Document:

exv10w8

 

Exhibit 10.8

Granite Falls Community Ethanol Plant, LLC

2448 — 540th Street, Suite 1

P.O. Box 216

Granite Falls, Minnesota 56241

August 10, 2004

Fagen, Inc.

501 West Highway 212

P.O. Box 159

Granite Falls, Minnesota 56241

     Re:    Qualifying Bridge Loan

Ladies and Gentlemen:

     On July 1, 2004, you indicated your intent, in connection with our initial
public offering, to subscribe for 2,500 of our membership units for $2,500,000.
As you are aware, we are awaiting comments from the U.S. Securities and
Exchange Commission on our preliminary prospectus supplement dated July 29,
2004 (a copy of which we have provided to you) which describes the investment
arrangements for Glacial Lakes Energy, LLC and you. Pending receipt of the
SEC’s comments, we are in the midst of asking the subscribers to date in our
offering to reconfirm their investment decision based on the information
contained in our preliminary prospectus supplement.

     Meanwhile, we are all mindful of the August 31, 2004 deadline to have at
least $18 million deposited in the escrow account in order to close on the
public offering, the 20-day call period for subscribers to send in the balance
of their subscription funds and the requirement to have a minimum of $18
million of subscriptions prior to making this call.

     As you recall, the $18 million minimum subscription requirement, and the
$18 million minimum escrow deposit amount, is reduced by the amount of proceeds
received by us from any “Qualifying Bridge Loans.” In order to expedite our
ability to call in the balance of subscription funds from existing subscribers
who have reconfirmed their investments, you have, in fact, now agreed to make a
$4,500,000 Qualifying Bridge Loan to us, to be effected as follows:

     1. You have today arranged for a $4,500,000 irrevocable letter of credit
(the “Letter of Credit”) in our favor from the Granite Falls Bank (the “Bank”).
Under the terms of the letter of credit (a copy of which is attached as
Exhibit A), we have the unrestricted right, at any time through and including
August 31, 2004, to draw up to $4,500,000 for our general business uses. We
will repay you for funds we draw down from the Bank under the Letter of Credit
pursuant to the Qualifying Bridge Loan Promissory Note attached as Exhibit B.

 

 

Fagen, Inc.

August 10, 2004

Page 2

     2. Assuming that the SEC declares effective the post-effective amendment
to our registration statement for the public offering on or before August 30,
2004, we will immediately draw down the remaining balance of the Line of
Credit. The entire $4,500,000 balance of the Qualifying Bridge Loan Promissory
Note will then automatically convert into 4,500 membership units in connection
with our offering.

     3. Despite the above, up to $2,000,000 of the Letter of Credit, and your
related commitment for a Qualifying Bridge Loan, will be automatically reduced,
dollar-for-dollar, for each reconfirmed subscription for membership units that
we receive prior to August 30, 2004 (excluding any subscription made by Glacial
Lakes Energy, LLC or you); provided, that the Letter of Credit and your
Qualifying Bridge Loan commitment will not reduce on account of the first
$7,000,000 of reconfirmed subscriptions we receive.

     To the extent of any conflict, this letter and the Qualifying Bridge Loan
Promissory Note supersede the Pre-Closing Memorandum of Understanding dated
July 1, 2004 between the parties.

     If this letter correctly summarizes our agreement, please so indicate by
your signature below.

	 	 	 
	Very truly yours,

	 	Agreed to and accepted:
	 
	 	 
	Granite Falls Community Ethanol Plant, LLC

	 	Fagen, Inc.

	 	 	 	 	 	 	 
	By

	 	/s/ Paul Enstad
	 	By
	 	/s/ Ron Fagen
	

	 	
 
	 	 	 	
 
	 
	 	 	 	 	 	 
	Its

	 	Chairman
	 	Its
	 	CEO and President
	

	 	
 
	 	 	 	
 

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IRREVOCABLE LETTER OF CREDIT

			
	Letter of Credit No. 128
	 	Date: August 10, 2004

Granite Falls Bank

702 Prentice Street

P.O. Box 8

Granite Falls, Minnesota 56241

Granite Falls Community Ethanol Plant, LLC

2448 — 540th Street, Suite 1

P.O. Box 216

Granite Falls, Minnesota 56241

     Re: Fagen, Inc. Matter

Ladies and Gentlemen:

     We authorize you to draw on Granite Falls Bank at 702 Prentice Street,
Granite Falls, Minnesota 56241 for the account of our Customer, Fagen, Inc., a
Minnesota corporation, up to an aggregate amount of Four Million Five Hundred
Thousand Dollars ($4,500,000) available on demand as follows:

     You may draw all or any part of this amount at any time and from time to
time, and in one or more installments, on or before 5:00 p.m., Central Time, on
August 31, 2004, upon written demand for payment in the form attached as
Exhibit 1 made upon us by you; except that if you have already drawn
$2,500,000 of the total $4,500,000 amount, your written demand for payment must
be in the form attached as Exhibit 2. We will honor any demand from you
without inquiring whether you have a right to make such demand and without
recognizing any claim of our Customer.

Very truly yours,

Granite Falls Bank

	 	 	 
	By

	 	      /s/ Steve Lindholm
	

	 	
 
	 
	 	 
	Its

	 	          President
	

	 	
 

 

 

Demand for Draw from Irrevocable Letter of Credit     Exhibit 1

(first $2,500,000)

August    , 2004

Granite Falls Bank

702 Prentice Street

P.O. Box 8

Granite Falls, Minnesota 56241

     Re: Irrevocable Letter of Credit No. 128

Ladies and Gentlemen:

     Reference is made to the above Irrevocable Letter of Credit established
for our benefit by you for your Customer, Fagen, Inc., a Minnesota corporation.
We hereby make demand for an immediate advance of $            against the
Irrevocable Letter of Credit. Please transfer the funds to Granite Falls Bank,
ABA Routing No.              for further credit to Granite Falls Community
Ethanol Plant, LLC, Account No.             .

Very truly yours,

Granite Falls Community Ethanol Plant, LLC

	 	 	 
	By
	 	 
	

	 	
 
	 
	 	 
	Its
	 	 
	

	 	
 

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Demand for Draw from Irrevocable Letter of Credit     Exhibit 2

(last $2,000,000)

August    , 2004

Granite Falls Bank

702 Prentice Street

P.O. Box 8

Granite Falls, Minnesota 56241

     Re:  Irrevocable Letter of Credit No. 128

Ladies and Gentlemen:

     Reference is made to the above Irrevocable Letter of Credit established
for our benefit by you for your Customer, Fagen, Inc., a Minnesota corporation.
We hereby make demand for an immediate advance of $                     against the
Irrevocable Letter of Credit. We certify that the amount of this advance, when
added to all other advances previously made to us against the Irrevocable
Letter of Credit, does not exceed the total amount we are permitted to draw
upon at our demand pursuant to our letter agreement dated August 10, 2004 with
Fagen relating to its Qualifying Bridge Loan to us. Please transfer the funds
to Granite Falls Bank, ABA Routing No.                      for further credit to
Granite Falls Community Ethanol Plant, LLC, Account No.                     .

Very truly yours,

Granite Falls Community Ethanol Plant, LLC

	 	 	 
	By
	 	 
	

	 	
 
	 
	 	 
	Its
	 	 
	

	 	
 

-3-

 

QUALIFYING BRIDGE LOAN PROMISSORY NOTE

			
	$4,500,000
	 	August 10, 2004

     FOR VALUE RECEIVED, the undersigned, Granite Falls Community Ethanol
Plant, LLC, a Minnesota limited liability company (the “Maker”), hereby
promises to pay to the order of Fagen, Inc., a Minnesota corporation (the
“Lender”), at such place as the Lender may designate in writing, the principal
sum of Four Million Five Hundred Thousand Dollars ($4,500,000), or such lesser
amount as the Maker has drawn down in its sole discretion against Irrevocable
Line of Credit No. 128 dated August 10, 2004 issued in favor of Maker by the
Granite Falls Bank (the “Line of Credit”), as follows.

1. Interest. No interest will accrue on any outstanding principal balance of
this Note through September 30, 2004. From and after such date, interest will
accrue on the outstanding principal balance of this Note at six percent (6%)
per annum.

2. Due Date; Automatic Conversion. The entire principal balance of this Note,
and all accrued, but unpaid interest, is due and payable in a single lump sum
on November 1, 2004. Despite the foregoing, the entire principal balance
hereof will automatically convert on August 30, 2004 into membership units of
Maker at a conversion rate of $1,000 per membership unit, conditioned upon the
U.S. Securities and Exchange Commission having declared effective on or before
such date a post-effective amendment to the Maker’s Registration Statement, SEC
File No. 333-112567, with respect to the public offering of Maker’s membership
units (the “Registration Statement”).

3. Prepayments. The Maker may prepay the principal of this Note, in whole or
in part, at any time without penalty.

4. Default. The Maker is in default under this Note (and the entire then
outstanding principal shall be immediately due and payable without any further
notice of any kind by Lender) if (i) the Maker fails to pay this Note in full
on its due date in Section 2 above or (ii) the Maker makes any general
assignment for the benefit of its creditors or institutes proceedings under (or
has any involuntarily proceedings commenced against it pursuant to) any
bankruptcy, debt arrangement or other similar law.

5. Waivers. The Maker waives presentment for payment, notice of dishonor,
protest and notice of payment and all other notices of any kind in connection
with the enforcement of this Note.

6. Costs of Collection. If this Note is not paid when due, the Maker will pay
the Lender’s reasonable costs of collection, including reasonable attorney’s
fees, in addition to the unpaid principal and interest hereunder.

 

 

7. Intent as Qualifying Bridge Loan. It is the intention of the Maker and
Lender that this Note be construed to constitute a “Qualifying Bridge Loan” as
described in the Maker’s Registration Statement.

8. Applicable Law. This Note is governed by Minnesota law, excluding its
conflict of laws rules.

     IN WITNESS WHEREOF, the undersigned has hereunto affixed its signature.

Granite Falls Community Ethanol Plant, LLC

	 	 	 
	By

	 	/s/ Paul Enstad
	

	 	
 
	 
	 	 
	Its

	 	Chairman
	

	 	
 

-2-exv10w9

 

EXHIBIT 10.9

Granite Falls Community Ethanol Plant, LLC

2448 — 540th Street, Suite 1

P.O. Box 216

Granite Falls, Minnesota 56241

August 10, 2004

Glacial Lakes Energy, LLC

301 — 20th Avenue S.E.

P.O. Box 933

Watertown, South Dakota 57201

	 	 	 	 	 
	 

	 	Re:
	 	Qualifying Bridge Loan

Ladies and Gentlemen:

     On July 1, 2004, you indicated your intent, in connection with our initial
public offering, to subscribe for 6,500 of our membership units for $6,500,000
subject to various conditions. As you are aware, we are awaiting comments from
the U.S. Securities and Exchange Commission on our preliminary prospectus
supplement dated July 29, 2004 (a copy of which we have provided to you) which
describes the investment arrangements for Fagen, Inc. and you. Pending receipt
of the SEC’s comments, we are in the midst of asking the subscribers to date in
our offering to reconfirm their investment decision based on the information
contained in our preliminary prospectus supplement.

     Meanwhile, we are all mindful of the August 31, 2004 deadline to have at
least $18 million deposited in the escrow account in order to close on the
public offering, the 20-day call period for subscribers to send in the balance
of their subscription funds and the requirement to have a minimum of $18
million of subscriptions prior to making this call.

     As you recall, the $18 million minimum subscription requirement, and the
$18 million minimum escrow deposit amount, is reduced by the amount of proceeds
received by us from any “Qualifying Bridge Loans.” In order to expedite our
ability to call in the balance of subscription funds from existing subscribers
who have reconfirmed their investments, we have requested that, in place of
your indicated intent to subscribe for 6,500 membership unit for $6,500,000,
you make a $6,500,000 loan to us on the following terms and conditions:

     1. Within ten (10) business days of the date of this letter, you agree to wire
transfer to us $6,500,000 as a loan that we will repay pursuant to the terms of
the Secured Qualifying Bridge Loan Promissory Note attached as Exhibit A. We
agree to hold the loan proceeds in escrow until each of the following
conditions to our right to draw upon the loan is satisfied or waived in writing
by you:

 

 

Glacial Lakes Energy, LLC

August 10, 2004

Page 2

	 	a.	 	Clearance by the Securities and Exchange Commission and
applicable state securities authorities of a prospectus supplement
for use in connection with the public offering that incorporates the
negotiated business terms for the Consulting Agreement, Operating
and Management Agreement and Fifth Amended and Restated Operating
and Member Control Agreement.
	 
	 	b.	 	Approval by our existing members to the Fifth Amended and
Restated Operating and Member Control Agreement and our execution
and delivery to you of the Consulting Agreement and Operating and
Management Agreement.
	 
	 	c.	 	Obtaining a written commitment for debt financing with a
lender or lenders for an amount which, when added to our net
offering proceeds in the public offering (including this loan and
any other qualified bridge loan proceeds), will yield at least
$57,850,000.
	 
	 	d.	 	The proceeds from the subscriptions for units in the public
offering are released from escrow to us.

If the foregoing conditions are not satisfied by September 30, 2004, or if the
proceeds from the subscriptions for units in the public offering are returned
to subscribers, whichever date occurs first, then the proceeds of this loan
will be returned to you from escrow. Upon delivery to the escrow agent and you
of our certification that the foregoing conditions have been satisfied by us
(or waived by you), the loan proceeds shall be released from escrow to us. We
will apply the loan proceeds to build an ethanol plant and to start operating
the ethanol plant as described in our prospectus.

     2. Assuming that the SEC declares effective the post-effective amendment to our
registration statement for the public offering on or before August 30, 2004,
the entire $6,500,000 balance of the Secured Qualifying Bridge Loan Promissory
Note will then automatically convert into subscription proceeds for 6,500
membership units in connection with our offering on August 30,
2004. Upon conversion, such subscription proceeds shall continue to
be held in escrow and shall be released from escrow to us upon
satisfaction of each of the conditions in Section 1 above, or
your waiver thereof. If the
subscription proceeds in the public offering are not released from escrow by
September 30, 2004, or if the proceeds from the subscriptions for units in the
public offering are returned to subscribers, whichever date occurs first, then
we will promptly return to you your subscription proceeds from the conversion of your
loan.

     To the extent of any conflict, this letter and the Secured Qualifying
Bridge Loan Promissory Note supersede the Pre-Closing Memorandum of
Understanding dated July 1, 2004 between the parties.

-2-

 

Glacial Lakes Energy, LLC

August 10, 2004

Page 3

     If this letter correctly summarizes our agreement, please so indicate by
your signature below.

	 	 	 
	Very truly yours,

	 	Agreed to and accepted:
	 
	 	 
	Granite Falls Community Ethanol Plant, LLC

	 	Glacial Lakes Energy, LLC
	 
	 	 
	By          /s/ PAUL ENSTAD

	 	By          /s/
JON T. ANDERSON
	

	 	

	 
	 	 
	Its          Chairman

	 	Its          Chairman

-3-

 

SECURED QUALIFYING BRIDGE LOAN PROMISSORY NOTE         Exhibit A

	 	 	 
	$6,500,000

	 	August 10, 2004

     FOR VALUE RECEIVED, the undersigned, Granite Falls Community Ethanol
Plant, LLC, a Minnesota limited liability company (the “Maker”), hereby
promises to pay to the order of Glacial Lakes Energy, LLC, a South Dakota
limited liability company (the “Lender”), at such place as the Lender may
designate in writing, the principal sum of Six Million Five Hundred Thousand
Dollars ($6,500,000), as follows.

1. Interest. No interest will accrue on any outstanding principal balance of
this Note until such principal balance is release from escrow to the Maker.
From and after such date, interest will accrue on the outstanding principal
balance of this Note at six percent (6%) per annum.

2. Due Date; Automatic Conversion. The entire principal balance of this Note,
and all accrued, but unpaid interest, is due and payable in a single lump sum
on September 30, 2004. Despite the foregoing, the entire principal balance
hereof will automatically convert on August 30, 2004 into subscription proceeds for membership units of
Maker at a conversion rate of $1,000 per membership unit, conditioned upon the
U.S. Securities and Exchange Commission having declared effective on or before
such date a post-effective amendment to the Maker’s Registration Statement, SEC
File No. 333-112567, with respect to the public offering of Maker’s membership
units (the “Registration Statement”).
Upon conversion, such subscription proceeds shall continue to be held in escrow
and shall be released from escrow to us upon satisfaction of each of the conditions in Section 1 of the letter
agreement between Maker and Lender of even date herewith, or your waiver thereof.
If the subscription proceeds in the
public offering are not released from escrow by September 30, 2004, or if the
proceeds from the subscriptions for units in the public offering are returned
to subscribers, whichever date occurs first, then we will promptly return to you your
subscription proceeds from the conversion of your loan.

3. Prepayments. The Maker may prepay the principal of this Note, in whole or
in part, at any time without penalty.

4. Default. The Maker is in default under this Note (and the entire then
outstanding principal shall be immediately due and payable without any further
notice of any kind by Lender) if (i) the Maker fails to pay this Note in full
on its due date in Section 2 above or (ii) the Maker makes any general
assignment for the benefit of its creditors or institutes proceedings under (or
has any involuntarily proceedings commenced against it pursuant to) any
bankruptcy, debt arrangement or other similar law.

5. Security. The Maker hereby grants the Lender a security interest in all of
the Maker’s assets, whether now owned or hereafter acquired, to secure the
timely repayment of this Note.

6. Waivers. The Maker waives presentment for payment, notice of dishonor,
protest and notice of payment and all other notices of any kind in connection
with the enforcement of this Note.

 

 

7. Costs of Collection. If this Note is not paid when due, the Maker will pay
the Lender’s reasonable costs of collection, including reasonable attorney’s
fees, in addition to the unpaid principal and interest hereunder.

8. Intent as Qualifying Bridge Loan. It is the intention of the Maker that
this Note be construed to constitute a “Qualifying Bridge Loan” as described in
the Maker’s Registration Statement. Maker acknowledges that Lender makes no
representation or warranty with regard to whether this Note constitutes a
“Qualifying Bridge Loan”.

9. Applicable Law. This Note is governed by Minnesota law, excluding its
conflict of laws rules.

     IN WITNESS WHEREOF, the undersigned has hereunto affixed its signature.

Granite Falls Community Ethanol Plant, LLC

	 	 	 
	By
    
/s/ Paul Enstad

	 	 
	

	 	 
	 
	 	 
	
Its     Chairman

	 	  

-2-

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