**Exhibit 10.28**

 

**PROMISSORY NOTE**

(RenewalNote)

(VariableRate, Non-Revolving Loan)

 
| Not to Exceed $3,900,000.00 |   | Sioux Falls, South Dakota |
|-----------------------------|--------|---------------------------|
|                        |   | March 30, 2005       |

 

FORVALUE RECEIVED, NORTHERN LIGHTS ETHANOL, LLC, a South Dakota LimitedLiability Company (‘Borrower’), hereby promises to pay to the order of U.S.BANK****NATIONAL ASSOCIATION, anational banking association (“Lender’, which term shall include any futureholder hereof), at 141 N. Main Avenue, Sioux Falls, South Dakota, or at suchother place as Lender may from time-to-time designate in writing, in lawfulmoney of the United States of America, the principal sum of Three Million NineHundred Thousand & 00/100 Dollars ($3,900,000.00) or so much thereof as maybe advanced hereunder, including all amounts due or incurred by Borrower inaccordance with the terms of the Loan Agreement between Borrower and Lenderdated as of July 11, 2001, or due or incurred by Borrower under the termsof any other Loan Document as defined in such Loan Agreement.

 

**PARTIAL RENEWAL OF NOTE**. ThisPromissory Note partially supercedes and replaces those Promissory Notes dated January 1,2003, in the original principal amounts of $15,000,000.00 and $11,100,000.00which Borrower delivered to Lender pursuant to the Loan Agreement between Borrowerand Lender dated as of January 1, 2003 (the ‘Prior Notes”). ThisPromissory Note and the $15,800,000 Note dated the same date represent anaggregate $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 thisPromissory Note.

 

**CALCULATION AND PAYMENT OF INTEREST**.The unpaid principal balance will bear interest at an annual rate equal to theprime rate announced by Lender (the “Prime Rate”). The interest rate shall beadjusted each time that the Prime Rate changes. Lender will strive to informBorrower of each change in the Prime Rate, but each adjustment in the PrimeRate is effective whether or not Lender informs Borrower of such change. Theprincipal amount of this Promissory Note shall be amortized over a period often (10) years (120 months) commencing March 30, 2005. Payments of allinterest 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 aBusiness Day as defined in the Loan Agreement (in which case the Business Daywhich immediately follows such day shall apply) (the “Quarterly Payment Date”).The first Quarterly Payment Date shall be June 30, 2005, and eachQuarterly 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 interestthrough 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 andseventy-five hundredths percent (5.75%). Interest shall be calculated on a365/360 simple basis; that is, by applying the ratio of the annual interestrate 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 quarterlyinstallment of principal and interest hereunder shall be adjusted so as toamortize the then outstanding principal balance under this Note over theremaining balance of the Amortization Period. In addition to the foregoingpayments, Borrower shall pay Lender all

 

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interest accrued under the Prior Notes (orprepay interest which shall accrue), as well as any non-principal item accruedunder such Prior Notes, if any, through March 30, 2005, not later than theclose of such Business Day.

 

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

 

**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 elect.

 

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

 

**COLLATERAL; COORDINATION WITH LOAN AGREEMENT.**This Note is within the definition of the “Note” inthe Loan Agreement, and is subject to the additional terms and conditions setforth in the Loan Agreement and the Loan Documents referred to therein. ThisNote is secured by a Mortgage, Security Agreement, Assignment of Leases andRents and Fixture Financing Statement dated as of July 11, 2001, on theProject, as well as other collateral described in the Loan Agreement and theother Loan Documents. Capitalized terms not defined herein shall have themeaning 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 whendue, 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 handlingthe overdue payment. After any Event of Default, as defined in the LoanAgreement, then the entire principal sum evidenced by this Note, together withall 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 annumwhich would otherwise be payable hereunder, and become immediately due andpayable without further notice (except as provided in the Loan Agreement),demand or presentment for payment, and without any relief whatever from anyvaluation or appraisement 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 Lender’s demand, whether or not any action orproceeding is commenced by Lender. Without limiting the generality of thepreceding sentence, such costs and expenses shall include all attorneys feesand costs incurred by Lender in connection with any federal or statebankruptcy, insolvency, reorganization, or other similar proceeding by oragainst Borrower or any surety, guarantor or endorser of this Note which in anyway affects Lender’s exercise of its rights and remedies under this Note orunder the Loan Agreement or any other

 

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Loan Document. Maker hereby stipulates thatLender is a “regulated lender” within the meaning of SDCL 54-3-13 and otherapplicable South Dakota statutes.

 

**NO OFFSET**.No indebtedness 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 betweenparties at any point in time when neither demand is barred by the applicablestatute of limitations, and an action is thereafter commenced by one suchparty, the other party may assert the defense of payment in that the twodemands are compensated so far as they equal each other, notwithstanding thatan independent action asserting the claim would at the time of filing theresponse be barred by the applicable 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**.****This note shall be construed under andgoverned by the laws of the State of South Dakota, without giving effect toconflict of laws or principles thereof but giving effect to federal laws of theUnited States applicable to national banks. Whenever possible, each provisionof this note and any other statement, instrument or transaction contemplatedhereby or relating hereto, shall be interpreted in such manner as to beeffective and valid under such applicable law, but, if any provision of thisnote or any other statement, instrument or transaction contemplated hereby orrelating hereto shall be held to be prohibited or invalid under such applicablelaw, such provision shall be ineffective only to the extent of such prohibitionor invalidity, without invalidating the remainder of such provision or theremaining provisions of this note or any other statement, instrument ortransaction contemplated hereby or relating hereto.

 

**NO WAIVER; CERTAIN MISCELLANEOUS PROVISIONS**.Failure to exercise any option provided herein shall not constitute a waiver ofthe right 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, omission or forbearance by Lender in exercising or enforcing any of itsrights and remedies under this Note shall constitute a waiver of such rights orremedies. Lender’s rights and remedies under this Note are cumulative with andin addition to all other legal and equitable rights and

 

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remedies which Lender may have in connectionwith the Loan. The headings of paragraphs of this Note are for convenience ofthe parties only and shall not be used in interpreting this Note. If this Noteis lost, 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 COURT OR SOUTH DAKOTA STATE COURTSITTING IN SIOUX FALLS, SOUTH DAKOTA; AND BORROWER CONSENTS TO THE JURISDICTIONAND VENUE OF ANY SUCH****COURT ANDWAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENTBORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORTOR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATEDBY****THIS NOTE, LENDER AT ITS OPTIONSHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS ANDVENUES ABOVE-DESCRIBED, OR IF SUCH****TRANSFERCANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSEDWITHOUT PREJUDICE.

 

BORROWER AND LENDER EACH IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIALBY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO****THIS NOTE OR ANY OF THE LOAN DOCUMENTS (ASDEFINED IN THE LOAN AGREEMENT) OR THE TRANSACTIONS CONTEMPLATED HEREBY ORTHEREBY.

 

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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