LOAN CLOSING; OPTION
WHEREAS, Granite Falls Bank (“Granite Falls Bank”) is willing to lend $800,000.00 to Highwater Ethanol, LLC (“Highwater”) so that Highwater can purchase real estate from “Halter” and “Imker” as further described on Exhibits “A” and “B” as attached hereto and made a part hereof provided that:
A. Granite Falls Bank has a first mortgage on said real estate;
B. Roland “Ron” Fagen guarantees $400,000.00 of said loan pursuant to the Guaranty attached hereto and made a part hereof as Exhibit “C”;
C. Warren Pankonin agrees pursuant to the terms contained herein to purchase said real estate (in case Highwater defaults on said loan and Fagen, Inc. does not step in and assume said loan and corresponding mortgage in full) for $402,500.00;
D. Highwater grants security in $55,000.00 cash in favor of Granite Falls Bank by placing a hold on funds in Granite Falls Bank or, in the alternative, sufficient Highwater Board Members (as solely determined by Granite Falls Bank) guarantee $55,000.00 of the $800,000.00 loan as being made by Granite Falls Bank to Highwater.
WHEREAS, Granite Falls Bank is requiring the terms of this Agreement in order to loan said $800,000.00 to Highwater; and
WHEREAS, Roland “Ron” Fagen is requiring the terms of this Agreement in
order to proceed to guarantee one-half of said loan; and
WHEREAS, Warren Pankonin is interested in purchasing said real estate (in case a default occurs) and therefore is willing to execute this Agreement.
NOW, THEREFORE, the undersigned parties hereby agree and contract, intending to be legally bound, as follows:
1. Roland “Ron” Fagen BK W.P. J.S. RF JV
Fagen, Inc. Guarantee. Roland “Ron” Fagen will guarantee one-half of the loan being made by Granite Falls Bank to Highwater to purchase said real estate, provided that said guarantee shall be capped at and limited to the principal amount of $400,000.00 and shall be in the form as attached hereto and made a part hereof as Exhibit “C”.
2. Fagen Right to Purchase Note/Mortgage. In exchange for providing said guarantee, Fagen, Inc. is hereby granted a first right to purchase said note (the entire $800,000.00 loan) and the corresponding first mortgage on said “Halter” and “Imker” real estate if Highwater defaults on said loan as owed to Granite Falls Bank. If such a default occurs and if Fagen, Inc. elects to purchase said loan in its entirety and receive an assignment of said note and mortgage on said real estate, then any rights as held by Warren Pankonin as described herein shall terminate and be of no further force or effect.
If there is a default on the note and mortgage, Granite Falls Bank shall give written notice to Fagen, Inc. and Fagen, Inc. shall have thirty (30) days after mailing of said notice to purchase the note and mortgage by paying all amounts then owed thereon
and receiving an assignment of the note, mortgage and any related documents.
3. Conditions to Guarantee. The guarantee from Roland “Ron” Fagen is conditional on said loan being made by Granite Falls Bank to Highwater for the purchase of said real estate, said real estate purchases closing with marketable title received by Highwater (subject to the mortgage being granted to Granite Falls Bank) and the full execution of this Agreement by all parties hereto.
4. Pankonin Conditional Option Right. If Highwater defaults on said loan and provided that Fagen, Inc. does not purchase said loan in its entirety and correspondingly receive an assignment of the note and the mortgage on said real estate; then if and when Granite Falls Bank receives title to the real estate (by voluntary conveyance or foreclosure), Granite Falls Bank shall offer said real estate to Warren Pankonin and Warren Pankonin shall purchase said real estate from Granite Falls Bank (once Granite Falls Bank receives title to said property) by paying Granite Falls Bank $402,500. If a sale by Granite Falls Bank to Warren Pankonin occurs pursuant to the terms hereof, Granite Falls Bank shall pay all delinquent taxes in full and shall pay all taxes due and payable in the year of closing. Granite Falls Bank shall not be required to prepay any special assessments and Warren Pankonin agrees to pay all real estate taxes due and payable in the year subsequent to the year of closing and thereafter, including any remaining special assessments.