PROMISSORY NOTE
$6,864,000.00 June 19, 2007
FOR VALUE RECEIVED, NEDAK ETHANOL, LLC (the "Borrower"), a Nebraska limited
liability company, with an address at 00000 Xxxxxxxxx Xxxx - P.O. Box 391,
Atkinson, Nebraska 68713, promises to pay to the order of ARBOR BANK, a Nebraska
banking corporation ("Lead Lender"), and having an office at 000 Xxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0429, the principal sum of SIX MILLION EIGHT
HUNDRED SIXTY-FOUR THOUSAND and No/100 Dollars ($6,864,000.00), under this Note
from the date of its disbursement until such principal sum shall be fully paid.
Interest and principal shall be payable in installments as set forth in Section
3 below. The total principal sum, or the amount thereof outstanding, together
with any accrued but unpaid interest, shall be due and payable in full on
December 1, 2021 (the "Maturity Date").
Section 1. Loan Agreement. This Note is issued pursuant to the terms,
provisions and conditions of that certain Loan Agreement (as amended, the "Loan
Agreement") dated as of even date, between the Borrower and Lead Lender, and
evidences the loan (the "Loan") made pursuant thereto. Capitalized terms used
herein which are not otherwise specifically defined shall have the same meaning
herein as in the Loan Agreement.
Section 2. Interest Rate. All principal amounts outstanding under this Note
shall bear interest at the then-applicable Interest Rate.
Section 3. Payment of Interest and Principal.
(a) Payment and Calculation of Interest. Subject to the provision of
Section 5(b) of this Note dealing with payments falling due on dates that are
not "Business Days," all interest shall be: (a) payable commencing on December
1, 2007 and on June 1 and December 1 for each year thereafter (each a "Loan
Payment Date") until the principal together with all interest and other charges
payable with respect to the Loan shall be fully paid; and (b) calculated on the
basis of a 360-day year and the actual number of days elapsed and by the
provisions set forth in Section 4 of the Loan Agreement. Interest at the
then-applicable Interest Rate shall be computed from and including the first day
of the applicable Interest Period (hereinafter defined), up to and including the
last day thereof. Proceeds from this Note in the amount of $870,850.00 (the
"Capitalized Interest Amount" as further defined in Section 9 of the Loan
Agreement) shall be retained by Lead Lender to pay for interest on the Loan due
in 2008 and 2009, pursuant to the Loan Agreement. Interest shall be paid in
accordance with Schedule 1 attached hereto.
(b) Interest Rate. The "Interest Rate" commencing on the date of the
closing of the Loan shall be nine and one-half percent (9.50%) simple interest.
The Interest Rate shall reset on June 1, 2012 ("First Reset Date") and June 1,
2017 ("Second Reset Date"). The interest rate on the First Reset Date shall be
equal to the 5-year U.S. Treasury Constant Maturity Index (average for the prior
month) plus 475 basis points for the applicable five-year period. The interest
rate on the Second Reset Date shall be equal to the 5-year U.S. Treasury
Constant Maturity Index (average for the prior month) plus 475 basis points for
the remainder of the term of the Loan.
(c) "Interest Period" shall mean, in the case of the first Interest
Period, the period commencing on the closing of the Loan and ending on the last
day before the first Loan Payment Date; or, thereafter, the period commencing on
each Loan Payment Date and ending on the last day before the next successive
Loan Payment Date until the Maturity Date.
(d) Principal Repayment. Principal shall be paid in accordance with
the Schedule 1 attached hereto.
(e) Excess Cash Flow. All payments paid by City of Xxxxxxxx, Nebraska
under the Series A Note and all other payments or distributions of Pledged
Revenues shall be paid to the Lead Lender. Any payment received under the Series
A Note in excess of the scheduled payment under this Note shall be used to
prepay principal hereunder, without any prepayment penalty to Xxxxxxxx, in
accordance with Section 7(d) of the Loan Agreement.
(f) Payment upon Maturity Date. The entire remaining principal balance
and any unpaid interest or other amount due and owing shall be due and payable
in full upon the Maturity Date.
(g) Prepayment. Except as expressly provided herein or in the Loan
Agreement, this Note may not be prepaid in whole or in part prior to June 1,
2009, except for mandatory prepayments as set forth herein or in the Loan
Agreement. As of June 1, 2009, this Note may be prepaid, in whole part, without
penalty to Xxxxxxxx, upon five (5) days' written notice to the holder of this
Note, in accordance with Section 7(d) of the Loan Agreement. All prepayments
shall include accrued interest through the date of payment.
(h) Maturity Date. Upon the Maturity Date of the Loan, all accrued
interest, principal and other charges due with respect to the Loan shall be due
and payable in full and the principal balance and such other charges, but not
unpaid interest, shall continue to bear interest at the Default Rate until so
paid.
(i) Date of Credit. Payments shall be credited on the Business Day on
which immediately available funds are received prior to one o'clock P.M. Central
Standard Time; payments received after one o'clock P.M. Central Standard Time
shall be credited to the Loan on the next Business Day.
(j) Billings. Lead Lender may submit xxxxxxxx reflecting payments due;
however, any changes in the interest rate which occur between the date of
billing and the due date may be reflected in the billing for a subsequent
payment period. Neither the failure of Lead
Lender to submit a billing nor any error in any such billing shall excuse the
Borrower from the obligation to make full payment of all payment obligations of
the Borrower when due.
(k) Default Rate. The Borrower shall pay upon billing therefor, an
interest rate ("Default Rate") which is four percent (4%) per annum above the
Interest Rate: (a) following Borrower's failure to make a required payment, for
that period between the due date and the date of payment, (b) following any
Event of Default, unless and until the Event of Default is expressly and
specifically waived in writing by Lead Lender or (c) after the Maturity Date.
(l) Late Charges. The Borrower shall pay, upon billing therefor, a
"Late Charge" equal to five percent (5%) of the amount of any payment of
principal (other than principal due on the Maturity Date of the Loan), interest,
or both, which is not paid in full within ten (10) days of the due date thereof.
Late charges (a) are payable in addition to, and not in limitation of, the
Default Rate, (b) are intended to compensate the Lead Lender for administrative
and processing costs incident to late payments, (c) are not interest and (d)
shall not be subject to refund or rebate or credited against any other amount
due.
Section 4. Debt Service Coverage Event.
(a) The Borrower hereby agrees to establish and maintain, so long as
the Loan remains unpaid, a debt service reserve account with the Lead Lender
(the "Debt Service Reserve Fund") in an amount equal to the ten percent (10%) of
the original stated principal amount of the Loan, which amount shall be
deposited to the Debt Service Reserve Fund by the Lead Lender on behalf of the
Borrower from the Loan Proceeds upon the closing of the Loan (the "Debt Service
Reserve Fund Requirement").
(b) The "Debt Service Coverage Ratio" shall mean the ratio of the
quotient obtained by dividing (a) the amount of available Pledged Tax Increment
Revenues plus interest earned on the actual funds held by the Lead Lender in the
Debt Service Reserve Fund to scheduled Debt Service by (b) interest and
principal due and payable to Lead Lender during the applicable Loan Payment Date
to 1.00. Commencing on June 1, 2009, and at all times thereafter for the term of
the Series A Note, the Debt Service Coverage Ratio shall equal or exceed 1.20 to
1.00.
(c) If the Lead Lender determines in its sole and reasonable
discretion that the Debt Service Coverage Ratio will not be achieved on any Loan
Payment Date, the Lead Lender may direct the Borrower to prepay principal in
such amount as reasonably determined by Lead Lender so that the Debt Service
Coverage Ratio shall thereafter be satisfied.
(d) If, upon direction from the Lead Lender, the Borrower does not
make payment as described in Subparagraph (c) above, the Lead Lender may utilize
funds from the Debt Service Reserve Fund to prepay principal in such amount as
reasonably determined by Lead Lender so that the Debt Service Coverage Ratio
shall thereafter be satisfied.
(e) If, after utilizing the Debt Service Reserve Fund to achieve the
Debt Service Coverage Ratio or make payment under the Loan, the Lead Lender
determines that that Debt Service Reserve Fund Requirement is less than ten
percent (10%) of the original principal
amount of the Loan, the Lead Lender shall notify the Borrower in writing of such
deficiency. Upon written notice from Lead Lender, Xxxxxxxx will replenish the
Debt Service Reserve Fund to an amount equal to ten percent (10%) of the
original principal amount of the Loan, being Six Hundred Eighty-Six Thousand
Four Hundred and no/100 Dollars ($686,400.00).
(f) In addition, Lead Lender may use the amounts in the Debt Service
Reserve Fund to make loan repayments falling due on each Loan Payment Date to
the extent that the payment made by the Issuer under the Issuer's Series A Note
on any such Loan Repayment Date is insufficient to pay the amounts due on such
Loan Payment Date, after the application of any amounts on deposit in the
Capitalized Interest Fund available to pay interest on such Loan Payment Date.
(g) The Debt Service Reserve Fund shall be maintained as an interest
bearing account or certificate of deposit with the Lead Lender. All interest
earnings shall be retained in the Debt Service Reserve Fund. On each Loan
Payment Date, if there exists an excess above the Reserve Requirement in the
Debt Service Reserve Fund and no withdrawal is required to pay principal of, and
interest on, the Loan then due, the Lead Lender shall apply such excess to the
prepayment of the principal amount on the Loan. The Debt Service Reserve Fund
shall be valued at the amount actually on deposit and currently available to
withdraw (excluding accrued but unpaid interest earnings) for the purposes of
determining a deficiency.
Section 5. Definitions.
(a) "Banking Day" means a day on which banks are not required or
authorized by law to close in Nebraska.
(b) "Business Day" means any Banking Day. If any day on which a
payment is due is not a Business Day, then the payment shall be due on the next
day following which is a Business Day.
(c) "Debt Service Coverage Ratio" for the purposes of this Note and
the Loan Agreement, means 1.20 to 1.00.
(d) "Dollars" or "$" means lawful money of the United States.
(e) "Interest Rate" means the interest rate for applicable Interest
Period, in an amount not to exceed nine and one-half percent (9.5%).
(f) "Series A Note" means the Tax Increment Revenue Note, Taxable
Series 2007A (NEDAK Ethanol, LLC Plant Project), issued by the City of Xxxxxxxx,
Nebraska and dated the date of issuance and delivery thereof, in the original
principal amount of not less than Six Million Eight Hundred Sixty-Four Thousand
Dollars ($6,864,000.00).
Section 6. Acceleration Due to an Event of Default. At the option of the
holder, this Note and the indebtedness evidenced hereby shall become immediately
due and payable without further notice or demand, and notwithstanding any prior
waiver of any breach or default, or other indulgence, upon the occurrence at any
time and during the continuance of any one or more of the following events, each
of which shall be an "Event of Default" hereunder and
under the Loan Agreement and each other Loan Document: (i) default continuing
uncured beyond the applicable notice and grace period, if any, set forth herein
or in the Loan Agreement, in making any payment of interest, principal, other
charges or payments due hereunder; (ii) an Event of Default as defined in or as
set forth in the Loan Agreement or any other Loan Document, each as the same may
from time to time hereafter be amended; or (iii) an event which pursuant to any
express provision of the Loan Agreement, or of any other Loan Document, gives
Lead Lender the right to accelerate the Loan.
Section 7. Certain Waivers, Consents and Agreements. Each and every party
liable hereon or for the indebtedness evidenced hereby whether as maker, (i)
agrees to any substitution, exchange, release, surrender or other delivery of
any security or collateral now or hereafter held hereunder or in connection with
the Loan Agreement, or any of the other Loan Documents, and to the addition or
release of any other party or person primarily or secondarily liable; (ii)
agrees that if any security or collateral given to secure this Note or the
indebtedness evidenced hereby or to secure any of the obligations set forth or
referred to in the Loan Agreement, or any of the other Loan Documents, shall be
found to be unenforceable in full or to any extent, or if Lead Lender or any
other party shall fail to duly perfect or protect such collateral, the same
shall not relieve or release any party liable hereon or thereon nor vitiate any
other security or collateral given for any obligations evidenced hereby or
thereby; (iii) agrees to pay all reasonable costs and expenses incurred by Lead
Lender or any other holder of this Note in connection with the indebtedness
evidenced hereby, including, without limitation, all reasonable attorneys' fees
and costs for (a) the administration and implementation of the Loan, (b) the
syndication and/or participation of the Loan, (c) the collection of the
indebtedness evidenced hereby and (d) for the enforcement of rights and remedies
hereunder or under the other Loan Documents, whether or not suit is instituted;
and (iv) consents to all of the terms and conditions contained in this Note, the
Loan Agreement, and all other instruments now or hereafter executed evidencing
or governing all or any portion of the security or collateral for this Note and
for such Loan Agreement, or any one or more of the other Loan Documents.
Section 8. Delay Not A Bar. No delay or omission on the part of the holder
of this Note in exercising any right hereunder or any right under any instrument
or agreement now or hereafter executed in connection herewith, or any agreement
or instrument which is given or may be given to secure the indebtedness
evidenced hereby or by the Loan Agreement, or any other agreement now or
hereafter executed in connection herewith or therewith shall operate as a waiver
of any such right or of any other right of such holder, except as expressly set
forth therein, nor shall any delay, omission or waiver on any one occasion be
deemed to be a bar to or waiver of the same or of any other right on any future
occasion.
Section 9. Partial Invalidity. The invalidity or unenforceability of any
provision hereof, of the Loan Agreement, of the other Loan Documents, or of any
other instrument, agreement or document now or hereafter executed in connection
with the Loan made pursuant hereto and thereto shall not impair or vitiate any
other provision of any of such instruments, agreements and documents, all of
which provisions shall be enforceable to the fullest extent now or hereafter
permitted by law.
Section 10. Use of Proceeds. All proceeds of the Loan shall be used solely
for the purposes more particularly provided for and limited by the Loan
Agreement.
Section 11. Notices. Any notices given with respect to this Note shall be
given in the manner provided for in the Loan Agreement.
Section 12. Governing Law. It is understood and agreed that all of the Loan
Documents were negotiated, executed and delivered in the State of Nebraska,
which State the parties agree has a substantial relationship to the parties and
to the underlying transactions embodied by the Loan Documents. This Note and
each of the other Loan Documents shall in all respects be governed, construed,
applied and enforced in accordance with the internal laws of the State of
Nebraska without regard to principles of conflicts of law.
Section 13. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 14. No Oral Change. This Note and the other Loan Documents may only
be amended, terminated, extended or otherwise modified by a writing signed by
the party against which enforcement is sought. In no event shall any oral
agreements, promises, actions, inactions, knowledge, course of conduct, course
of dealing, or the like be effective to amend, terminate, extend or otherwise
modify this Note or any of the other Loan Documents.
Section 15. Rights of the Holder. This Note and the rights and remedies
provided for herein may be enforced by Lead Lender or any subsequent holder
hereof. Wherever the context permits each reference to the term "holder" herein
shall mean and refer to Lead Lender or the then subsequent holder of this Note.
Section 16. Right to Pledge to Federal Reserve. Lead Lender may at any time
pledge or assign all or any portion of its rights under the Loan Documents
including any portion of this Note to any of the twelve (12) Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or assignment or enforcement thereof shall release Lead
Lender from its obligations under any of the Loan Documents.
Section 17. General Rights of Assignment and Participation. In accordance
with and subject to the terms and conditions of the Loan Agreement, Lead Lender
shall have the unrestricted right at any time or from time to time, and without
Xxxxxxxx's or any other person's consent, to assign all or any portion of its
rights and obligations hereunder and to grant participating interests in the
obligations of Lead Lender.
Section 18. Replacement Note. Upon receipt of an affidavit of an officer of
Lead Lender as to the loss, theft, destruction or mutilation of the Note or any
other security document which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon cancellation of the Note or
other security document, the Borrower will issue, in lieu thereof, a replacement
note or other security document in the same principal amount thereof and
otherwise of like tenor.
[Signatures appear on following page]
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
as of the date and year set forth above as a sealed instrument at Omaha,
Nebraska.
WITNESS: BORROWER:
/s/ Xxxxxxx Xxxxx
----------------------------- NEDAK ETHANOL, LLC,
a Nebraska limited liability company
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President and General Manager
Hereunto duly authorized
Schedule 1
Principal and Interest Payments
