June 14, 2000
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▇▇▇▇▇▇ State Ethanol
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
Lena, IL 61048
Dear ▇▇. ▇▇▇▇▇▇:
The purpose of this letter is to set forth the understanding and agreement
between U.S. Energy Services, Inc. ("U.S. Energy") and Badger State Ethanol
regarding the provision of energy management and engineering services.
TERM: The initial term of this Agreement shall be from __________ through
___________, and thereafter for successive one year terms unless and until
terminated by either party with thirty (30) days notice.
U.S. ENERGY SHALL:
1) Provide a detailed economic comparison of receiving natural gas
transportation service from a Local Distribution Company (LDC), or
directly connecting with Northern Natural Gas (NNG) for facility sites
under consideration. U.S. Energy will provide BADGER STATE ETHANOL with
engineering cost estimates, route drawings, and a project timeline
related to constructing pipeline facilities directly connecting BADGER
STATE ETHANOL with NNG.
In the event that the direct connect pipeline option is selected, U.S.
Energy will submit a tap request to NNG. Engineering and construction
management services related to constructing a pipeline which will
interconnect with NNG can be provided by U.S. Energy Services on a fee
basis.
2) Determine whether firm, interruptible, or a blend of transportation
entitlement with NNG will provide the lowest burnertip cost for BADGER
STATE ETHANOL. Factors that will be considered include NNG credits for
the new interconnect, cost of an alternative fuel system, and
availability of specific receipt point capacity. Analysis of the costs
and benefits will require U.S. Energy to negotiate as BADGER STATE
ETHANOL' agent with NNG and other potential third party shippers.
3) Provide natural gas supply information to minimize the cost of natural
gas purchased by BADGER STATE ETHANOL. This will include acquiring
multiple supply quotes and reporting to BADGER STATE ETHANOL the
various supply index and fixed prices. U.S. Energy will not take title
to BADGER STATE ETHANOL gas supplies, but will communicate supply
prices and potential buying strategies.
4) Negotiate directly with NNG, other shippers, and suppliers to provide
transportation, balancing, and supply agreements that meet BADGER STATE
ETHANOL's performance criteria at the lowest possible cost.
5) Provide daily nominations to NNG and other applicable parties for
BADGER STATE ETHANOL. This will include daily written confirmations to
BADGER STATE ETHANOL of all nominations and actual daily usage. U.S.
Energy will utilize telemetering to obtain actual usage on a real time
basis.
6) Provide advisory services to BADGER STATE ETHANOL regarding electric
pricing and service agreements. Such services will include, but are not
limited to, the following:
a) Evaluation of regulator and legislative precedent regarding
electric supplier choice options.
b) Identification of qualified electric suppliers.
c) Evaluation of self-generation options
d) Development and implementation of an electric sourcing strategic
plan. Such plan may include a competitive bid process and/or
installation of on-site generation.
e) Negotiation of electric service agreements that meet the pricing
and reliability requirements of BADGER STATE ETHANOL.
7) Prepare detailed cost estimates for substation, transformation and
distribution equipment required for service options proposed by service
providers.
8) Prepare, implement and modify, as required, an electric and natural gas
price risk management plan. The objective of the plan is to achieve
stable forward prices that are consistent with BADGER STATE ETHANOL's
risk profile and pricing objectives.
9) U.S. Energy will also evaluate on an ongoing basis other options that
may reduce energy costs.
10) Provide a monthly projection of energy (natural gas and electricity)
and annual summaries.
11) Provide a consolidated monthly invoice that reflects all applicable
costs. U.S. Energy will be responsible for reconciling and paying all
shipper and supplier invoices.
FEES: U.S. Energy's fee for services described in items 1-11 during the initial
term of this Agreement shall be $3,000 per month, plus pre-approved travel
expenses not to exceed $2,500 during the initial term of this Agreement. The
monthly retainer and out of pocket expenses will begin to accrue on the
commencement date of this Agreement. BADGER STATE ETHANOL will not be invoiced
until financing for the plant has been secured. In the event that plan
financing is not secured, this Agreement shall become null and void and both
parties will be relieved of professional and/or financial obligations due the
other party.
TERMINATION: BADGER STATE ETHANOL shall have the unilateral right to terminate
this Agreement, with or without cause, at any time during the initial term and
any subsequent term of the Agreement within thirty (30) days written
notification if not satisfied with U.S. Energy's service.
BILLING AND PAYMENT: On the first of the month, U.S. Energy will invoice
BADGER STATE ETHANOL. BADGER STATE ETHANOL shall pay U.S. Energy within ten
(10) days of receipt of invoice.
INDEPENDENT CONTRACTOR: U.S. Energy shall be and remain an independent
contractor-consultant during the term of this Agreement, and U.S. Energy, its
directors, officers and employees, shall not act for, or bind BADGER STATE
ETHANOL in any manner, unless specifically directed by ▇▇▇▇▇▇ STATE ETHANOL.
CONFIDENTIALITY: U.S. Energy shall not divulge to any other person or party any
information developed by U.S. Energy hereunder or revealed to U.S. Energy
pursuant to this Agreement, unless such information is (a) already in U.S.
Energy's possession if such information is not known by U.S. Energy to be
subject to another Confidentiality Agreement, or (b) is or becomes generally
available to the public other than as a result of an unauthorized disclosure by
U.S. Energy, its officers, employees, directors, agents or its advisors, or (c)
becomes available to U.S. Energy on a non-confidential basis from a source
which is not known to be prohibited from disclosing such information to U.S.
Energy by legal, contractual or fiduciary obligation to the supplier, or (d) is
required by U.S. Energy to be disclosed by court order, or (e) is permitted by
BADGER STATE ETHANOL. All such information shall be and remain the property of
BADGER STATE ETHANOL unless such information is subject to another
Confidentiality Agreement, and upon the termination of this Agreement, U.S.
Energy shall return all such information upon BADGER STATE ETHANOL' request.
CONFLICT OF INTEREST: U.S. Energy will not, directly or indirectly, engage in
any activities which would result in any conflict of interest with BADGER STATE
ETHANOL, or enable U.S. Energy to benefit from its relationship with BADGER
STATE ETHANOL, except as provided in this Agreement or approved by BADGER STATE
ETHANOL.
NOTICES: Any formal notice, request or demand which a party hereto may desire
to give to the other respecting this Agreement shall be in writing and shall be
considered as duly delivered as of the postmark date when mailed by ordinary,
registered or certified mail by said party to the following addresses:
BADGER STATE ETHANOL: ▇▇▇▇ ▇▇▇▇▇▇
Badger State Ethanol
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S. ENERGY: U.S. Energy Services, Inc.
(Payment) c/o US Bank SDS 12-1449
Account #173100561153
P.O. Box 86
Minneapolis, MN 55486
(Notices) U.S. Energy Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without
the written consent of U.S. Energy and BADGER STATE ETHANOL.
APPLICABLE LAW: The Agreement shall be construed in accordance with the laws
of the State of Minnesota.
ENTIRE AGREEMENT: This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understanding pertaining hereto.
If the above correctly sets forth BADGER STATE ETHANOL's understanding of the
Agreement, please so indicate in the spaces below and return one copy to U.S.
Energy, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇.
Sincerely,
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: V.P.
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ACCEPTED AND DATED THIS 1ST
DAY OF JULY, 2000.
BADGER STATE ETHANOL
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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