JOINT POWERS AND PARTICIPATION AGREEMENT PROVIDING FOR A LOAN TO GRANITE FALLS ENERGY, LLC
EXHIBIT 10.4
THIS AGREEMENT is entered into as of the 1st day of February, 2006, by and among the Granite
Falls Economic Development Authority (“EDA”), the City of Granite Falls, Minnesota (the “City”),
The Western Minnesota Revolving Loan Fund, a Minnesota nonprofit corporation (the “Western MN RLF”)
and Chippewa County, Minnesota (the “County”) (collectively, the “Parties”, or individually, a
“Party”). Each of the foregoing entities, other than the Western MN RLF, is a political
subdivision of, or instrumentality of a political subdivision of, the State of Minnesota and a
governmental unit within the meaning of Minnesota Statutes, Section 471.59 (the “Joint Powers
Act”).
1. The Joint Powers Act provides that two or more governmental units, by agreement entered
into through action of their governing bodies, may jointly or cooperatively exercise any power
common to the contracting parties, and may provide for the exercise of such power by one of the
participating governmental units.
2. On October 4, 2004, the EDA adopted a Redevelopment Plan (the “Redevelopment Plan”)
pursuant to Minnesota Statutes, Sections 469.001 through 469.047 (the “HRA Law”) in connection with
the acquisition, construction and equipping of an approximately 40,000,000 gallon per year dry mill
ethanol production plant in the City (the “Project”).
3. Pursuant to Minnesota Statutes, Section 469.041, for the purpose of aiding and cooperating
in the planning, undertaking, construction or operation of a redevelopment project, any state
public body, including the City, the EDA and the County, may upon the terms, with or without
consideration, as it may be determined: (1) do any and all things necessary or convenient to aid
and cooperate in the planning, undertaking, construction or operation of a redevelopment project;
(2) incur the entire expense of any public improvement made by it in exercising the powers granted
in the HRA Law; (3) enter into agreements with an authority respecting action to be taken by the
state public body pursuant to any of the powers granted by the HRA Law; and (4) furnish funds
available to it from any source, including the proceeds of bonds, to an authority to pay all or
part of the costs to the authority of the activities authorized by the HRA Law.
4. The Western MN RLF has the power to enter into this Agreement, to make loans and to carry
out its obligations hereunder.
5. Granite Falls Energy, LLC, a Minnesota limited liability company, (the “Developer”) has
proposed that the Parties enter into this Agreement pursuant to Minnesota Statutes, Section 469.041
to (1) provide for a loan to the Developer in the aggregate principal amount of $700,000 (the
“Loan”) to finance the acquisition of certain equipment in connection with the Project (the
“Equipment”) and pay certain engineering
and administrative expenses, (2) to authorize the City to enter into a Loan Agreement with the
Developer and (3) to provide for the allocation of security for the Loan and Loan Repayments from
the Developer to the Parties.
6. The County, the Western MN RLF and the EDA hereby request and authorize the City to enter
into a Loan Agreement with the Developer on their behalf in connection with the Project and the
Equipment. The County, the Western MN RLF and the EDA further request and authorize the City to
secure the repayment of the Loan with a second lien mortgage in the real property on which the
Developer is constructing the Project (the “Mortgaged Property”) pursuant to a Statutory Mortgage
from the Developer to the City (the “Mortgage”) and to disburse and administer the Loan and enforce
the terms of the Loan Agreement and the Mortgage in accordance with the terms thereof and take such
further actions and assert such further rights under the Loan Agreement, the Mortgage or any
document relative thereto as the City in its reasonable judgment deems appropriate.
7. The County agrees to deposit the proceeds of a loan from the County in the amount of
$100,000 pursuant to the Redevelopment Plan and Minnesota Statutes, Section 469.041 (the “County
Loan”) with the City to be disbursed and administered pursuant to the Loan Agreement.
8. The Western MN RLF agrees to deposit the proceeds of a loan from its Revolving Loan Fund
program in the amount of $100,000 with the City to be disbursed and administered pursuant to the
Loan Agreement (the “Western Minnesota RLF Loan”).
9. The City agrees to disburse the proceeds of a loan received from the Minnesota Department
of Employment and Economic Development through the Minnesota Investment Fund program in the amount
of $500,000 pursuant to the Redevelopment Plan and pursuant to the Loan Agreement (the “MIF Loan”).
10. Payments received by the City from the Developer pursuant to Section 3.2(5) of the Loan
Agreement (the “Loan Repayments”) shall allocated to the County, the Western MN RLF and the City
within 10 days of receipt in the amounts set forth therein for the repayment of the County Loan,
the Western Minnesota RLF Loan and the MIF Loan.
11. The County, the Western MN RLF and the EDA hereby request and authorize the City to enter
into a Subordination Agreement with the Developer and First National Bank of Omaha and agree that
its terms apply equally to the County Loan, the Western Minnesota RLF Loan and the MIF Loan.
12. In the event Loan Repayments received by the City from the Developer pursuant to Section
3.2(5) of the Loan Agreement are insufficient to make payments with respect to the County Loan, the
MIF Loan and the Western Minnesota RLF Loan in the amounts set forth in Section 3.2(5), the City
shall apply such Loan Repayments pro rata in accordance with the outstanding principal balance of
each of the County Loan, the MIF Loan and the Western Minnesota RLF Loan.
13. In the event the City receives a partial prepayment from the Developer pursuant to Section
3.5 of the Loan Agreement, the City shall apply such prepayment pro rata in accordance with the
outstanding principal balance of each of the County Loan, the MIF Loan and the Western Minnesota
RLF Loan.
2
14. In the event of a declaration of default under the Loan Agreement or the acceleration or
demand for payment of the Loan, or of any foreclosure, sale, or other disposition or liquidation of
the Mortgaged Property, all money collected or received by the City on account of the Loan or
otherwise owed by the Developer shall be applied to the payment of all proper costs incurred in the
collection thereof (including expenses and disbursements of the Parties and their counsel and
including attorneys’ fees, including any extraordinary administrative fees of the Parties) pro rata
in accordance with the amount of such costs, and the balance of such money shall be applied pro
rata in accordance with the outstanding principal balance of each of the County Loan, the MIF Loan
and the Western Minnesota RLF Loan.
15. This Agreement shall terminate upon the payment in full of the County Loan, the MIF Loan
and the Western Minnesota RLF Loan, and this Agreement may not be terminated in advance of such
payment.
3
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf
by its duly authorized officers, all as of the day and year first above written.
| GRANITE FALLS ECONOMIC DEVELOPMENT AUTHORITY | ||||||
| By | /s/ Xxxx Xxxxxxxxx | |||||
| Xxxx Xxxxxxxxx, Chair | ||||||
| By | /s/ Xxxx Xxxxxxx | |||||
| Xxxx Xxxxxxx, Secretary | ||||||
SIGNATURE PAGE TO JOINT POWERS AGREEMENT
X-0
| XXXX XX XXXXXXX XXXXX, XXXXXXXXX | ||||||
| By | /s/ Xxxx Xxxxxxxxxx | |||||
| Xxxx Xxxxxxxxxx, Mayor | ||||||
| By | /s/ Xxxxxxx Xxxxx | |||||
| Xxxx Xxxxx, City Manager | ||||||
SIGNATURE PAGE TO JOINT POWERS AGREEMENT
S-2
| CHIPPEWA COUNTY, MINNESOTA | ||||||
| By | /s/ Xxxxxxx Xxxxxx | |||||
| Xxxxxxx Xxxxxx, Chair | ||||||
| By | /s/ Xxx Xxxxxxx | |||||
| Xxx Xxxxxxx, Auditor/Treasurer | ||||||
SIGNATURE PAGE TO JOINT POWERS AGREEMENT
S-3
| THE WESTERN MINNESOTA REVOLVING LOAN FUND | ||||||
| By | /s/ Xxxxxxx Xxxxxx | |||||
| Xxxxxxx Xxxxxx, Chair | ||||||
| ATTEST: | ||||||
| By | /s/ Xxxx Xxxxxx | |||||
| Xxxx Xxxxxx, Director | ||||||
SIGNATURE PAGE TO JOINT POWERS AGREEMENT
S-4
