Exhibit 10.29
PROMISSORY NOTE
(Variable Rate, Revolving
Loan)
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Not to Exceed
$3,000,000.00
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Sioux Falls, South Dakota
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March 30, 2005
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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 Three Million &
00/100 Dollars ($3,000,000.00) or so much thereof as may be
advanced hereunder.
CALCULATION AND PAYMENT OF
INTEREST. The unpaid
principal balance will bear interest at an annual rate equal to
prime rate announced by Lender from time-to-time (the ‘Prime
Rate”). The interest rate shall be adjusted each time that
the Prime Rate changes. Lender will strive to inform Borrower of
each change in the Prime Rate, but each adjustment in the Prime
Rate is effective whether or not Lender informs Borrower of such
change. Payments of all interest accrued hereunder shall be made
March 31, June 30, September 30 and December
31 of each year unless such day is not a Business day
as defined in the Loan Agreement (in which case the Business Day
which immediately follows such day shall apply) in which any amount
is outstanding under the Note (the “Quarterly Payment
Date”). The first Quarterly Payment Date shall be
June 30, 2005, and an interest only payment shall be due that
day and each Quarterly Payment Date thereafter until March 31,
2008 (the “Maturity Date”), if there is any amount
outstanding hereunder on each such date. The Prime Rate applicable
on the date of this Note shall be five and seventy-five hundredths
percent (5.7%). Interest shall be calculated on a 365/360 simple
basis; that is, by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal
balance is outstanding.
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) Three Million Dollars
($3,000,000.00) (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, (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, and not for other purposes, including funding
distributions to members. 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 Three Million Dollars
($3,000,000.00). 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 foregoing
conditions at the time each such advance is requested and
made.
PAYMENT IN FULL AT
MATURITY .
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.
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 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 30 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 Borrowers 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 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.
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