreement, Assignment of
Leases and Rents and Fixture Financing Statement dated as of July 11,2001, on
the Project, as well as other collateral described in the Loan Agreement and the
other Loan Documents. Capitalized terms not defined herein shall have the
meaning given such terms in the Loan Agreement.

 

LATE PAYMENT; GRACE PERIOD.  If a payment due hereunder is not made within ten
(10) days after the date when due, Borrower shall pay to Lender a late payment
charge of Five Hundred Dollars ($500.00) to compensate Lender for a portion of
the cost related to handling the overdue payment. After any Event of Default, as
defined in the Loan Agreement, then the entire principal sum evidenced by this
Note, together with all accrued and unpaid interest, shall, at the option of the
holder hereof, bear interest at the rate per annum (the ‘Default Rate”) equal to
3% in excess of the rate of interest per annum which would otherwise be payable
hereunder, and become immediately due and payable without further notice (except
as provided in the Loan Agreement), demand or presentment for payment, and
without any relief whatever from any valuation or appraisement laws.

 

PAYMENT OF OTHER ITEMS. If Borrower defaults under any of the terms of this
Note, Borrower shall pay all reasonable costs and expenses, including without
limitation attorneys’ fees (including any service tax thereon) and costs,
incurred by Lender in enforcing this Note immediately upon Lenders demand,
whether or not any action or proceeding is commenced by Lender. Without limiting
the generality of the preceding sentence, such costs and expenses

 

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shall include all attorneys’ fees and costs incurred by Lender in connection
with any federal or state bankruptcy, insolvency, reorganization, or other
similar proceeding by or against Borrower or any surety, guarantor or endorser
of this Note which in any way affects Lender’s exercise of its rights and
remedies under this Note or under the Loan Agreement or any other Loan Document.
Maker hereby stipulates that Lender is a “regulated lender” within the meaning
of SDCL 54-3-13 and other applicable South Dakota statutes.

 

NO OFFSET. No indebtedness evidenced by this Note shall be offset by all or part
of any claim, cause of action, or cross-claim of any kind, whether liquidated or
unliquidated, which Borrower now has or may hereafter acquire or allege to have
acquired against Lender. To the fullest extent permitted by law, Borrower waives
the benefits of any applicable law, regulation, or procedure which provides, in
substance, that where cross demands for money exist between parties at any point
in time when neither demand is barred by the applicable statute of limitations,
and an action is thereafter commenced by one such party, the other party may
assert the defense of payment in that the two demands are compensated so far as
they equal each other, notwithstanding that an independent action asserting the
claim would at the time of filing the response be barred by the applicable
statute of limitations.

 

CERTAIN BORROWER WAIVERS. Borrower waives presentment, protest and demand,
notice of protest, demand and of dishonor and nonpayment of this Note and any
lack of diligence or delays in collection or enforcement of this Note. Borrower
agrees that this Note, or any payment hereunder, may be extended from
time-to-time, and Borrower consents to the release of any party liable for the
obligation evidenced by this Note, the release of any of the security for this
Note, the acceptance of any other security therefor, or any other indulgence or
forbearance whatsoever, all without notice to any party and without affecting
the liability of Borrower.

 

APPLICABLE LAW. This note shall be construed under and governed by the laws of
the State of South Dakota, without giving effect to conflict of laws or
principles thereof, but giving effect to federal laws of the United States
applicable to national banks. Whenever possible, each provision of this note and
any other statement, instrument or transaction contemplated hereby or relating
hereto, shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this note or any other statement,
instrument or transaction contemplated hereby or relating hereto shall be held
to be prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
note or any other statement, instrument or transaction contemplated hereby or
relating hereto.

 

NO WAIVER; CERTAIN MISCELLANEOUS PROVISIONS. Failure to exercise any option
provided herein shall not constitute a waiver of the right to exercise the same
in the event of any subsequent default. No modification or waiver by Lender of
any of the terms of this Note shall be valid or binding on Lender unless such
modification or waiver is in writing and signed by Lender. Without limiting the
generality of the preceding sentence, no delay,

 

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omission or forbearance by Lender in exercising or enforcing any of its rights
and remedies under this Note shall constitute a waiver of such rights or
remedies. Lender’s rights and remedies under this Note are cumulative with and
in addition to all other legal and equitable rights and remedies which Lender
may have in connection with the Loan. The headings of paragraphs of this Note
are for convenience of the parties only and shall not be used in interpreting
this Note. If this Note is lost, stolen, or destroyed, upon Borrower’s receipt
of a reasonably satisfactory indemnification agreement executed by Lender, or if
this Note is mutilated, upon Lender’s surrender of the mutilated Note to
Borrower, Borrower shall execute and deliver to Lender a new promissory note
which is identical in form and content to this Note to replace the lost, stolen,
destroyed or mutilated Note. Time is of the essence in the performance of each
provision of this Note by Borrower.

 

AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR SOUTH
DAKOTA STATE COURT SITTING IN SIOUX FALLS, SOUTH DAKOTA; AND BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP  CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

 

BORROWER AND LENDER EACH IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE
LOAN DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above
written.

 

 

NORTHERN LIGHTS ETHANOL, LLC

 

 

 

 

 

 

 

 

 

By:

 

/s/ Delton Strasser

 

 

 

Delton Strasser

 

 

 

Its:

President

 

 

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