Document:

CONSULTING AGREEMENT

	
 

	
 

	
            THIS CONSULTING AGREEMENT (the "Agreement") is made the 16th day of September, 2002 (the "Effective Date"), by and between Value Add Ventures, LLC of Volga, South Dakota, a South Dakota limited liability company ("VAV") and Golden Grain Energy, LLC of New Hampton, Iowa, an Iowa limited liability company ("Client').

	
 

	
            WHEREAS, Client intends to develop, finance, and construct an ethanol plant in or near New Hampton, Iowa (the "Project"); and

	
 

	
            WHEREAS, VAV has a background in value-added agriculture and is willing to provide services to Client based on this background.

	
 

	
            NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, Client hereby engages VAV, and VAV hereby accepts engagement, upon the terms and conditions hereinafter set forth.

	
 

	
            1.            Term.  The VAV engagement with Client shall commence as of the Effective Date and may be terminated at any time by either party upon fourteen (14) days prior written notice of its intent to terminate this Agreement.  Upon termination, neither Client nor VAV shall have any further rights or obligations under the terms of this Agreement other than delivery of payments for services to which VAV may be entitled through the date of termination.

	
 

	
            2.            Services.  VAV shall serve as the Client's Project Consultant and its Service Providers shall perform the following duties incident to that service subject to Client's approval:

	
 

	
 
	
           a.            Assist negotiations of contracts with various service and product providers;

	
 

	
 
	
           b.            Assist the planning of the Client's equity marketing effort, including, without limitation, preparation of written and visual equity marketing materials (including but not limited to a Power Point presentation), and training Client's officers and directors to conduct the Client's equity marketing effort;

	
 

	
 
	
            c.            Assist the securing of debt financing for and commencement of construction of the Project;

	
 

	
 
	
            d.            Assist the education of local lenders including, without limitation, the preparation of a "banker's book" tailored to the Project; and

	
 

	
 
	
            e.            Perform such other reasonably necessary duties as Client may request for the timely and successful securing of debt financing and

	 

	 	1	 

	 

	

	
 
	
commencement of construction of the Project, including without limitation, cooperating with the Client's personnel similarly engaged.  Notwithstanding the foregoing, neither VAV, its members, employees, nor agents shall itself or themselves be asked to, or actually, solicit an offer to buy, or accept an offer to sell, any equity security to be issued by Client.

	 

	
            Subject to Client's approval, VAV shall determine the manner in which the services are to be performed and the specific hours to be worked by VAV.  Client will rely on VAV to work as many hours as may be reasonably necessary to fulfill VAV's commitments under this Agreement.

	
 

	
            3.            Employees, Members, Agents.  VAV's employees, members, or agents, if any, who perform services for Client under this Agreement shall also be bound by the terms under this Agreement.

	
 

	
            4.            Payment.  VAV shall receive payment for services in the amount of $1,000 per week commencing upon the date (the "Commencement Date") six weeks prior to the time that the Client becomes legally authorized to sell its equity (the "Client's Equity Sales Initiation Date").  Beginning on the Client's Equity Sales Initiation Date the payment shall be increased to $1,500.00 per week.  In the event Client requests VAV to perform services described in Paragraph 2 prior to the Commencement Date, VAV shall also receive $150 per day for each day prior to the Commencement Date during which VAV provides services to Client consistent with this Agreement.  Payments shall be payable twice monthly, no later than the 15th day and last day of each month during which the services were performed.  Upon termination of this Agreement, payments hereunder shall cease; provided, however, that VAV shall be entitled to payments for period or partial period that occurred prior to the date of termination for which VAV has not been paid.

	
 

	
            Additionally, Client will pay a one-time bonus of $75,000, if, after the Client has raised the amount of equity required by a prospective lender to secure a loan adequate to finance the Client's business plan, the Client receives a binding commitment from such prospective lender to provide such loan or loans as a result of the efforts of VAV pursuant to section 2(c) of this Agreement, and the loan transaction described in such commitment actually closes and is funded.  Notwithstanding the foregoing, the Client shall have sole discretion in determining whether to accept a loan commitment or close a loan, and the Client shall not become liable to pay the one-time bonus discussed in this section if it elects to not accept a loan commitment or close a loan.     

	
 

	
            5.            Expenses.  Client shall reimburse VAV for all reasonable, ordinary, and necessary expenses incurred by VAV in performance of its duties hereunder, including without limitation, reimbursement for automobile mileage at a rate of 30 cents per mile or such other rate to which the parties hereto may later agree.  However, in no case shall any such expense reimbursements exceed $750 in any single week.

	 

	 	2	 

	 

	

	
            6.            Support Services.  Client will provide the following support services for the benefit of VAV as approved by Client:  office space, secretarial support, and office supplied.

	
 

	
            7.            Successors and Assigns Bound.  This Agreement shall be binding upon the Client and VAV, their respective heirs, executors, administrators, successors in interest or assigns, including without limitation, any partnership, corporation, or other entity into which the Client may be merged or by which it may be acquired (whether directly, indirectly, or by operation of law), or to which it may assign its rights under this Agreement.  Notwithstanding the foregoing, any assignment by VAV of this Agreement or of any interest herein, or of any money due to or to become due by reason of the terms hereof without the prior written consent of Client shall be void.

	
 

	
            8.            Relationship of the Parties.  The parties understand that VAV is an independent contractor with respect to Client, and not an employee of Client.  Client will not provide fringe benefits, including health insurance benefits, paid vacation, or any other employee benefits for the benefit of VAV.

	
 

	
            9.            Injuries.  VAV acknowledges VAV's obligation to obtain appropriate insurance coverage for the benefit of VAV and its members, employees, and agents.  VAV waives any rights to recover from Client for any injuries that VAV or its members, employees, or agents may sustain while performing services under this Agreement resulting from the negligence of VAV, or its members, employees, or agents.

	
 

	
            10.            Return of Records.  Upon termination of this Agreement, VAV shall delivery all records, notes, data, memoranda, and equipment of any nature that are in VAV's possession or under VAV's control and that are Client's property or relate to Client's business.

	
 

	
            11.            Waiver.  The waiver by the Client of its rights under this Agreement or the failure of the Client promptly to enforce any provision hereof shall not be construed as a waiver of any subsequent breach of the same or any other covenant, term, or provision.

	
 

	
            12.            Entire Agreement.  This Agreement constitutes the entire Agreement between the parties hereto with regard to the subject matter hereof, and there are no agreements, understanding specific restrictions, warranties, or representations relating to said subject matter between the parties other than those set forth herein or herein provided for.  No amendment or modification of this Agreement shall be valid or binding unless in writing and signed by the party against whom such amendment or modification is to be enforced.

	
 

	
            13.            Notices.  Any notice required to be given hereunder shall be in writing and shall be deemed to be sufficiently served by either party on the other party if such notice is delivered personally or is sent by certified or first class mail addressed as follows:

	 

	 	3	 

	 

	

	
 
	
 
	To VAV: 	
 
	
Value Add Ventures, LLC

	
 
	
 
	
 
	
 
	
 
	
Attention:  Bill Riechers

	
 
	
 
	
 
	
 
	
 
	
504 Astrachan Street

	
 
	
 
	
 
	
 
	
 
	
Volga, South Dakota

	
 

	
 
	
 
	To Client:	
 
	
Golden Grain Energy, LLC

	
 
	
 
	
 
	
 
	
 
	
Attention:  Stan Laures

	
 
	
 
	
 
	
 
	
 
	
P.O. Box 435

	
 
	
 
	
 
	
 
	
 
	
951 N. Linn Avenue

	
 
	
 
	
 
	
 
	
 
	
New Hampton, Iowa  50659

	
 

	
            14.            Governing Law.  This Agreement is entered into pursuant to and shall be governed by and in accordance with the laws of the State of Iowa.

	
 

	
            15.            Service Providers.  Paul Casper shall provide the majority of VAV's services under this Agreements, with the assistance of Bill Riechers.  Notwithstanding the foregoing, in the event that Client, in its own sole discretion, schedules frequent or simultaneous capital raising meetings, or otherwise desires an aggressive capital raising schedule, both Paul Casper and Bill Riechers shall then be available and simultaneously provide VAV's services.

	
 

	
            IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the Effective Date.

	
 

	
 

	VALUDE ADD VENTURES, LLC	GOLDEN GRAIN ENERGY, LLC

	
 

	
 

	By:        /s/ Paul Casper            	By:       /s/ Walter Wendland       

	      Paul Casper, Member	       Walter Wendland, President

	 

	 	4/TBODY>
	
 

	
July 16, 2002

	
 

	
Mr. Walter Wendland

	
President

	
Golden Grain Energy, LLC

	
2325 McCloud Avenue

	
New Hampton, IA  50659

	
 

	
Dear Mr. Wendland:

	
 

	
The purpose of this letter is to set forth the understanding and agreement between U.S. Energy Services, Inc. ("U.S. Energy") and Golden Grain Energy, LLC ("Golden"). 

	
 

	
PROJECT DESCRIPTION:  Golden Grain Energy is developing a 40 million gallon per year ethanol plant (the "Plant") to be located in the eight county area surrounding New Hampton, Iowa.  The Plant will use approximately 5 MW of electricity and 4,000 MMBtu per day of natural gas. A plant site has not been selected yet and fund raising has not yet begun.  

	
 

	
U.S. ENERGY RESPONSIBILITIES:  U.S. Energy will provide consulting and project management services for supplies of natural gas and electricity for the Plant.  These services will be provided during the construction of the plant ("Construction Period"), and after the Construction Period when the plant has been placed in service ("Completion Date").  The Completion Date shall be determined by Golden in its sole discretion.  These services will include but not be limited to the following:

	
 

	
A.  Energy Infrastructure Advisory Services

	
 

	
1.
	
Provide an economic comparison of receiving natural gas distribution service from third party companies, or directly from Northern Natural Gas Company (NNG).  U.S. Energy will provide preliminary engineering cost estimates, route drawings, and project timeline related to constructing pipeline facilities.  

	
            

	
 
	
In the event that the direct connect pipeline option is selected, U.S. Energy will submit the tap request to the pipeline or utility.  In addition, U.S. Energy will also attempt to negotiate an option for Golden to minimize interconnect costs through the purchase of firm transportation to the plant. Engineering and construction management services related to constructing a Golden Grain Energy pipeline can be provided by U.S. Energy's sister company U.S. Energy Engineering, Inc. on a fee basis.

	
 

	
2.
	
Determine whether firm, interruptible, or a blend of transportation entitlement with NNG will provide the lowest burnertip cost.  Factors that will be considered include pipeline credits for the new interconnect, cost of an alternate fuel system, and availability of specific receipt point capacity.  

	 

	 	 	 

	 

	

	Confidential Information	 	Golden Initials /s/ WW

	 	 	U.S. Energy Initials /s/ BLH

	 

	
 
	
 
	
a.
	
Provide advisory services to Golden regarding electric pricing and service agreements.  

	
 

	
 
	
 
	
b.
	
Analyze the electric service proposals along with generation options and 

	
 

	
 
	
 
	
 
	
recommend an electric sourcing strategy and plan.  The plan may include a combination of electric supplier agreement and/or installation of on-site generation.

	
 

	
 
	
 
	
c.
	
Negotiate final electric service agreements that meet the pricing and reliability requirements of Golden.

	
 

	
 
	
 
	
d.
	
Prepare and implement a regulatory strategy, if required and if an alternative power supplier is selected.  Any attorney fees required for the specific purpose of obtaining regulatory approval for an alternative power supplier, if any, will be over and above U.S. Energy's monthly fee herein, and must be pre-approved by Golden.

	
 

	
3.
	
Evaluate the proposed electric distribution infrastructure (substation) for reliability, future growth potential and determination of the division of ownership of facilities between the utility and the Plant.

	
 

	
4.
	
Investigate economic development rates, utility grants, equipment rebates and other utility programs that may be available.

	 

	
B.  On-Going Energy Management Services

	
 

	
U.S. Energy will provide the following services at Golden's request:

	
 

	
1.
	
Provide natural gas supply information to minimize the cost of natural gas purchased. This will include acquiring multiple supply quotes and reporting to Golden the various supply index and fixed prices.  U.S. Energy will not take title to Golden gas supplies, but will communicate supply prices and potential buying strategies.  

	
 

	
2.
	
Negotiate with pipelines, utilities, other shippers, and suppliers to provide transportation, balancing, and supply agreements that meet Golden's performance criteria at the lowest possible cost.

	
 

	
3.
	
Develop and implement a price management plan that is consistent with Golden's pricing objectives and risk profile.

	
 

	
4.
	
Provide daily nominations to the suppliers, pipeline, and other applicable shippers for natural gas deliveries to the plant. This will include daily electronic confirmations to Golden of all nominations and actual daily usage.  U.S. Energy will utilize customer or utility supplied telemetering to obtain actual usage data.

	 

		2	 

	 

	

	Confidential Information	 	Golden Initials /s/ WW

	 	 	U.S. Energy Initials /s/ BLH

	
 

	
5.
	
Review and renegotiate electric service costs as required.  This may include:

	
 

	
 
	
 
	
 
	
a)   Identifying new service tariffs or opportunities to renegotiate the service agreement to provide lower costs.

	
 

	
 
	
 
	
 
	
b)   Identifying operating changes that would lower the total cost of electricity while maintaining production performance of the Plant.

	
 

	
 
	
 
	
 
	
c)   Identifying on-site generation opportunities as market conditions change.

	
 

	
5.
	
Evaluate other options that may reduce energy costs.  Some of these options include, but are not limited to joint projects with other energy users in the area. 

	
 

	
6.
	
Provide a monthly projection of energy (natural gas and electricity) and annual summaries.

	
 

	
7.
	
Provide natural gas and electric energy operating budgets for the Plant.

	
 

	
8.
	
Provide a consolidated monthly invoice to Golden that reflects all applicable natural gas and electric energy costs.  U.S. Energy will be responsible for reviewing, reconciling and paying all shipper, supplier and utility invoices.

	
 

	
9.
	
Perform initial sales tax exemption audits for energy consumption costs as required by Iowa tax laws.

	
 

	
TERM:  The Initial Term of this Agreement shall commence on August 1, 2002 and continue until six months after the Completion Date.  The Agreement shall be month-to-month after the Initial Term.  This Agreement may be terminated by either party effective after the Initial Term upon sixty (60) days prior written notice. 

	
 

	
FEES:  U.S. Energy's fee for services described above during the Initial Term of this Agreement shall be $2,500 per month, plus pre-approved travel expenses.  Golden may defer payment on the invoiced amounts until financing for the plant has been secured.  Deferred invoice amounts shall not bear interest. Plant financing shall be deemed to be secured at the time Golden and its project lender(s) actually execute and deliver all required documents for closing the loans necessary to finance the complete construction of the ethanol plant. In the event that plant 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. If Golden experiences significant delays in its project timeline and it is necessary for U.S. Energy to delay work on Golden's

	 

		3	 

	 

	

	Confidential Information	 	Golden Initials /s/ WW

	 	 	U.S. Energy Initials /s/ BLH

	 

	
energy management activities, U.S. Energy will suspend its activities and suspend invoicing Golden until U.S. Energy's activities resume.  

	 

	
BILLING AND PAYMENT:  On the first of the month, U.S. Energy shall invoice Golden for the work to be completed that month.  Payment shall be deferred until plant financing has been secured.  After plant financing has been secured and monthly thereafter, Golden shall pay U.S. Energy within ten (10) days of receipt of invoice. U.S. Energy will also provide to Golden a consolidated invoice of the Plant's energy costs.

	
 

	
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 Golden in any manner, unless specifically authorized to do so by Golden.

	
 

	
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 and 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 Golden.  All such information shall be and remain the property of Golden 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 Golden's request.  Notwithstanding anything to the contrary herein, U.S. Energy shall not disclose any information which is in any way related to this Agreement or U.S. Energy's services hereunder without first discussing such proposed disclosure with Golden.

	
 

	
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 addresses listed below. Either party may, from time-to-time, identify alternate addresses at which they may receive notice during the term of this Agreement by providing written notice to the other party of such alternate addresses.

	
 

	Golden:	Golden Grain Energy, LLC

	 	
2325 McCloud Avenue

	 	
New Hampton, IA  50659

	 	
Attn:  Stan Laures

	 

		4	 

	 

	

	Confidential Information	 	Golden Initials /s/ WW

	 	 	U.S. Energy Initials /s/ BLH

	 

	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.

	 	
1000 Superior Blvd, Suite 201

	 	
Wayzata, MN  55391

	 	
Attn: Bruce L. Hoffarber

	
 

	
ASSIGNMENT OR AMENDMENT:  The Agreement may not be assigned or amended without the written consent of U.S. Energy and Golden.

	
 

	
APPLICABLE LAW:  The Agreement shall be construed in accordance with the laws of the State of Iowa.

	
 

	
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 Golden's understanding of the Agreement, please so indicate in the spaces below and return one copy to U.S. Energy, Attention: Bruce L. Hoffarber.

	
 

	
Sincerely,

	
 

	
 

	
U.S. ENERGY SERVICES, INC.

	
 

	
 

	
By:                  /s/ Bruce L. Hoffarber                                       (Sign) 

	
 

	
Name:             Bruce L. Hoffarber                                            (Print)

	
 

	
Title:               Vice President                                      

	
 

	
Date:               July 31, 2002                                        

	
 

	
 

	
 

	
ACCEPTED AND DATED TO THIS          31st    

	
DAY OF                          July                   , 2002.

	 

		5	 

	 

	

	Confidential Information	 	Golden Initials /s/ WW

	 	 	U.S. Energy Initials /s/ BLH

	
 

	
GOLDEN GRAIN ENERGY, LLC 

	
 

	
By:                  /s/ Walter Wendland                                         (Sign) 

	
 

	
Name:             Walter Wendland                                              (Print)

	
 

	
Title:               President                                           

	
 

	
Date:               7/31/02                                                

	 

		6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]