Document:

Exhibit10.6-PromissoryNote

EXHIBIT 10.6

PROMISSORY NOTE

	
								
	Principal
$5,000,000.00
	Loan Date
07-23-2013
	Maturity
09-23-2013
	Loan No
28407
	Call/Coll
55
	Account
	Officer
JOHN
	Initials

	References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.
Any item containing “***” has been omitted due to text length limitations.

	
		
	Borrower:  PROJECT VIKING, LLC
	Lender:  GRANITE FALLS BANK

	ROLAND J. FAGEN
	702 PRENTICE ST.

	108 MILLER CIRCLE
	PO BOX 8

	GRANITE FALLS, MN  56241
	GRANITE FALLS, MN  56241

	 
	(320) 564-2111

_____________________________________________________________________________________________________________________

Principal Amount:  $5,000,000.00               Date of Note:  July 23, 2013

PROMISE TO PAY. PROJECT VIKING, LLC; and ROLAND J. FAGEN ("Borrower") jointly and severally promise to pay to GRANITE FALLS BANK ("Lender"), or order, in lawful money  of the United States of America, the principal amount of Five Million & 00/100 Dollars ($5,000,000. 00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 3.990% per annum based on a year of 360 days.  Interest shall be calculated from the date of each advance until repayment of each advance.  The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.
PAYMENT.  Borrower will pay this loan in full immediately upon Lender's demand.  If no demand is made, Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on September 23, 2013.  Unless otherwise agreed or required by applicable law, payments will be applied ·first to any accrued unpaid interest; then to principal; and then to any unpaid collection costs.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.
INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/360 basis; that is, by applying the ration of the interest rate of a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.
PREPAYMENT.  Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  GRANITE FALLS BANK, 702 PRENTICE ST. PO Box 8, GRANITE FALLS, MN  56241.
INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 3.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note: 
               Payment Default.  Borrower fails to make any payment when due under this Note.

EXHIBIT 10.6

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any· of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.
False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Death or Insolvency.  The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower's existence as a going business or the death of any member, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor to or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by· Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Insecurity.  Lender in good faith believes itself insecure.
LENDER'S  RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.
CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of YELLOW MEDICINE County, State of Minnesota.
RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all 

EXHIBIT 10.6

such accounts, and, at Lender 's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.
COLLATERAL.  Borrower acknowledges this Note is secured by PROPERTY DESCRIBED IN OTHER DOCUMENT(S).
LINE OF CREDIT.  This Note evidences a straight line of credit.  Once the total amount of principal has been advanced, Borrower is not entitled to further loan advances.  Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or as provided in this paragraph.  Lender may, but need not, require that all oral requests be confirmed in writing. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority:  ROLAND J. FAGEN, Member of PROJECT VIKING, LLC; and ROLAND J. FAGEN, Individually.  Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.  Lender will have no obligation to advance funds under this Note if:  (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.

LOAN PURPOSE. COMMERCIAL - EQUITY INJECTION FOR STOCK PURCHASE.
SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.  Borrower may notify Lender if Lender reports any inaccurate information about Borrower's account(s) to a consumer reporting agency.  Borrower's written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address:  GRANITE FALLS BANK, 702 PRENTICE ST. PO BOX 8, GRANITE FALLS, MN 56241.
GENERAL PROVISIONS.  This Note is payable on demand.  The inclusion of specific default provisions or rights of Lender shall not preclude Lender's right to declare payment of this Note on its demand.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  In addition, Lender shall have all the rights and remedies provided in the related documents or available at law, in equity, or otherwise.  Except as may be prohibited by applicable law, all of lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower shall not affect Lender's right to declare a default and to exercise its rights and remedies.  Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of  the rate of  interest on the indebtedness; (c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with any one or more of Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application) of payments and credits shall be made on any other indebtedness owing by such other Borrower.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor:  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the medication is made.  The obligations under this Note are joint and several.

EXHIBIT 10.6

SECTION DISCLOSURE.  To the extent not preempted by federal law, this loan is made under Minnesota Statutes, Section 334.01.
PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  EACH BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. 

BORROWER:

PROJECT VIKING, LLC

By: /s/ Roland J. Fagen        
            ROLAND J. FAGEN, Member of PROJECT VIKING, LLC

x /s/ Roland  J. Fagen        
        ROLAND J. FAGEN, Individually

LENDER:

     GRANITE FALLS BANK

      x /s/ John Virnig            
             John Virnig, PresidentExhibit10.7-AssumptionAgreement

EXHIBIT 10.7

Assumption Agreement

This Assumption Agreement (the “Agreement”) is entered into among Granite Falls Energy, LLC, a Minnesota limited liability company (hereinafter “GFE”), Project Viking, LLC, a Minnesota limited liability company (hereinafter “Viking”), Roland J. Fagen (hereinafter “Mr. Fagen”) and Granite Falls Bank (hereinafter “Lender”). 
 
WHEREAS, as a condition to its purchase of Viking, GFE has agreed to assume all obligations as Borrower under that certain Promissory Note in the principal amount of $5,000,000 having Loan Number 28407 (the “Note”) between Viking and Mr. Fagen, who are jointly and severally the current Borrower on the Note, and Lender, and 
  
WHEREAS,  Lender is willing to consent to the assumption by GFE of the Note pursuant to the terms and conditions set forth herein. 
  
NOW THEREFORE, in consideration of Lender’s agreement to allow GFE to assume primary responsibility for payment of the Note, the parties agree as follows: 
  
1.    Assumption of Borrower Status by GFE.  Upon the date hereof, GFE shall become the Borrower on the Note.  GFE hereby agrees to the assumption of all obligations of Borrower under the Note. 

2.    Ongoing Obligations.  The assumption by GFE of the obligations of Borrower under the Note shall not serve to release Viking and Mr. Fagen from their payment obligations in the event GFE fails to make payments due on the Note.  On the date hereof, the parties have entered into that certain Creditor and Debtors Agreement, which addresses, among other things, the manner in which Lender shall pursue collection on the Note as between GFE, Viking and Mr. Fagen. 

3.    Supplement to Note.  Except as expressly amended or supplement hereby, the Note is and shall remain in full force and effect.

4.    Law Governing. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Minnesota.

5.    Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators and successors of the parties hereto, but no right or liability or obligation arising hereunder may be assigned by any party hereto without the prior written consent of all other parties. 

6.    Counterparts, Separate Signature Pages. This Agreement may be executed in any number of counterparts, or using separate signature pages.  Each such executed counterpart and each counterpart to which such signature pages are attached shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument.  A signed copy of this Agreement 

EXHIBIT 10.7

delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

EXHIBIT 10.7

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

GRANITE FALLS ENERGY, LLC

By /s/ Paul Enstad            
Its Chairman                

PROJECT VIKING, L.L.C.

By /s/ Roland J. Fagen            
Its President & Managing Member    

/s/ Roland J. Fagen            
Roland “Ron” J. Fagen

GRANITE FALLS BANK

By /s/ John C. Virnig            
Its President

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