Exhibit 10.1
PROMISSORY NOTE
(Variable Rate, Revolving
Loan)
(Renewal Note)
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Not to Exceed
$9,000,000.00
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Sioux Falls, South Dakota
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July 30, 2008
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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 Nine
Million & 00/100 Dollars ($9,000,000.00) or so much
thereof as may be advanced hereunder.
LOAN RENEWAL
. This Promissory Note renews the
loan evidenced in part by that Promissory Note dated
September 21, 2007, in the original principal amount not to
exceed $9,000,000.00 (the “Prior Note”). The terms of
the Prior Note apply until July 30, 2008, the date this
Renewal Note becomes effective.
CALCULATION OF
INTEREST. Interest on
each advance hereunder shall accrue at an annual rate equal to
3.00% plus the one-month LIBOR rate quoted by Lender (LIBOR +
3.00%), which shall be the one-month LIBOR rate in effect two New
York Banking Days prior to the stated monthly reprice date,
adjusted for any reserve requirement and any subsequent costs
arising from a change in government regulation, such rate to be
reset monthly on the last day of the month. The term “New
York Banking Day” means any date (other than a Saturday or
Sunday) on which commercial banks are open for business in New
York, New York. Lender’s internal records of applicable
interest rates shall be determinative in the absence of manifest
error. If the initial advance under this Note occurs other than on
the first day of the month, the initial one-month LIBOR rate shall
be that one-month LIBOR rate in effect two New York Banking Days
prior to the date of the initial advance, which rate shall be in
effect on the remaining days of the month of the initial
advance.
PAYMENT OF INTEREST
. Payments of all interest accrued
hereunder shall be made on the last day of any month in which any
amount is outstanding hereunder.
REVOLVING FEATURE.
Borrower may from time to time prior
to the Maturity Date draw, on a revolving basis, the difference of
the outstanding principal amount hereunder and the lesser of
(i) the Borrowing Base and (ii) Nine Million Dollars
($9,000,000.00) (the greater of the two being the “Loan
Maximum”). Lender’s obligation to make any advance
under this Promissory Note is conditioned upon (i) all
representations and warranties made by Borrower in the Loan
Agreement remaining true, accurate and complete,
(ii) Borrower’s continued compliance with all other
terms and conditions of this Promissory Note and the Loan Agreement
including any preconditions to any advance hereunder contained in
the Loan Agreement, (iii) no Event of Default having occurred
under this Promissory Note, or any other Promissory Note between
the parties hereto, or under any other Loan Document, and
(iv) Borrower shall demonstrate to Lender’s satisfaction
that the funds requested to be advanced shall be used in the
operation of Borrower’s ethanol production facility. Subject
to these conditions, Lender shall advance to Borrower hereunder,
such amounts as Borrower may from time-to-time request, not to
exceed the total principal amount at any one time outstanding
hereunder of Nine Million Dollars ($9,000,000.00). Such requests
for advances hereunder shall be funded the next Business Day if
received by Lender not
later than 11:00 a.m. of any
Business Day, subject to Lender requiring additional time to
confirm Borrower has satisfied the conditions of this Note
(including the Borrowing Base requirements provided for below) at
the time each such advance is requested and made.
PAYMENT IN FULL AT
MATURITY . The maturity
date of this Note is July 28, 2009 (the “Maturity
Date”). 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.
PAYMENT DUE ON NON-BUSINESS
DAY. In the event any
payment due under this Note is due on a date other than a Business
Day (as defined in the Loan Agreement), such payment shall be due
on the Business Day immediately following the day the payment was
otherwise due.
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.
MANDATORY PAYMENTS PRI0R TO
MATURITY . In the event
the amount outstanding hereunder at any time, including interest
and any other amounts, exceeds the amount which could be borrowed
on such date according to the then applicable Borrowing Base (the
“Eligible Balance”), Borrower shall immediately pay to
Lender an amount not less than the difference between such balance
and the Eligible Balance.
BORROWING BASE.
Definitions.
As used in this Promissory Note:
“Borrowing Base” means, as of the day for which it is
calculated, . 75 (75%) of the total of (i) the fair
market value of the outstanding Inventory, (ii) the Eligible
Accounts Receivable, and (iii) hedging accounts at fair market
value; “Inventory” means all Borrower’s corn, and
ethanol, and DDGS Inventory, as determined to Lender’s
satisfaction; “Eligible Accounts Receivable” means
Accounts (as defined in the Uniform Commercial Code) owned by
Borrower that were generated by Borrower’s sale of Inventory,
minus Ineligible Accounts; “Ineligible Accounts” means
Accounts which either have been outstanding more than 90 days, or
Accounts which otherwise would be Eligible Accounts Receivable that
Lender determines in its discretion should not so qualify. Eligible
Accounts Receivable shall exclude Borrower’s
“contra” accounts and any other obligations or offsets
which any of Borrower’s account obligors may claim against
Borrower.
Borrower Reports.
Each request for an advance
hereunder shall be accompanied by Borrower’s report to Lender
evidencing the Borrowing Base as of the close of the previous
Business Day, in a form and containing such content as Lender shall
from time-to-time specify to Borrower, including but not limited
to: reports of the Borrower’s Accounts itemized by age;
reports of the Inventory itemized by type, including its quantity,
geographical location, and information identifying any third party
in possession or control thereof. Borrower Report shall also report
Eligible Accounts Receivable on a gross basis, and be itemized as
to all offsets that may be claimed by any account obligor as
further set forth in the definition of Eligible Accounts Receivable
above. If at the end of any calendar month any amount is
outstanding hereunder, not later than the 15th day of the
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