Exhibit 10.28


 


PROMISSORY NOTE


(Renewal
Note)


(Variable
Rate, Non-Revolving Loan)


 


	
  Not to Exceed $3,900,000.00

  	
   

  	
  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 Three Million Nine
Hundred Thousand & 00/100 Dollars ($3,900,000.00) 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 NOTE. 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 $15,800,000 Note dated the 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.


 


CALCULATION AND PAYMENT OF INTEREST.
The unpaid principal balance will bear interest at an annual rate equal to the
prime rate announced by Lender (the “Prime Rate”). The interest rate shall be
adjusted each time that the Prime Rate changes. Lender will strive to inform
Borrower of each change in the Prime Rate, but each adjustment in the Prime
Rate is effective whether or not Lender informs Borrower of such change. 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”),
and the amount of each payment is subject to adjustment as set forth hereafter.
Each such quarterly payment if timely made shall be in the principal amount of $97,500.00, plus all accrued interest
through the date of payment, except for the payment made on the Maturity Date.
The Prime Rate applicable on the date of this Note shall be five and
seventy-five hundredths percent (5.75%). 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 balance,
multiplied by the actual number of days the principal balance is outstanding.
As of March 30, 2005, and each March 30 thereafter the quarterly
installment of principal and interest hereunder shall be adjusted so as to
amortize the then outstanding principal balance under this Note over the
remaining balance of the Amortization Period. In addition to the foregoing
payments, Borrower shall pay Lender all


 





















 


interest accrued under the Prior Notes (or
prepay interest which shall accrue), 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.


 


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 elect.


 


PREPAYMENTS.
Borrower may prepay this Note in whole or in part at any time, and if in part
from time-to-time, during the entire term of this Note, without penalty or
premium. No prepayment shall reduce the amount of any scheduled payment.


 


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 Lender’s demand, whether or not any action or
proceeding is commenced by Lender. Without limiting the generality of the
preceding sentence, such costs and expenses 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


 


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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, 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


 


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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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