Exhibit 10.20
PROMISSORY NOTE
(Renewal Note)
(Variable Rate, Revolving Loan)
Not to Exceed $15,000,000.00 Sioux Falls, South Dakota
January 1, 2003
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 000 X. Xxxx Xxxxxx, Xxxxx
Xxxxx, Xxxxx Xxxxxx, 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 Fifteen Million & 00/100 Dollars ($15,000,000.00) or so much
thereof as may be advanced hereunder, including all amounts due or incurred by
Borrower in accordance with the terms of the Loan Agreement between Borrower and
Lender dated as of July 11, 2001, or due or incurred by Borrower under the terms
of any other Loan Document as defined in such Loan Agreement.
PARTIAL RENEWAL OF LOAN. This Promissory Note partially supercedes and
replaces that Promissory Note dated July 11, 2001, in the original principal
amount of $31,100,000.00 which Borrower delivered to Lender pursuant to the Loan
Agreement between Borrower and Lender dated as of July 11, 2001, (the `Prior
Note"). The original principal amount of this Note represents, Fifteen Million
Dollars ($15,000,000.00) of the unpaid principal balance of the Prior Note after
application of all payments made by Borrower thereunder. Xxxxxx acknowledges
that the Construction Loan has qualified for conversion to the Term Loan under
the terms of the Loan Agreement.
REPAYMENT. Xxxxxxxx agrees to pay to the order of Lender interest at
the fixed annual rate of Six and Ninety-five Hundredth percent (6.95%) on all
outstanding amounts hereunder. The principal amount of this Promissory Note
shall be amortized over a period of ten (10) years (120 months) commencing
January 1, 2003. Payments of all interest accrued hereunder and amortized
principal 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) (the "Quarterly Payment Date"). The first Quarterly Payment Date
shall be March 31, 2003, and each Quarterly Payment Date thereafter until
December 31, 2007 (the "Maturity Date"). 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
balanced, multiplied by the actual number of days the principal balance is
outstanding. In addition to the foregoing payments, Borrower shall pay Lender
all interest accrued (or prepay interest which shall accrue) under the Prior
Note, as well as any non-principal item accrued under such Prior Note, if
any, through December 31, 2002, not later than the close of such Business Day.
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.
PAYMENTS. All payments under this Note shall be made in immediately
available funds. In the event there is no outstanding Event of Default, all
payments made hereunder shall be credited first to accrued interest, next to
unpaid principal, and next, in such order as Lender may determined in its sole
and absolute discretion, to other fees, charges, or costs and expenses payable
by Borrower under this Note or in connection with any other Loan Document.
BREAKFUNDING PREPAYMENT INDEMNITY.
PREPAYMENT: There shall be no prepayments of this Note, provided that
Lender may consider requests for its consent with respect to prepayment of this
Note, without incurring an obligation to do so, and Borrower acknowledges that
in the event that such consent is granted, Borrower shall be required to pay
Lender, upon prepayment of all or part of the principal amount before final
maturity, an Indemnity Amount equal to the maximum of: (a) zero, or (b) that
amount, calculated on any prepayment date, which is derived by subtracting: (1)
the principal amount of the Note or portion of the Note to be prepaid from (2)
the Net Present Value of the Note or portion of the Note to be prepaid on such
date of prepayment.
"NET PRESENT VALUE" shall mean the amount which is derived by summing
the present values of each prospective payment of principal and interest which,
without such full or partial prepayment, could otherwise have been received by
Lender over the shorter of the remaining contractual life of the Note or next
repricing date if Lender had instead initially invested the Note proceeds at the
Initial Money Market Rate. The individual discount rate used to present value
each prospective payment of interest and/or principal shall be the Money Market
Rate at Prepayment for the maturity matching that of each specific payment of
principal and/or interest.
"INITIAL MONEY MARKET RATE" shall mean the rate per annum, determined
solely by Xxxxxx, on the first day of the term of this Note or the most recent
repricing date or as mutually agreed upon by Xxxxxxxx and Lender, as the rate at
which Lender would be able to borrow funds in Money Markets for the amount of
this Note and with an interest payment frequency and principal repayment
schedule equal to this Note and for a term as may be arranged and agreed upon by
Borrower and Lender. Such a rate shall include FDIC insurance, reserve
requirements and other explicit or implicit costs levied by any regulatory
agency. Borrower acknowledges that Lender is under no obligation to actually
purchase and/or match funds for the Initial Money Market Rate of this Note.
"MONEY MARKET RATE AT PREPAYMENT" shall mean that zero-coupon rate,
calculated on the date of prepayment, and determined solely by Xxxxxx, as the
rate in which Lender would be able to borrow funds in Money Markets for the
prepayment amount matching the maturity of a specific prospective Note payment
or repricing date. Such a rate shall include FDIC insurance, reserve
requirements and other explicit or implicit costs levied by any regulatory
agency. A separate Money Market Rate at Prepayment will be calculated for each
prospective interest and/or principal payment date.
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"MONEY MARKETS" shall mean one or more wholesale funding mechanisms
available to Lender, including negotiable certificates of deposit, eurodollar
deposits, bank notes, fed funds, interest rate swaps, or others.
In calculating the amount of such an Indemnity Amount, Lender is hereby
authorized by Borrower to make such assumptions regarding the source of funding,
redeployment of funds and other related matters, as Lender may deem appropriate.
If Borrower fails to pay any Indemnity Amount when due, the amount of such
Indemnity Amount shall thereafter bear interest until paid at the Default Rate
specified in this Note (computed on the basis of a 360-day year, actual days
elapsed). Any prepayment of principal shall be accompanied by a payment of
interest accrued to date thereon; and such prepayment shall be applied to the
principal installments in the inverse order of their maturities. All partial
prepayments shall be in increments of $100,000.00.
MANDATORY PREPAYMENTS. Borrower shall make mandatory prepayments of the
principal amount of the Loan as mandated by Xxxxxxxx's Excess Cash Flow from
time-to-time, as defined and provided for in Schedule V of the Loan Agreement.
Prepayments shall not reduce the amount of any scheduled payments due hereunder.
COLLATERAL; COORDINATION WITH LOAN AGREEMENT. This Note is within the
definition of the "Note" in the Loan Agreement, and is subject to the additional
terms and conditions set forth in the Loan Agreement and the Loan Documents
referred to therein. This Note is secured by a Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Financing Statement dated as of July
11, 2001, on the Project, as well as other collateral described in the Loan
Agreement and the other Loan Documents. Capitalized terms not defined herein
shall have the meaning given such terms in the Loan Agreement.
LATE PAYMENT; GRACE PERIOD. If a payment due hereunder is not made
within five (5) days after the date when due, 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 handling the overdue payment. After any Event of
Default, as defined in the Loan Agreement, then the entire principal sum
evidenced by this Note, together with all 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 annum which
would otherwise be payable hereunder, and become immediately due and payable
without further notice (except as provided in the Loan Agreement), demand or
presentment for payment, and without any relief whatever from any valuation or
appraisement laws.
PAYMENT OF OTHER ITEMS. If Borrower defaults under any of the terms of
this Note, Borrower shall pay all reasonable costs and expenses, including
without limitation attorneys' fees (including any service tax thereon) and
costs, incurred by Xxxxxx in enforcing this Note immediately upon Xxxxxx's
demand, whether or not any action or proceeding is commenced by Lender. Without
limiting the generality of the preceding sentence, such costs and expenses shall
include all attorneys' fees and costs incurred by Lender in connection with any
federal or state bankruptcy, insolvency, reorganization, or other similar
proceeding by or against Borrower or any surety, guarantor or endorser of this
Note which in any way affects Xxxxxx's
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exercise of its rights and remedies under this Note or under the Loan Agreement
or any other Loan Document. Maker hereby stipulates that Lender is a "regulated
lender" within the meaning of SDCL 54-3-13 and other applicable South Dakota
statutes.
NO OFFSET. No indebtedness evidenced by this Note shall be offset by
all or part of any claim, cause of action, or cross-claim of any kind, whether
liquidated or unliquidated, which Borrower now has or may hereafter acquire or
allege to have acquired against Lender. To the fullest extent permitted by law,
Borrower waives the benefits of any applicable law, regulation, or procedure
which provides, in substance, that where cross demands for money exist between
parties at any point in time when neither demand is barred by the applicable
statute of limitations, and an action is thereafter commenced by one such party,
the other party may assert the defense of payment in that the two demands are
compensated so far as they equal each other, notwithstanding that an independent
action asserting the claim would at the time of filing the response be barred by
the applicable statute of limitations.
CERTAIN BORROWER WAIVERS. Borrower waives presentment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of this Note
and any lack of diligence or delays in collection or enforcement of this Note.
Xxxxxxxx agrees that this Note, or any payment hereunder, may be extended from
time-to-time, and Xxxxxxxx consents to the release of any party liable for the
obligation evidenced by this Note, the release of any of the security for this
Note, the acceptance of any other security therefor, or any other indulgence or
forbearance whatsoever, all without notice to any party and without affecting
the liability of Borrower.
APPLICABLE LAW. This note shall be construed under and governed by the
laws of the State of South Dakota, without giving effect to conflict of laws or
principles thereof, but giving effect to federal laws of the United States
applicable to national banks. Whenever possible, each provision of this note and
any other statement, instrument or transaction contemplated hereby or relating
hereto, shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this note or any other statement,
instrument or transaction contemplated hereby or relating hereto shall be held
to be prohibited or invalid under such applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
note or any other statement, instrument or transaction contemplated hereby or
relating hereto.
NO WAIVER; CERTAIN MISCELLANEOUS PROVISIONS. Failure to exercise any
option provided herein shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default. No modification or waiver by
Lender of any of the terms of this Note shall be valid or binding on Lender
unless such modification or waiver is in writing and sighed by Xxxxxx. Without
limiting the generality of the preceding sentence, no delay, omission or
forbearance by Xxxxxx in exercising or enforcing any of its rights and remedies
under this Note shall constitute a waiver of such rights or remedies. Xxxxxx's
rights and remedies under this Note are cumulative with and in addition to all
other legal and equitable rights and remedies which Lender may have in
connection with the Loan. The headings of paragraphs of this Note are for
convenience of the parties only and shall not be used in interpreting this Note.
If this Note
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is lost, stolen, or destroyed, upon Xxxxxxxx's receipt of a reasonably
satisfactory indemnification agreement executed by Xxxxxx, or if this Note is
mutilated, upon Xxxxxx's surrender of the mutilated Note to Borrower, Borrower
shall execute and deliver to Lender a new promissory note which is identical in
form and content to this Note to replace the lost, stolen, destroyed or
mutilated Note. Time is of the essence in the performance of each provision of
this Note by Xxxxxxxx.
AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT
OR SOUTH DAKOTA STATE COURT SITTING IN SIOUX FALLS, SOUTH DAKOTA; AND BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE,
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
BORROWER AND XXXXXX EACH IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY
OF THE LOAN DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, Xxxxxxxx has executed this Note as of the date
first above written.
NORTHERN LIGHTS ETHANOL, LLC
By: /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
Its: Chairman of the Board
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