Exhibit 10.1
PROMISSORY NOTE
(Variable Rate, Revolving
Loan)
(Second 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 28, 2009
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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 bunking 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 he 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 Promissory Note was renewed by a Renewal
Note dated July 30, 2008, which extended the maturity date of
the Promissory Note to July 28, 2009 (the “Prior
Note”). The terms of the Prior Note apply until July 28,
2009, the date this Renewal Note becomes effective.
CALCULATION OF
INTEREST . Interest on
each advance hereunder shall accrue at an annual rate equal to
4.00% plus the one-month LIBOR rate quoted by Lender (LIBOR +
4.00%), 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 tins 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
tinder 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 am, 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 26, 2010 (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 PRIOR
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 sate 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 o the inventory itemized by type, including its quantity,
geographical location, and information identifying any third party
in possession or control thereof. Borrower’s 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 following
month, Borrower shall provide Lender a report containing the above
information as of the end of such prior month. Borrower shall also
provide Lender such reports at other times specified by Lender. The
request for advances shall be on the form attached hereto as
Exhibit A, unless Lender specifies otherwise.
Reasonable Processes and
Controls. Borrower shall
maintain reasonable processes and controls, provide accurate
calculation of the Borrowing Base and otherwise assure compliance
with the Lender’s collateral audit program, including
instituting policies requiring its employee marketers to accurately
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