**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 fromtime-to-time designate in writing, in lawful money of the United States ofAmerica, the principal sum of Fifteen Million Eight Hundred Thousand &00/100 Dollars ($15,800,000.00) or so much thereof as may be advancedhereunder, including all amounts due or incurred by Borrower in accordance withthe 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 Documentas defined in such Loan Agreement.

 

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

 

**REPAYMENT.**Borroweragrees to pay to the order of Lender interest at the fixed annual rate of Sixand Thirty-eight Hundredths percent (6.38%) on all outstanding amountshereunder. The principal amount of this Promissory Note shall be amortized overa period of ten (10) years (120 months) commencing March 30, 2005.Payments of all interest accrued hereunder and amortized principal shall bemade June 30, September 30, December 31 and March 31 ofeach year unless such day is not a Business Day as defined in the LoanAgreement (in which case the Business Day which immediately follows such dayshall apply) (the “Quarterly Payment Date”). The first Quarterly Payment Dateshall 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 simplebasis; that is, by applying the ratio of the annual interest rate over a yearof 360 days, multiplied by the outstanding principal balanced, multiplied bythe actual number of days the principal balance is outstanding. Each suchquarterly payment if timely made shall be in the amount of $537,500.00, exceptfor the payment made on the Maturity Date. In addition to the foregoingpayments, Borrower shall pay Lender all interest accrued (or prepay interestwhich shall accrue) under the Prior Notes, as well as any non-principal itemaccrued under such Prior Notes, if any, through March 30, 2005, not laterthan the close of such Business Day.

 

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**PAYMENT IN FULL AT MATURITY.**Thetotal unpaid principal amount and all interest thereon and any other amount duehereunder shall be payable on the Maturity Date. THIS NOTE REQUIRES A BALLOONPAYMENT.

 

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

 

**BREAKFUNDINGPREPAYMENT INDEMNITY.**

 

Prepayment: Thereshall be no prepayments of this Note, provided that Lender may considerrequests for its consent with respect to prepayment of this Note, withoutincurring an obligation to do so, and Borrower acknowledges that in the eventthat such consent is granted, Borrower shall be required to pay Lender, uponprepayment of all or part of the principal amount before final maturity, aprepayment indemnity (“Prepayment Fee”) equal to the greater of zero, or thatamount, calculated on any date of prepayment (‘Prepayment Date”), which isderived by subtracting: (a) the principal amount of the Note or portion of theNote to be prepaid from (b) the Net Present Value of the Note or portion of theNote to be prepaid on such date of Prepayment Date; provided, however, that thePrepayment Fee shall not in any event exceed the maximum prepayment feepermitted by applicable law.

 

“Net Present Value”****shallmean the amount which is derived by summing the present values of each prospectivepayment of principal and interest which, without such full or partialprepayment, could otherwise have been received by Lender over the shorter ofthe remaining contractual life of the Note or next repricing date if Lender hadinstead initially invested the Note proceeds at the Initial Money Market Rate.The individual discount rate used to present value each prospective payment ofinterest and/or principal shall be the Money Market Rate at Prepayment for thematurity 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 ofthe term of this Note or the most recent repricing date or as mutually agreedupon by Borrower and Lender, as the rate at which Lender would be able toborrow funds in Money Markets for the amount of this Note and with an interestpayment frequency and principal repayment schedule equal to this Note andfor a term as may be arranged and agreed upon by Borrower and Lender, adjustedfor any reserve requirements and any subsequent costs arising from a change ingovernment regulation. Borrower acknowledges that Lender is under no obligationto actually purchase and/or match funds for the Initial Money Market Rate ofthis Note.

 

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

 

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

 

“Money Markets” shall mean one or more wholesale funding marketsavailable to Lender, including negotiable certificates of deposit, commercialpaper, eurodollar deposits, bank notes, federal funds, interest rate swaps, orothers.

 

In calculating the amount of such Prepayment Fee, Lender is herebyauthorized by Borrower to make such assumptions regarding the source offinding, redeployment of funds and other related matters, as Lender may deemappropriate. If Borrower fails to pay any Prepayment Fee when due, the amountof such Prepayment Fee shall thereafter bear interest until paid at the DefaultRate specified in this Note (computed on the basis of a 360-day year, actualdays elapsed). Any prepayment of principal shall be accompanied by a payment ofinterest accrued to date thereon; and such prepayment shall be applied to theprincipal installments in the inverse order of their maturities. All prepaymentsshall be in an amount of at least $100,000.00 or, if less, the remaining entireprincipal balance of this Note.

 

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

 

**LATE PAYMENT; GRACE PERIOD. **If****a payment due hereunder is not made withinten (10) days after the date when due, Borrower shall pay to Lender a latepayment charge of Five Hundred Dollars ($500.00) to compensate Lender for aportion of the cost related to handling the overdue payment. After any Event ofDefault, as defined in the Loan Agreement, then the entire principal sumevidenced 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 ‘DefaultRate”) equal to 3% in excess of the rate of interest per annum which wouldotherwise be payable hereunder, and become immediately due and payable withoutfurther notice (except as provided in the Loan Agreement), demand orpresentment for payment, and without any relief whatever from any valuation orappraisement laws.

 

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

 

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shall include all attorneys’ fees and costsincurred by Lender in connection with any federal or state bankruptcy,insolvency, reorganization, or other similar proceeding by or against Borroweror any surety, guarantor or endorser of this Note which in any way affectsLender’s exercise of its rights and remedies under this Note or under the LoanAgreement or any other Loan Document. Maker hereby stipulates that Lender is a “regulatedlender” within the meaning of SDCL 54-3-13 and other applicable South Dakotastatutes.

 

**NO OFFSET**. Noindebtedness evidenced by this Note shall be offset by all or part of anyclaim, cause of action, or cross-claim of any kind, whether liquidated orunliquidated, which Borrower now has or may hereafter acquire or allege to haveacquired against Lender. To the fullest extent permitted by law, Borrowerwaives the benefits of any applicable law, regulation, or procedure whichprovides, in substance, that where cross demands for money exist between partiesat any point in time when neither demand is barred by the applicable statute oflimitations, and an action is thereafter commenced by one such party, the otherparty may assert the defense of payment in that the two demands are compensatedso far as they equal each other, notwithstanding that an independent actionasserting the claim would at the time of filing the response be barred by theapplicable statute of limitations.

 

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

 

**APPLICABLE LAW**. Thisnote shall be construed under and governed by the laws of the State of SouthDakota, without giving effect to conflict of laws or principles thereof, butgiving effect to federal laws of the United States applicable to nationalbanks. Whenever possible, each provision of this note and any other statement,instrument or transaction contemplated hereby or relating hereto, shall beinterpreted in such manner as to be effective and valid under such applicablelaw, but, if any provision of this note or any other statement, instrument ortransaction contemplated hereby or relating hereto shall be held to beprohibited or invalid under such applicable law, such provision shall be ineffectiveonly to the extent of such prohibition or invalidity, without invalidating theremainder of such provision or the remaining provisions of this note or anyother statement, instrument or transaction contemplated hereby or relatinghereto.

 

**NO WAIVER**; **CERTAIN MISCELLANEOUS PROVISIONS.**Failureto exercise any option provided herein shall not constitute a waiver of theright to exercise the same in the event of any subsequent default. Nomodification or waiver by Lender of any of the terms of this Note shall bevalid or binding on Lender unless such modification or waiver is in writing andsigned by Lender. Without limiting the generality of the preceding sentence, nodelay,

 

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omission or forbearance by Lender inexercising or enforcing any of its rights and remedies under this Note shallconstitute a waiver of such rights or remedies. Lender’s rights and remediesunder this Note are cumulative with and in addition to all other legal andequitable rights and remedies which Lender may have in connection with theLoan. The headings of paragraphs of this Note are for convenience of theparties only and shall not be used in interpreting this Note. If this Note islost, stolen, or destroyed, upon Borrower’s receipt of a reasonablysatisfactory indemnification agreement executed by Lender, or if this Note ismutilated, upon Lender’s surrender of the mutilated Note to Borrower, Borrowershall execute and deliver to Lender a new promissory note which is identical inform and content to this Note to replace the lost, stolen, destroyed ormutilated Note. Time is of the essence in the performance of each provision ofthis Note by Borrower.

 

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

 

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

 

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

 
|   | **NORTHERN LIGHTS ETHANOL, LLC** |
|--------|----------------------------------|
|   |                             |   |   |
|   |                             |   |   |
|   | By:                              |   | /s/ Delton  Strasser |   |
|   |                             | Delton  Strasser |   |
|   |                             | Its: | President |   |

 

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