Exhibit 10.4


 


DEVELOPMENT AGREEMENT

FOR

UNITED WISCONSIN GRAIN PRODUCERS, LLC

ETHANOL PLANT


 


AGREEMENT made and
entered into this 7th day of June, 2004, by and between the Town of Randolph, a
body politic (hereinafter referred to as “Town”) and United Wisconsin Grain
Producers, LLC, a Wisconsin limited liability company (hereinafter referred to
as “UWGP”),


 


WITNESSETH:


 


WHEREAS, UWGP is
intending to construct and operate a dry mill, fuel grade ethanol plant and
production facility (“Plant”) on land located within the Town of Randolph,
Columbia County, Wisconsin; and


 


WHEREAS, in
conjunction with the construction of the infrastructure to serve the Plant, the
Town has applied for and received approval for certain grants or other economic
assistance including a Community Development Block Grant, Public Facilities for
Economic Development, from the Wisconsin Department of Commerce (“DOC”),
(“Block Grant”) and a Transportation Facilities Economic Assistance and
Development Grant from the Wisconsin Department of Transportation (“TEA
Grant”); and


 


WHEREAS, the Block
and/or TEA Grants require that a Development Agreement be entered into between
the Town and UWGP containing certain provisions; and


 


WHEREAS, the
utilization of the grant funds and ongoing monitoring of the grant requirements
will require the Town to incur certain costs and expenses; and


 


WHEREAS, as
inducement to have the Town apply for, receive, and administer the grant funds,
UWGP has agreed to reimburse the Town for all of its direct and indirect costs
related to the grants and to be responsible for all of the construction and
other work and costs to be performed in connection therewith;


 


NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Town and UWGP agree as follows:


 


1.                                       Subject
to the conditions set forth in this paragraph 1, the Town shall enter into a
contract with the DOC for a $271,000.00 Block Grant, which funds, when
received, shall be used to provide infrastructure improvements to Plant
including, but not limited to, an interior asphalt roadway, approximately 1,750
feet long and approximately 30 feet wide originating from County Highway EF to
the Plant, an asphalt turn lane approximately 600 feet long by approximately 15
wide to be constructed on County Highway EF, and a 250,000 gallon water tower
tank to be located on the north side of the Plant and a fire hydrant to be
constructed off the southwest portion of the


 

















 


plant.  The Town shall only be
required to enter into the contract provided the form of the contract meets
with the approval of the Town Attorney.


 


2.                                       As
a condition of the receipt of the Block Grant, UWGP agrees as follows:


 


A.                                   UWGP shall create
and fill at least 32 full-time positions at the Plant no later than December 31,
2006, and shall, thereafter, maintain each of those full-time positions until
December 31, 2008.  Of the 32
full-time positions created, at least 51% shall be made available to low to
moderate income (“LMI”) persons as defined using the most recent income figures
published by the US Department of Housing and Urban Development for the
Community Development Block Grant program. 
UWGP acknowledges and agrees that the creation and continuation of this
employment constitutes the major inducement for the DOC granting funds to the
Town.  UWGP acknowledges and understands
that if the DOC, in its reasonable discretion, determines that UWGP has failed
to comply with these employment obligations, then for each full-time position
that UWGP fails to create, UWGP shall pay to the Town the following:


 


(i)                                     $500.00 for each
new full-time position created less than 32, plus


 


(ii)                                  $1,000.00 for each
full-time position not made available to LMI persons.


 


For purposes of this Agreement, the term
“full-time position” means a regular full-time position where the employee is
required, as a condition of employment, to work at least 40 hours per week and
2,080 per year, including holidays and paid vacations.


 


B.                                     All of the Block
Grant shall only be used by the Town and UWGP for the road and water
infrastructure set forth above.


 


C.                                     UWGP warrants and
represents that in connection with the construction of the Plant in the Town,
including all start-up costs and initial grain acquisition, it shall invest and
spend a minimum of $40,000,000.00 for all of the required improvements and,
further, agrees that in connection with such investment, it will expend
sufficient match amounts to support the receipt of the entire Block Grant
applied for and received by the Town.


 


D.                                    UWGP shall, pursuant
to §106.16, Wis. Stats., notify the Department of Work Force Development, the
local job service office, and the area Private Industry Council of any vacant
full-time positions at the Plant.  UWGP
agrees that it shall at all times provide at least two weeks advance notice to
the above agencies prior to advertising for such full-time positions.


 


E.                                      UWGP shall, as
required by DOC, provide the payroll records for all employees at the Plant to
the Town necessary to establish the base level of


 

















 


employment.  Thereafter, UWGP
shall periodically provide to the Town, as from time to time requested and
required, a record of the full-time positions that are created and maintained
at the Plant up to and through December 31, 2008, to determine the number
of new full-time positions.  UWGP shall
be required to prepare, for the Town’s review and execution, each and every
document and other report required to be submitted to DOC in connection with
the receipt and subsequent monitoring of compliance in connection with the
Block Grant Contract between DOC and Town.


 


3.                                       UWGP
shall, at its sole cost, post a notice at a location to be determined by the
Town, stating that a portion of the Plant was funded through a grant from the
Wisconsin Department of Commerce using a DOC Block Grant.


 


4.                                       Subject
to the conditions set forth in this paragraph 4, the Town shall enter into a
Transportation Economic Assistance Agreement with the Wisconsin Department of
Transportation (“DOT”) for the $160,000.00 TEA Grant, which funds, when received,
shall be used to provide infrastructure improvements to the Plant consisting of
a multiple track, mini-rail yard railroad spur approximately 10,421 feet from
the point of the switch on the Union Pacific track to the end of the track at
the Plant (“Project”).  The conditions
that must be met before the Town shall be required to enter into the Agreement
include, among others, the following:


 


A.                                   UWGP executing a
Facility Use Agreement with the Town in a form satisfactory to the Town and the
Town’s attorney for the construction and use of the Project.


 


B.                                     UWGP executing a
Track Easement for the Project with the Town in a form satisfactory to the Town
and Town’s attorney granting easement rights on, over, and across the real
estate upon which the Project will be located.


 


C.                                     UWGP providing and
executing an Industry Track Agreement in a form acceptable to the Town and
Town’s attorney between the Town, UWGP, and Union Pacific providing for service
and maintenance of the Project.


 


D.                                    UWGP executing any
and all documents required by the Town or DOT in a form satisfactory to the
Town and Town’s attorney granting a first priority lien position in favor of
DOT for all of the Project construction material purchased in whole or in part
with the TEA Grant for the Project to be maintained for the duration of the
placement of the Project materials within the easement.  The first lien will be perfected by a
recording with the office of the Columbia County Register of Deeds and filing
with the Wisconsin Department of Financial Institutions.


 


E.                                      UWGP preparing
for and on behalf of the Town any and all necessary environmental reports or
obtain any and all necessary approval letters from the Wisconsin Department of
Natural Resources, Wisconsin State Historical


 

















 


Society, or other state or federal agencies which are required to
review the Project all at no cost to the Town.


 


F.                                      The Town Attorney
approving the form of the TEA Agreement between the Town and DOT.


 


5.                                       UWGP
acknowledges that as a condition of the receipt of the TEA Grant, the Town is
required to sign a job guarantee in favor of DOT.  UWGP acknowledges that in the event that it does not expand
employment by 32 jobs as contemplated and required by the TEA Agreement by the
Town for mini-rail yard construction and retain the 32 jobs for another four
(4) years, the Town may be required to reimburse DOT up to the full TEA Grant
amount.  In the event that the Town is
ever required to reimburse DOT as a consequence of UWGP’s failure to expand and
maintain the 32 jobs for a total of seven (7) years from the date the TEA
Agreement is executed, UWGP shall promptly reimburse the Town for any and all
sums repaid by the Town to DOT.  For
purposes of this paragraph, a job is defined to be consistent with Trans. 510
of the Wisconsin Administrative Code and shall include all non-retail jobs and
exclude jobs obtained through geographical job transfers within Wisconsin
except those that would be lost to the state. 
Eligible jobs may include full time equivalents.


 


6.                                       UWGP
agrees that it shall be solely responsible to provide all of the construction
and funds to support the 50% matching funds required as a condition of the TEA
Grant.  The Town shall not be required
at any time to expend Town funds in connection with the Project and UWGP shall
indemnify and hold Town harmless in connection therewith.


 


7.                                       At
all times from and after the date of this Agreement, UWGP shall be solely
responsible for all costs of construction, maintenance, repair, or
reconstruction of the infrastructure improvements contemplated by the Block
Grant (except the turn lane within the road right-of-way) and TEA Grant.  The Town shall have no responsibility at any
time with respect to any improvements of any kind constructed in connection
with the Plant.


 


8.                                       UWGP
agrees that all work utilizing the Block Grant and, as set forth below, the TEA
Grant funds undertaken by UWGP and its contractors shall be completed in
accordance with all applicable federal, state, and local laws.  UWGP acknowledges and agrees that the Town
shall draw and disburse funds only after receipt of contractors’ bills and
verification by the supervising engineer that all work contemplated by the
Block Grant and TEA Grant has been properly performed and that sufficient and
suitable matching funds have been paid by UWGP to support the Block Grant.


 


9.                                       UWGP
acknowledges and agrees that in the event the cost of the infrastructure
improvements contemplated to be made by the Block or TEA Grants exceeds the
amount budgeted, all of the excess costs shall be the sole and exclusive
responsibility of UWGP.


 

















 


10.                                 In
the event that DOC or DOT ever determines that the Town has not satisfied the
match funds requirement contained in the Block or TEA Grants and requires the
Town to refund all or a part of the Block or TEA Grants, UWGP shall be required
to immediately reimburse and compensate the Town for any and all of the
matching funds required to be repaid. 
In addition, to the extent that the Town is required to pay attorney
fees or other costs incurred to recover the amount to be repaid, UWGP shall
promptly reimburse the Town said amount. 
If any amounts owed by the Town are not reimbursed by UMGP within thirty
(30) days of the date of written demand, all such sums shall accrue interest at
the rate of prime plus five (5) percent.


 


11.                                 UWGP
shall always maintain sufficient staff to ensure the proper administration of
the construction of the infrastructure contemplated by the Block and TEA
Grants.  In addition, UWGP shall
maintain all files and records, including all contracts relating to the
construction and implementation of the infrastructure contemplated by the Block
and TEA Grants for at least four (4) years or longer as required by the
Contract between the Town and DOC and/or DOT and prepare and file all necessary
reports with the DOC or DOT.


 


12.                                 UWGP
shall at all times be required to maintain adequate comprehensive liability
insurance on the real estate upon which the Track Easement is located in the
minimum amount of $2,000,000.00.  The
Town shall be listed as an additional insured on said liability policy so long
as the Track Easement remains in place. 
UWGP shall provide the Town, upon request from time to time, proof of
the existence of the liability insurance and that the Town is listed as an
additional insured.  UMGP shall, at all
times, hold harmless and indemnify the Town from any and all liability or
damages for injuries of any kind or nature arising out of the rail operations
on or in the vicinity of the Track Easement. 
The hold harmless and indemnification shall encompass any and all costs
incurred by the Town in defending against any claims, including all reasonable
attorney fees.


 


13.                                 Attached
hereto and incorporated herein as Exhibit A are certain requirements imposed
upon the Town (referenced as “Grantee” in Exhibit A) in connection with the
receipt and administration of the Block Grant funds.  UWGP acknowledges and agrees that in connection with the
construction of all of the infrastructure contemplated by the Block and TEA
Grants, to the extent applicable, it shall comply with each and every
requirement imposed upon the Town set forth in Exhibit A and shall indemnify
and hold the Town harmless in connection with any and all violations of said
requirements in connection with the construction of the infrastructure.


 


14.                                 To
the extent that the Town is required to conduct audits in connection with the
Block and TEA Grants, any and all costs of the audit shall be promptly
reimbursed to the Town by UWGP within thirty (30) days of billing.


 


15.                                 UWGP
shall prepare, keep, and maintain records allowing Town to determine whether it
is complying with the terms of this Agreement. 
Such records shall include, at a minimum, bills, invoices, and other
documents sufficient to evidence and


 

















 


support the investment of $40,000,000.00 in infrastructure and other
improvement or acquisition costs for the Plant and payroll records for each
full-time employee employed. Town shall have reasonable access to all of the
records relating to this Agreement as from time to time requested.  UWGP shall prepare, at its sole cost, all
reports that must from time to time be filed by the Town with DOT or DOC.


 


16.                                 UWGP
agrees to be responsible for and reimburse the Town for its reasonable fees and
costs incurred for any consulting, legal, or other services required to be
incurred by the Town in connection with the construction of the Plant including
all services incurred in connection with the review, negotiation,
implementation, ongoing administration, and closeout of the Block and TEA
Grants.  The Town shall periodically
bill UWGP for such expenses and payment shall be made by UWGP within thirty
(30) days of billing.  Any amounts
remaining unpaid beyond 30 days shall bear interest at the rate of twelve (12)
percent per annum.


 


17.                                 In
the event that UWGP defaults on any of its obligations under this Agreement
after its execution, UWGP shall be liable to the Town for all of its costs and
expenses, including all reasonable attorney fees, incurred by the Town as a
direct result of such breach, whether incurred prior to or after the
commencement of any lawsuit of enforce this Agreement.


 


18.                                 This
Agreement shall be construed according to the laws of the State of Wisconsin.


 


19.                                 Each
of the signators to this Agreement warrants and represents that they are duly
authorized this Agreement for and on behalf of the Town or UWGP, respectively.


 


20.                                 This
Agreement contains the entire agreement of the parties and supersedes any and
all prior agreements or oral understandings between same.


 


21.                                 This
Agreement shall be binding between the parties hereto together with their
respective successors and assigns.


 


IN WITNESS WHEREOF,
the parties have set their hands and seals on the date and year first written
above.


 


	
   

  	
   

  	
  TOWN OF RANDOLPH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ David J. Hughes

  	
   

  
	
   

  	
   

  	
  David J. Hughes, Chair

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
    /s/ Rodney Kok

  	
   

  
	
   

  	
   

  	
  Rodney Kok, Clerk

  
					



 

















 


	
   

  	
   

  	
  UNITED WISCONSIN GRAIN

  PRODUCERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin Roche

  	
   

  
	
   

  	
   

  	
  Kevin Roche, its

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
  /s/ William Herrmann

  	
   

  
	
   

  	
   

  	
  William Herrmann, its

  	
  VICE PRESIDENT

  	
   

  
								



 


Contents: Exhibit A—Requirements of Town


 

















 


LABOR STANDARDS


 


The Grantee shall comply with and assure compliance of all Project
contractors and subcontractors with the Davis-Bacon Act, as amended 40 U.S.C.
276a-276a-5, the Contract Work Hours and Safety Standards Act, 40 U.S.C.
327-333, other applicable Federal laws and regulations pertaining to labor
standards, and the Labor Standards section of the Implementation Handbook.


 


ACQUISITION/RELOCATION


 


The Grantee shall:


 


•                                          Comply
with ch. 32, Stats., and related administrative rules issued by the Department
of Workforce Development.


 


•                                          Comply
with the Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970, as amended, and Department of Transportation Implementing
Instructions in 49 CFR Part 24.


 


•                                          Refer
to the Acquisition/Relocation section of the Implementation Handbook for
further requirements.


 


BIDDING


 


In advertising for and letting bids, the Grantee shall comply with sec.
66.29, Stats., and, if a county, sec. 59.52 (29), Stats.; if a town, sec. 60.47
(1m), Stats.; if a village, sec. 61.54 through 61.56, Stats.; and, if a city,
sec. 62.15, Stats.


 


ACQUISITION AND DISPOSITION OF PROPERTY AND EQUIPMENT


 


The Grantee shall comply with the Procurement Policy section of
the Implementation Handbook and account for any tangible personal property
acquired with CDBG funds.  All proceeds
derived from the disposition of real property acquired with CDBG funds shall be
treated as program income under paragraph 5 of this Agreement.


 


LOBBYING


 


The Grantee shall comply with Section 319 of Public Law 101-102,
and 24 CFR 87.  The Grantee shall
maintain a file containing signed copies of 24 CFR 87 Appendix A,
“Certification Regarding Lobbying,” and 24 CFR 87 Appendix B, “Disclosure of
Lobbying Activities”.


 


REPORTING


 


The Grantee shall prepare semiannual narrative reports as required by
the Implementation Handbook, together with a detailed narrative and financial
report within 30 days after the end of this Agreement.  Financial Reports shall be submitted with
each request for funds.  Copies of such
reports shall be maintained in the Grantee’s file.  The Department reserves the right to withhold CDBG funds if such
reports are not submitted on time or if they do not demonstrate adequate
progress on the Project.


 


FINANCIAL MANAGEMENT


 


The Grantee shall maintain a financial management system that complies
with the provisions of the Implementation Handbook.


 


EXHIBIT A


 

















 


ENVIRONMENTAL PROTECTION


 


The Grantee’s chief executive officer shall assume the status of a
responsible Federal official under the National Environmental Policy Act of
1969 (NEPA) and other provisions of Federal law, as specified in 24 CFR 58. The
Grantee and its chief executive officer hereby consent to the jurisdiction of
the federal courts for the purpose of enforcement of their
responsibilities.  The Grantee shall
comply with the terms in the Environmental Review section of the
implementation Handbook.


 


EQUAL OPPORTUNITY/AFFIRMATIVE ACTION


 


The Grantee shall comply with:


 


A.                                   Title VI of the
Civil Rights Act of 1964 (P.L. 88-352) and 24 CFR 1.


 


B.                                     Title VIII of the
Civil Rights Act of 1968 (P.L. 90-284), as amended.


 


C.                                     Section 109
of the Housing and Community Development Act of 1974, 24 CFR 570.601, the Age
Discrimination Act of 1975, Section 504 of the Vocational Rehabilitation
Act of 1973, and the Americans with Disabilities Act of 1991.


 


D.                                    Executive Order
11246, 24 CFR 130, and 41 CFR Chapter 60.


 


E.                                      Section 3
of the Housing and Urban Development Act of 1968, as amended.


 


F.                                      The Equal
opportunity Section of the Implementation Handbook.


 


NONDISCRIMINATION IN EMPLOYMENT


 


In connection with the Project, the Grantee agrees not to discriminate
against any employee or applicant for employment because of age, race,
religion, color, handicap, sex, physical condition, developmental disabilities
as defined in sec. 51.01(5), Stats., sexual orientation or national
origin.  This provision shall include,
but not be limited to, the following: employment, upgrading, demotion or
transfer, recruitment or recruitment advertising, layoff or termination, rates
of pay or other forms of compensation, and selection for training, including
apprenticeship.  Except with respect to
sexual orientation, the Grantee further agrees to take affirmative action to
ensure equal employment opportunities. 
The Grantee agrees to post in conspicuous places available for employees
and applicants for employment, notices to be provided by the contracting officer
setting forth the provision of the nondiscrimination clause.


 


PUBLICITY


 


Any publications, news releases, public notices, placards or signs
relating to the Project shall state that it is supported and financed by the
Wisconsin Department of Commerce with federal Community Development Block Grant
funds.  During the term of this
agreement, the Grantee shall post a notice in a conspicuous location in the
city or village hall and, upon the Department’s request, in the vicinity of the
project, stating that the Project was funded in part through a grant from the
Wisconsin Department of Commerce using federal Community Development Block
Grant funds.


 

















 


AUDIT


 


The Grantee shall conduct an annual, single, or program-specific audit
in accordance with Office of Management and Budget (OMB) Circular A-133,
“Audits of States, Local Governments and Non-Profit Organizations,” and the State  Single
Audit Guidelines issued by the Department of Administration, if
required to do so under the Single Audit Act (31 U.S.C §§7501-7507), as amended
by the Single Audit Act Amendments of 1996 (P.L. 104-156).  The audit shall be performed by an
independent auditor in accordance with generally accepted government auditing
standards.  The audit shall include
funds passed-through the Department and expended by the Grantee under the
Community Development Block Grant - State’s Program (Catalog of Federal
Domestic Assistance number 14.228), as well as funds expended under selected
state financial assistance programs.


 


Records of the Grantee, subgrantees, if any, and contractors relating
to this Agreement shall be available for review or audit upon request by the
Department, the U.S. Department of Housing and Urban Development, the General
Accounting Office, and made their duly authorized representative.  (See the “Audit Requirements” chapter of the
Handbook for additional discussion of single or program-specific audits.)


 


CLOSEOUT


 


The Grantee shall closeout this Agreement in accordance with the
Program Closeout section of the implementation Handbook.