**Exhibit10.17**

 

**PROMISSORYNOTE**

 
| $33,024,200.00 |   | February 26, 2004 |
|----------------|--------|------------------------|

 

1.                                       FORVALUE RECEIVED, UNITED WISCONSIN GRAIN PRODUCERS, LLC, a Wisconsin limitedliability company (the “Borrower”), hereby promises to pay to the order ofAGSTAR FINANCIAL SERVICES, PCA., an United States instrumentality (the“Lender”),  the principal sum ofThirty-Three Million Twenty-Four Thousand Two Hundred and No/100ths($33,024,200.00) Dollars, or so much thereof as may be advanced to, or for thebenefit of, the Borrower and be outstanding, with interest thereon, to becomputed on each advance from the date of its disbursement as set forth hereinpursuant to that certain Construction and Promissory Loan Agreement of evendate herewith by and between the Lender and the Borrower (“Loan Agreement”),and which remains unpaid, in lawful money of the United States and immediatelyavailable funds.

 

2.                                       Theoutstanding principal balance of this Promissory Note shall bear interest at afixed rate per annum determined by Lender to be three and three-quarterspercent (3.75%) above the LIBOR Rate in effect on the first Advance pursuant tothis Promissory Note.  Notwithstandingthe foregoing, the rate of interest under this Promissory Note may be adjustedby Lender pursuant to the provisions of Sections 2.06 and 2.08 of the LoanAgreement.  At Borrower’s option, all orpart of the outstanding principal balance under this Promissory Note may beconverted to a fixed rate of interest at a rate acceptable to Lender in itssole discretion.

 

3.                                       TheLIBOR Rate means the London interbankoffered rate per annum for one-month deposits in United States dollars, asdetermined by the British Banker’s Association average of interbank offeredrates for United States dollar deposits in the London market based on quotationsat 16 major banks, as published in the “Money Rates” Section of the *Wall StreetJournal* as of the applicable determination date; provided, ifLender determines that the foregoing source is unavailable for the applicableInterest Period, Lender shall determine LIBOR based on a new index which isbased on comparable information.

 

4.                                       Therate of interest due hereunder shall initially be determined as of the datehereof 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 bemade and become effective as of the date of any change in the LIBOR Rate andshall remain in effect until and including the day immediately preceding thenext such adjustment (each such day hereinafter being referred to as an“Adjustment Date”).  All suchadjustments to said rate shall be made and become effective as of theAdjustment Date, and said rate as adjusted shall remain in effect until and includingthe day immediately preceding the next Adjustment Date.  Interest hereunder shall be computed on thebasis of a year of three hundred sixty-five or three hundred sixty-six (365 or366) days, but charged for actual days principal is outstanding.

 

5.                                       Accruedinterest prior to the Conversion Date shall be payable quarterly, with paymentsdue on April 1st, July 1st, October 1st,and January 1st (hereinafter referred to as “Quarterly PaymentDates”), commencing on the first Quarterly Payment Date following the date onwhich the first advance is made hereunder, and continuing on each QuarterlyPayment Date thereafter until the Conversion Date, as that term is defined inthe Loan Agreement.

 

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6.                                       Onthe Conversion Date, if the outstanding principal balance of this note exceedsthe lesser of: (i) $29,024,200.00; or (ii) 55% of the Project Costs less$4,000,000.00, then it must be reduced by Borrower to not more than the lesserof: (i) $29,024,200.00; or (ii) 55% of the Project Costs less $4,000,000.00.  The Revolving Note between the parties mayassume the reduction in principal required herein according to the terms of theLoan Agreement.

 

7.                                       Beginningon the first (1st) day of the month following the month in which theConversion Date occurs, and continuing on the first (1st) day ofeach succeeding month thereafter until the Maturity Date, the Borrower shallmake equal monthly payments of principal and accrued interest in such amountsas will be required to fully amortize the entire outstanding principal of thisPromissory Note, together with accrued interest thereon, over a period not toexceed ten (10) years from the Conversion Date.  The amount of said monthly payments shall be recalculated and, ifnecessary, adjusted as of each Adjustment Date, as defined herein, to accountfor changes in the effective rate of interest hereunder and to maintain saidten (10) year amortization.  Following the Conversion Date, and inaddition to all other payments of principal and interest required under theLoan Agreement, the Borrower shall annually remit to Lender and amount equal tothe sum of:  (i) 20% of the Borrower’sExcess Cash Flow; and (ii) the Borrower’s Incentive Payment Recapture on orbefore January 31st of the succeeding fiscal year, as thoseterms are defined in the Loan Agreement. Notwithstanding the foregoing, the amount required to be prepaid toLender shall not exceed $3,500,000.00 for any fiscal year of the Borrower.  No payment of Excess Cash Flow or IncentivePayment Recapture to Lender shall be required for any fiscal year in whichBorrower’s Owner Equity Ratio shall exceed 55%.

 

8.                                       Theoutstanding principal balance hereof, together with all accrued interest, ifnot paid sooner, shall be due and payable in full on the fifth (5th)annual anniversary of the Conversion Date (the “Maturity Date”).

 

9.                                       Advancesmay only be made under this Promissory Note until the Completion Date, as thatterm is defined in the Loan Agreement, after which no further advances may bemade hereunder.  No amounts may bereadvanced under this Promissory Note. Any principal repayment will reduce the commitment on the loan.

 

10.                                 Allpayments and prepayments shall, at the option of the Lender, be applied firstto any costs of collection, second to any late charges, third to accruedinterest and the remainder thereof to principal.

 

11.                                 ThisPromissory Note may be prepaid, in whole or in part, at the option of theBorrower, as further provided herein. In the event the loan is prepaid, in whole or in part, there will beadditional fee according to the following schedule:

 

| **Time of Payment** |   | **Prepayment  Premium** |   |
|---------------------|--------|-------------------------|--------|
| Months 1-12         |   | 3.00                    | %      |
| Months 13-24        |   | 2.00                    | %      |
| Months 25-36        |   | 1.00                    | %      |

 

No prepayment premium or fee shall be required if a prepayment ofprincipal is made pursuant to any Excess Cash Flow or Incentive PaymentRecapture formulas as described in Section 2.03(b) of the Loan Agreement.

 

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12.                                 ThisPromissory Note is issued pursuant to the terms and provisions of the LoanAgreement and is entitled to all of the benefits provided for in saidagreement.  All capitalized terms usedand not defined herein shall have the meanings assigned to them in the LoanAgreement.

 

13.                                 Uponthe occurrence at any time of an Event of Default or at any time thereafter,the outstanding principal balance hereof plus accrued interest hereon plus allother amounts due hereunder shall, at the option of the Lender, be immediatelydue and payable, without notice of demand.

 

14.                                 Theoccurrence at any time of an Event of Default or at any time thereafter, theLender shall have the right to set off any and all amounts due hereunder by theBorrower to the Lender against any indebtedness or obligation of the Lender tothe Borrower.

 

15.                                 Ifany payment of principal or interest due hereunder is not paid with ten (10)days of the due date thereof, the Borrower shall pay to the Lender a latecharge equal to five percent (5%) of the amount of such payment.

 

16.                                 TheBorrower promises to pay all costs of collection of this Promissory Note,including, but not limited to, attorneys’ fees paid or incurred by the Lenderon account of such collection, whether or not suit is filed with respectthereto and whether or not such costs are paid or incurred, or to be paid orincurred, prior to or after the entry of judgment.

 

17.                                 Demand,presentment, protest and notice of nonpayment and dishonor of this PromissoryNote are hereby waived.

 

18.                                 ThisPromissory Note shall be governed by and construed in accordance with the lawsof the State of Minnesota.

 

19.                                 Asused herein, the term “Event of Default” shall mean and include any one or moreof the events specified as “Events of Default” in the Loan Agreement.

 
|   | UNITED WISCONSIN GRAIN  PRODUCERS, LLC |
|--------|----------------------------------------|
|   | a Wisconsin limited liability company  |
|   |                                   |
|   |                                   |
|   | */s/ KevinRoche*                       |   |
|   | By Kevin Roche                         |
|   |   Its President              |

 

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