Document:

Exhibit 10.82

 

Priceline
Mortgage

Company, L.L.C.

 

Financial Statements for
the Years

Ended December 31, 2003
and 2002

and Independent Auditors’
Report

 

 

PRICELINE
MORTGAGE COMPANY, L.L.C.

 

TABLE OF CONTENTS

 

	
  INDEPENDENT AUDITORS’ REPORT

  	
   

  
	
   

  	
   

  
	
  FINANCIAL
  STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002:

  	
   

  
	
   

  	
   

  
	
  Balance Sheets

  	
   

  
	
   

  	
   

  
	
  Statements of Income

  	
   

  
	
   

  	
   

  
	
  Statements of Changes in Members’ Equity

  	
   

  
	
   

  	
   

  
	
  Statements of Cash Flows

  	
   

  
	
   

  	
   

  
	
  Notes to Financial Statements

  	
   

  

 

 

INDEPENDENT
AUDITORS’ REPORT

 

To the Members 

Priceline Mortgage Company, L.L.C.

Jacksonville, Florida

 

We have audited the accompanying balance sheets of
Priceline Mortgage Company, L.L.C. (the ”Company”) (formerly National
Mortgage Center, L.L.C.) as of December 31, 2003 and 2002 and the related
statements of income, changes in members’ equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

 

We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

 

In our opinion, such financial statements present
fairly, in all material respects, the financial position of Priceline Mortgage
Company, L.L.C. at December 31, 2003 and 2002 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

 

	
  /s/ DELOITTE
  & TOUCHE LLP

  
	
  Jacksonville,
  Florida

  
	
  February 25, 2004

  

 

 

 

PRICELINE MORTGAGE COMPANY,
L.L.C.

 

BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

 

	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
  ASSETS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSETS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash and cash equivalents

  	
   

  	
  $

  	
  4,038,766

  	
   

  	
  $

  	
  7,092,422

  	
   

  
	
  Loans held for sale

  	
   

  	
  13,500,167

  	
   

  	
  2,323,586

  	
   

  
	
  Due from affiliates, net

  	
   

  	
  —

  	
   

  	
  1,537,495

  	
   

  
	
  Prepaid expenses and other assets

  	
   

  	
  97,942

  	
   

  	
  60,799

  	
   

  
	
  Premises and equipment, net

  	
   

  	
  844,109

  	
   

  	
  1,210,885

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ASSETS

  	
   

  	
  $

  	
  18,480,984

  	
   

  	
  $

  	
  12,225,187

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES AND MEMBERS’ EQUITY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable and accrued expenses

  	
   

  	
  $

  	
  1,407,293

  	
   

  	
  $

  	
  3,492,631

  	
   

  
	
  Due to affiliates, net

  	
   

  	
  78,722

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total liabilities

  	
   

  	
  1,486,015

  	
   

  	
  3,492,631

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMMITMENTS AND CONTINGENCIES (see Note 4)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MEMBERS’ EQUITY

  	
   

  	
  16,994,969

  	
   

  	
  8,732,556

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LIABILITIES AND MEMBERS’ EQUITY

  	
   

  	
  $

  	
  18,480,984

  	
   

  	
  $

  	
  12,225,187

  	
   

  

 

See notes to financial statements.

 

2

 

PRICELINE MORTGAGE COMPANY, L.L.C.

 

STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2003 AND 2002

 

	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INTEREST INCOME:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest income

  	
   

  	
  $

  	
  796,054

  	
   

  	
  $

  	
  482,635

  	
   

  
	
  Interest expense

  	
   

  	
  (2,783

  	
  )

  	
  (4,044

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net interest income

  	
   

  	
  793,271

  	
   

  	
  478,591

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-INTEREST INCOME:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gain on sale of loans, net of commitment fees

  	
   

  	
  13,523,357

  	
   

  	
  9,882,002

  	
   

  
	
  Loan production revenue, net

  	
   

  	
  10,301,923

  	
   

  	
  9,475,171

  	
   

  
	
  Other

  	
   

  	
  118,906

  	
   

  	
  249,794

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total non-interest income

  	
   

  	
  23,944,186

  	
   

  	
  19,606,967

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-INTEREST EXPENSES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Salaries, commissions and other employee benefits

  	
   

  	
  10,326,230

  	
   

  	
  8,465,906

  	
   

  
	
  Occupancy and equipment

  	
   

  	
  1,174,278

  	
   

  	
  1,251,970

  	
   

  
	
  General and administrative

  	
   

  	
  4,974,536

  	
   

  	
  5,895,796

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total non-interest expenses

  	
   

  	
  16,475,044

  	
   

  	
  15,613,672

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET INCOME

  	
   

  	
  $

  	
  8,262,413

  	
   

  	
  $

  	
  4,471,886

  	
   

  

 

See notes to financial statements.

 

3

 

PRICELINE MORTGAGE COMPANY, L.L.C.

 

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

YEARS ENDED DECEMBER 31, 2003 AND 2002

 

	
   

  	
   

  	
  Capital

  	
   

  	
  Accumulated

  Earnings

  (Deficit)

  	
   

  	
  Total

  Members’

  Equity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2001

  	
   

  	
  $

  	
  7,934,472

  	
   

  	
  $

  	
  (3,673,802

  	
  )

  	
  $

  	
  4,260,670

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
   

  	
   

  	
  4,471,886

  	
   

  	
  4,471,886

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2002

  	
   

  	
  7,934,472

  	
   

  	
  798,084

  	
   

  	
  8,732,556

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
   

  	
   

  	
  8,262,413

  	
   

  	
  8,262,413

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2003

  	
   

  	
  $

  	
  7,934,472

  	
   

  	
  $

  	
  9,060,497

  	
   

  	
  $

  	
  16,994,969

  	
   

  

 

See notes to financial statements.

 

4

 

PRICELINE MORTGAGE COMPANY, L.L.C.

 

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003 AND 2002

 

	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPERATING ACTIVITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
  $

  	
  8,262,413

  	
   

  	
  $

  	
  4,471,886

  	
   

  
	
  Adjustments to reconcile net income to net

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  cash (used in) provided by operating activities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Depreciation expense

  	
   

  	
  408,935

  	
   

  	
  419,243

  	
   

  
	
  Loss on disposal of fixed assets

  	
   

  	
  —

  	
   

  	
  920

  	
   

  
	
  Change in operating assets and liabilities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Increase) decrease in loans held for sale

  	
   

  	
  (11,176,581

  	
  )

  	
  93,921

  	
   

  
	
  Decrease (increase) in due to affiliates, net

  	
   

  	
  1,616,217

  	
   

  	
  (1,831,291

  	
  )

  
	
  (Increase) decrease in prepaid expenses and other assets

  	
   

  	
  (37,143

  	
  )

  	
  806,731

  	
   

  
	
  (Decrease) increase in accounts payable and accrued expenses

  	
   

  	
  (2,085,338

  	
  )

  	
  2,477,684

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net cash (used in) provided by operating activities

  	
   

  	
  (3,011,497

  	
  )

  	
  6,439,094

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVESTING ACTIVITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase of premises and equipment

  	
   

  	
  (42,159

  	
  )

  	
  (839,373

  	
  )

  
	
  Net cash used in investing activities

  	
   

  	
  (42,159

  	
  )

  	
  (839,373

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

  	
   

  	
  (3,053,656

  	
  )

  	
  5,599,721

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH AND CASH EQUIVALENTS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beginning of year

  	
   

  	
  7,092,422

  	
   

  	
  1,492,701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  End of year

  	
   

  	
  $

  	
  4,038,766

  	
   

  	
  $

  	
  7,092,422

  	
   

  

 

 

See notes to financial statements.

 

5

 

PRICELINE
MORTGAGE COMPANY, L.L.C.

 

NOTES
TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003 AND 2002

 

1.                      ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

 

Organization—Priceline Mortgage Company, L.L.C.,
formerly known as National Mortgage Center, L.L.C., (the “Company”), engages in
the origination of real estate mortgage loans using the internet. The Company
is 51% owned by EverBank (formerly First Alliance Bank, FSB) and 49% owned by a
wholly owned subsidiary of Priceline.com and is doing business as
pricelinemortgage.com.

 

Basis of
Presentation—The financial statements
are presented in accordance with accounting principles generally accepted in
the United States of America, which require management to make estimates that
affect the reported amounts and disclosures of contingencies in the financial
statements. Estimates, by their nature, are based on judgment and available
information. Therefore, actual results could differ from those estimates and
could have a material impact on the financial statements, and it is possible
that such change could occur in the near term.

 

Cash and Cash
Equivalents—Cash
represents amounts held on deposit with various banks.

 

Loans Held for Sale—Loans held for sale are residential
mortgage loans originated by the Company which management intends to sell at
some point in the future. Loans held for sale are reported at the lower of cost
or estimated market value determined on an aggregate basis.

 

Commitments to
Originate Mortgage Loans—The Company enters into commitments to originate
loans whereby the interest rate on the loan is determined prior to funding
(rate lock commitments). Rate lock commitments on loans that are intended to be
sold are considered to be derivatives and are therefore recorded at fair value
with changes in fair value recorded in earnings. The fair value of rate lock
commitments at December 31, 2003 and 2002 recorded in loans held for sale was
$43,114 and $207,065, respectively. The change in fair value recorded in gain
on sale for the years ended December 31, 2003 and 2002 was $(163,951) and
$(178,138), respectively.  Rate lock
commitments expose the Company to interest rate risk.

 

Premises and
Equipment—Premises
and equipment consist of leasehold improvements, furniture, and equipment.
Premises and equipment are recorded at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated useful
lives of the assets ranging from 3 to 10 years. Leasehold improvements are
amortized using the straight-line method over the shorter of their estimated
useful life or the period the Company expects to occupy the related leased
space.

 

Revenue Recognition—Loan production income represents income earned
from the origination of mortgage loans. Gains and losses on the sale of
loans are recorded upon the sale of these assets by the Company.

 

6

 

Interest income on mortgage loans is accrued as earned
and is computed using the effective interest method. Loans are placed on
non-accrual status when any portion of the principal or interest is 90 days
past due.

 

Income Taxes—For federal and state income tax
purposes the Company is considered a partnership with income taxable to the
ultimate owners of the Company. Thus, the Company does not provide for federal
and state income taxes.

 

Reclassification—Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.

 

2.                      PREMISES AND EQUIPMENT

 

Premises and equipment at December 31 consist of the
following:

 

	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leasehold improvements

  	
   

  	
  $

  	
  233,874

  	
   

  	
  $

  	
  233,874

  	
   

  
	
  Furniture

  	
   

  	
  543,623

  	
   

  	
  540,748

  	
   

  
	
  Equipment

  	
   

  	
  1,285,252

  	
   

  	
  1,245,968

  	
   

  
	
   

  	
   

  	
  2,062,749

  	
   

  	
  2,020,590

  	
   

  
	
  Less accumulated depreciation

  	
   

  	
  (1,218,640

  	
  )

  	
  (809,705

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
  844,109

  	
   

  	
  $

  	
  1,210,885

  	
   

  

 

Depreciation expense for the years ended December 31,
2003 and 2002 was $408,935 and $419,243, respectively.

 

3.                      EMPLOYEE BENEFIT PLAN

 

The Company participates in a defined contribution
plan sponsored by EverHome Mortgage Company (formerly Alliance Mortgage
Company), an affiliated company, adopted under the Internal Revenue Code
Section 401(k) (the “Profit Sharing and Savings Plan”), covering substantially
all full-time employees meeting the eligibility requirements. Employees may
contribute between 1% and 18% of their pre-tax compensation to the Profit
Sharing and Savings Plan. Company contributions to the Profit Sharing and
Savings Plan are at the discretion of the Company. The Company made
discretionary contributions of $320,500 and $253,000 to the Plan for the years
ended December 31, 2003 and 2002, respectively. The Company made employer
matching contributions of approximately $198,000 and $115,000 in 2003 and 2002,
respectively.

 

7

 

4.                      COMMITMENTS AND CONTINGENCIES

 

The Company has entered into various operating leases
for the office space in which it operates. Rent expense associated with these
leases was approximately $284,000 and $347,000 for the years ended December 31,
2003 and 2002, respectively. The future minimum lease payments for the leases
are as follows:

 

	
  2004

  	
   

  	
  $

  	
  465,589

  	
   

  
	
  2005

  	
   

  	
  474,900

  	
   

  
	
  2006

  	
   

  	
  484,398

  	
   

  
	
  2007

  	
   

  	
  494,086

  	
   

  
	
  2008

  	
   

  	
  506,874

  	
   

  
	
  Thereafter

  	
   

  	
  1,286,634

  	
   

  
	
   

  	
   

  	
  $

  	
  3,712,481

  	
   

  

 

5.                      RELATED PARTY TRANSACTIONS

 

At December 31 due from (to) affiliates includes the
following amounts:

 

	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Due from EverHome Mortgage Company, net

  	
   

  	
  $

  	
  40,658

  	
   

  	
  $

  	
  815,408

  	
   

  
	
  Due from BNY Mortgage Company L.L.C.

  	
   

  	
  69

  	
   

  	
  54

  	
   

  
	
  Due (to) from EverBank

  	
   

  	
  (119,449

  	
  )

  	
  722,033

  	
   

  
	
   

  	
   

  	
  $

  	
  (78,722

  	
  )

  	
  $

  	
  1,537,495

  	
   

  

 

Administrative expenses allocated to the Company from
affiliates were $420,000 and $210,000 for the years ended December 31, 2003 and
2002, respectively. Advertising expenses paid to an affiliate were $533,935 and
$1,752,637 for the years ended December 31, 2003 and 2002, respectively.

 

The Company participates in an overall insurance
program administered by EverBank Financial, L.P. (formerly Alliance Capital
Partners, L.P.), parent of EverBank. Insurance expense allocated to the Company
totaled $76,176 and $43,813 for the years ended December 31, 2003 and 2002,
respectively.

 

The Company generally sells all its originated mortgage
loans to affiliates on a right of first refusal basis. In 2003 and 2002, the
Company recognized gains of $13,591,438 and $10,060,156, respectively, on loans
sold to affiliates.

 

6.                      FINANCIAL INSTRUMENTS

 

Derivative
Instruments—In the ordinary course of business, the
Company enters into commitments to originate loans. Inherent in these
transactions is the interest rate risk associated with the movement of interest
rates in the mortgage market. The Company mitigates this risk by obtaining
commitments from investors for the purchase of loans generally at or prior to
the loan origination date. At December 31, 2003 and 2002, the Company had
commitments to originate loans of approximately $96 million and $669 million,
respectively.

 

8

 

As a mortgage banking entity, the Company underwrites
loans and the extension of credit to borrowers in accordance with the standards
prescribed by loan investors. The Company does not invest in mortgage loans for
its own account and, therefore, does not assume the long-term credit risk
associated with mortgage lending. The Company’s credit risk is generally
transferred to the investor upon the sale of the loans. The Company does not
have credit risk concentration, as defined, with any one financial institution,
government agency, government-sponsored enterprise, or individual investor.

 

Fair Value Financial Instruments—The
following methods and assumptions were used by the Company to estimate the fair
value of each class of financial instruments:

 

Loans Held for Sale—Fair value is estimated using the quoted market
prices for similar loans, adjusted for differences in loan characteristics. The
estimated fair value of these financial instruments at December 31, 2003 and
2002 was $13.6 million and $5.3 million, respectively.

 

* * * * * *

 

9Exhibit 10.6

 

ELECTRIC SERVICE AGREEMENT

 

This Agreement
is made as of October 3, 2003, by and between Adams-Columbia Electric
Cooperative, of Friendship, Wisconsin (“ACEC” or the “Cooperative”), and United
Wisconsin Grain Producers (“UWGP” or “Member”).

 

PREMISES

 

1.                                       The
Cooperative supplies electric power and energy on a cooperative basis to its
members in and around Adams, Marquette, Waushara, Columbia, and other adjacent
counties in central Wisconsin, and wishes to provide electric power and energy
to Member upon the terms stated in this Agreement.

 

2.                                       UWGP
wishes to be a member of the Cooperative and obtain from the Cooperative, on a
cooperative basis, electric power and energy for the Member’s Friesland ethanol
plant located on the NW 1⁄4 section 27, T13N, R12E (Randolph Township) in
Columbia County, Wisconsin, (hereafter referred to as the “Site”) upon the
terms to be stated in this Agreement.

 

3.                                       Member
further wishes to have the Cooperative request transmission service from the
appropriate transmission providers and to own, operate, and maintain a
substation and appurtenant facilities to supply power to the Site upon the
terms to be stated in this Agreement.

 

4.                                       This
Agreement states the terms of the Agreement between the parties, as
supplemented by the Bylaws, policies, rules, and regulations of the
Cooperative, as they may be modified from time to time, which are incorporated
herein by reference.

 

AGREEMENT

 

In consideration of the above
premises, and for other good and valuable consideration, the parties agree as
follows:

 

1.                                      SPECIFIC
SERVICE REQUIREMENTS AND FACILITIES

 

UWGP selected ACEC to provide
service to UWGP’s proposed ethanol plant near Friesland, Wisconsin.  Said facility was located more than 500’
from the existing local service distribution lines of both ACEC and Alliant
Energy/WP&L.  Member acknowledges
that it had the opportunity to receive service from either ACEC or Alliant
Energy/WP&L, and chose ACEC to supply electric service as permitted by
law.  Electric service will be supplied
to UWGP at both 4,160 volt (nominal) and 277/480 volt (nominal) services on the
site provided by UWGP.

 

1.1                                 Cooperative-owned
facilities and equipment.  ACEC will
arrange for transmission service to the site with the American Transmission
Company, LLC (ATCLLC) at a capacity level not less than ten (10) MW.  The costs for transmission service will be
charged to UWGP on a monthly basis at rates included in Schedule 1
attached.  ACEC will own, operate, and
maintain

 

1

 

a substation at a mutually agreed to location on property provided by
UWGP for this purpose.  ACEC will also
own, operate, and maintain necessary distribution facilities to provide UWGP
with the desired level of service facilities at mutually agreed to
locations.  Schedule 1 was prepared
based on preliminary indications that UWGP desired two primary voltage (4,160
volt) services and five secondary (277/480 volt) services.  By mutual agreement the parties may amend
this Agreement to modify the desired number of service points and the costs
associated with those services.

 

1.2                                 Member-owned
facilities and equipment.  UWGP will
be responsible for the secondary wire leaving each desired secondary-voltage
service point and for the transformer and secondary wire from each desired
primary-voltage service point.  Member
will insure that operation of its facilities will not cause harm from voltage
flickering to other members of the Cooperative, or the customers of other utilities,
by the installation and proper maintenance of soft-start capability for all
motors 150 horsepower and above.

 

2.                                      ELECTRIC
SERVICE GENERAL TERMS AND CONDITIONS

 

2.1                                 UWGP,
agrees prior to receiving service to become a member of the Cooperative, and
shall pay the Membership fee and be bound by the Cooperative’s Bylaws,
policies, rules, and regulations as they may be modified from time to time by
the Cooperative’s membership or Board of Directors.  UWGP acknowledges that it has received a copy of the current
Bylaws.

 

2.2                                 Member
shall provide and maintain suitable locations and electric supply for the
installation of any Cooperative-owned electric facilities or equipment on
Member’s property.  Member agrees to
convey such easements as in Cooperative’s reasonable judgment may be necessary
or convenient for the Cooperative to provide service at the location(s)
described in this Agreement.

 

2.3                                 Member
shall be solely responsible for the design, installation, operation,
maintenance, and safety of any and all Member-supplied electric facilities or
equipment.

 

2.4                                 The
Cooperative shall furnish, install, operate, and maintain the Cooperative-owned
electric equipment or facilities described in Section 1 above to deliver
electric power and energy to the Member, including the means specified to meter
that power and energy.  Metered
quantities shall include all electrical losses incurred on Site to provide
power and energy to the Member.  The
Cooperative does not undertake or assume any responsibility to assist or advise
the Member concerning the design, installation, operation, or maintenance of
electric facilities or equipment supplied and owned by Member.

 

2.5                                 The
Cooperative as owner and operator of the substation will retain the right to
utilize the substation to meet other needs of the Cooperative’s system and the
needs of its membership.  Such usage
will not conflict with the needs of the Member herein.  If the Cooperative uses this facility in
such a manner as to conflict with the needs of the Member, the Cooperative will
be responsible for costs required to remove the conflict.

 

2

 

If the
Cooperative uses the substation in such a manner as to benefit the general
membership other than Member, then the Cooperative shall provide to the Member
a construction credit for the substation based on any incremental cost the
Member paid to expand the substation facilities above the capacity requested by
the Member for its own use, whether or not the Member has used the capacity it
requested for its own use.  Any incremental
costs to be paid by the member and any construction credit eligible for refund
to the Member must have been identified in writing by the Cooperative prior to
construction of said facilities.

 

2.6                                 Electric
equipment or facilities furnished and maintained by the Cooperative on the
Member’s property shall remain the property of the Cooperative, and the
Cooperative may remove it upon reasonable notice upon termination of this
Agreement for any reason.

 

2.7                                 Authorized
representatives or employees of the Cooperative may enter the Member’s premises
at all reasonable times in order to carry out the Cooperative’s
responsibilities under this Agreement, as well as to maintain or remove any
Cooperative- furnished equipment or facilities.

 

2.8                                 Member
shall not interfere with the operation of any Cooperative-owned electric
equipment or facilities, including any metering equipment (whether owned by the
Cooperative or others), and Member shall advise the Cooperative as soon as
possible if Member discovers any problem with the condition or functioning of
Cooperative-owned equipment or facilities. 
Member shall notify the Cooperative immediately if Member discovers that
the condition or operation of any of the Member-supplied equipment or
facilities may pose a risk to any persons or property.

 

2.9                                 The
Cooperative shall use reasonable diligence to provide the power and energy
consistent with the type of electric service being provided to Member.  Should the Cooperative’s supply of electric
power and energy fail or be interrupted, or become defective, through:  a) compliance with any law, ruling, order,
regulation, requirement, or instruction of any federal, state, or municipal
government or any governmental department or agency or any court of competent
jurisdiction; b) Member’s actions or omissions; c) operation of protective
devices; or, d) acts of God, fires, strikes embargoes, wars, insurrection,
riot, or other causes beyond the reasonable control of the Cooperative or the
Cooperative’s wholesale power supplier, neither the Cooperative nor any
wholesale power supplier to the Cooperative shall be liable for any loss or
damages incurred by Member or be deemed to be in breach of this Agreement.  Member acknowledges that the delivery of
electric power and energy may at times be subject to interruption by causes
beyond the control of the Cooperative, including weather conditions, vandalism,
and other interruptions, and the Member assumes the risk of those potential
interruptions.

 

3.                                      PAYMENT
FOR ELECTRIC SERVICE

 

3.1                                 Rates.

 

Member shall pay the Cooperative for all electric service provided
under this Agreement at the rates and upon the terms and conditions set forth
in the rate schedule attached to and

 

3

 

incorporated in this Agreement as Schedule 1, and any revisions or
substitutes subsequently adopted by the Cooperative’s Board of Directors.  The rates set forth herein and attached in
Schedule 1 are based on the cost of providing distribution service at this
site and for securing power supply and transmission services at the same
site.  Rates proposed in Schedule 1
for distribution service are estimated. 
Rates for distribution service will be adjusted as necessary throughout
the life of this agreement based on the cost to provide service.

 

Power supply rates in Schedule 1 are for the period covering from
the signing of this Agreement until December 31, 2004, and beyond that
date will be adjusted to reflect changes in the power supply costs to ACEC.  Transmission service costs are estimated
based on current rates and current rate forecasts from the American
Transmission Company LLC (transmission system owner) and the Midwest
Independent System Operator (MISO – transmission system operator), and are
included in the rates shown in Schedule 1.  Changes in rates charged ACEC by these or any successor
organizations will cause changes in the rates to the Member, whether prior to
or after December 31, 2004.

 

3.2                                 Demand
and Energy Charges.

 

The demand and energy charges will be pursuant to the attached rate
schedule for any demand and energy used by the Member in accordance with
that rate schedule.  The demand and
energy charges include costs for power supply, power transmission (capacity and
operation), and for the general operation of the cooperative including margins.

 

3.3                                 Power
Cost Adjustment Charges.

 

The Cooperative may apply a power cost adjustment charge to energy
purchases made under this Agreement. 
The power cost adjustment charge shall be a pass-through from the
Cooperative’s power and transmission suppliers, based on any changes in the
charges from the established rates for the Member.  The power cost adjustment charges will periodically be adjusted
to zero as new base rates are established.

 

3.4                                 Aid-to-Construction.

 

The member will be required to make a non-refundable payment in aid of
construction for the facilities the Cooperative will install for the benefit of
the member.  The amount of this
aid-to-construction shall be $253,750. 
This amount will remain fixed regardless of changes in scope of the
facilities to be installed so long as the total estimated or actual cost does
not exceed $870,000 (120% of the estimate provided in the original proposal of
$725,000).  Portions of this aid-to-construction
will be invoiced to the Member as the Cooperative makes commitments on behalf
of the Member for construction at the Site.

 

3.5                                 Deposit.

 

No deposit is required.

 

4

 

3.6                                 Payments.

 

Member shall pay all bills for the Cooperative’s electric service under
this Agreement at the Cooperative’s offices at 401 East Lake Street, PO Box 70,
Friendship, Wisconsin, 53934-0070.  All
payments are overdue and in default if received by the Cooperative later than
the 20th day of the month that the Member receives the bill for the
previous month’s service.  Member shall
have no less than 15 calendar days from postmark date of invoice prior to
payment without being overdue or in default.

 

4.                                      AGREEMENT
TERM AND TERMINATION

 

4.1                                 Term.

 

The power supply portion of this Agreement shall be in effect as of the
date stated on page 1 and thereafter for a period of three (3) years after
electric service is first provided.  At
each anniversary of the commencement of service, this Agreement shall
automatically be extended so that the term again covers a period of three (3)
years, unless either party gives written notice of intent not to extend.  Upon receipt of written notice, the contract
shall expire on the meter reading date immediately following the then-current term;
i.e., until notice of non-renewal, this Agreement will always be in force for a
period longer than two (2) years and less than or equal to three (3) years.

 

The facility surcharge portion of this Agreement shall remain in effect
independent of rates or power supply agreements, and the Member shall be
responsible for paying this charge to cover the cost of the facilities required
to serve the Site as provided in Section 1.1.  In the event the power supply portion of this Agreement is
cancelled, the Member shall reimburse the Cooperative an amount equal to the
net book value of all Cooperative assets invested to serve the Member.  This amount shall be due on the first day
after the power supply contract is not in effect.

 

Upon termination or expiration of this Agreement, Member shall continue
to obtain electric service from the Cooperative at the applicable rates
provided under the Cooperative’s general rate schedules.

 

5

 

4.2                                 Default
and Termination.

 

Member shall be in default if it fails to timely pay for service under
this Agreement, if it breaches any other of its obligations to the Cooperative,
or if it becomes the subject of bankruptcy or insolvency proceedings.  If Member fails to cure that default within
8 days after the Cooperative mails written notice of default to Member, and
subject to restrictions imposed by applicable law, the Cooperative may at its
sole option suspend or terminate its further performance under this Agreement,
disconnect electric service to Member, terminate the Agreement, or take other
action to address the Member’s default.

 

4.3                                 Survival
of Obligations.

 

Upon termination of this Agreement, the rights and obligations of the
parties under this Agreement shall cease without further liability, effective
as of the date of termination, except that this Agreement shall still be valid
as to any prior obligation owed by either party including the Member’s
obligation to reimburse the Cooperative for the net book value of any assets
owned by the Cooperative.

 

5.                                      PATRONAGE
CAPITAL CREDITS

 

The Member shall accrue patronage capital credits under the terms of
this Agreement for service at this location in accordance with the Bylaws of
the Cooperative and subject to any applicable classification of business
formula.  The parties acknowledge that
classification of business may result in customers of some classes of business
earning capital credits at a different rate then other classes.  Patronage capital shall be refunded to the
Member in a manner consistent with other members and as determined by the
Cooperative’s board of directors.

 

6.                                      DISCLAIMER
OF WARRANTY AND LIMITATION OF LIABILITY

 

IN PROVIDING ELECTRIC SERVICE UNDER THIS
AGREEMENT, THE COOPERATIVE DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OF THE ELECTRIC POWER AND ENERGY SUPPLIED HEREUNDER.  Each party shall be responsible for its own
facilities and personnel provided or used in the performance of this
Agreement.  Neither Cooperative nor
Member shall be responsible to the other party for damage to or loss of any
property, wherever located, unless that damage or loss is caused by its own
sole negligence or intentional conduct or by the sole negligence of intentional
conduct of that party’s officers, employees, or agents, in which case the
damage or loss shall be borne by the responsible party.  The Cooperative shall not be responsible or
liable to Member or to any other person for any indirect, special or consequential
damages, or for loss of revenues from any cause.

 

6

 

7.                                      ELECTRIC
SUPPLIER

 

Should a
dispute arise between the Cooperative and some other electric power supplier
over the right or the ability to service the Member’s facilities or property,
the Member shall support the Cooperative’s claim for the right to serve the
Member, and the Cooperative will use its reasonable best efforts to avoid any
inconvenience to the Member as a result of that dispute.

 

8.                                      INDEMNIFICATION

 

Member agrees
to indemnify, defend, and hold Cooperative harmless against any liability for
any claims or demands arising out of property damage, bodily injury, or
interruptions to the Cooperative’s electric service caused by electric
equipment or facilities owned by the Member, or the Member’s use or operation
of its electric equipment or facilities.

 

9.                                      GENERAL

 

9.1                                 Governing Law.  This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
shall be governed by the laws of the State of Wisconsin.

 

9.2                                 Attorney’s Fees.  Member shall reimburse the Cooperative for
all costs and all out-of-pocket expenses (including reasonable attorneys’ fees
and disbursements) incurred by reason of any breach or threatened breach of
this Agreement by the Member.

 

9.3                                 Notices.  All notices under this Agreement shall be
given in writing and shall be delivered personally or mailed by first class U.
S. mail to the respective parties as follows:

 

(a)                                  To
Member:

Kevin Roche, Board President

United Wisconsin Grain Producers

P.O. Box 247

Friesland, WI  53935

 

(b)                                 To
Cooperative:

Martin A. Hillert, CEO

Adams-Columbia Electric Cooperative

401 East Lake Street, P.O. Box 70

Friendship, WI  53934

 

10.4                           No Waiver.  No course of dealing nor any failure or
delay on the part of a party exercising any right, power, or privilege under
this Agreement shall operate as a waiver of any such right, power, or
privilege.  The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which a party would otherwise have.

 

10.5                           Entire
Agreement/Amendment.  This
Agreement, including Schedule 1, represents the entire Agreement between
the parties with respect to the matters addressed in this

 

7

 

Agreement, except as provided in the Cooperative’s Bylaws, policies,
rules, and regulations, as they may be modified from time to time, which are
incorporated herein.  Except as
specifically provided herein, this Agreement may be changed, waived, or terminated
only by written Agreement signed by both parties.

 

10.6                           Assignment/Benefit
of Agreement.  Any assignment of
this Agreement, in whole, in part, or of any other interest hereunder, without
Cooperative’s written consent shall be void. 
Cooperative may assign this Agreement to an affiliate or affiliates of
Cooperative, to a partnership or partnerships in which Cooperative or an
affiliate has an interest, or to any entity which succeeds to all or
substantially all of Cooperative’s assets by sale, merger, or operation of
law.  Otherwise, Cooperative may assign
this Agreement subject to Member’s written approval, which shall not be
unreasonable withheld.  To the extent
not prohibited hereby, this Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns.  The parties’ rights and obligations under
this Agreement shall run with the land, and, except as provided in this
section, shall be unaffected by any change in ownership of the Site or Site
facilities.

 

10.7                           Severability.  If any provision of this Agreement is held
invalid under any applicable laws, that invalidity shall not affect any other
provision of this Agreement that can be given an effect without the invalid
provision, and, to this end, the provisions are severable.  If any term or condition of this Agreement
is unenforceable under applicable law, such term or condition shall
nevertheless be deemed enforceable to the fullest extent permissible and the
applicable court is requested to reform the offending term or condition.

 

10.8                           Non-disclosure.  The Member agrees not to share the terms of
this Agreement including any information regarding charges or rates with any
other person or party, other than as is mandated by state or federal law,
including but not limited to required disclosure in securities filings.  In the event of any such mandated
disclosure, Member shall give the Cooperative prior notice of the nature and
content of the disclosure that is proposed to be made at least five (5)
business days prior to the disclosure. 
The Cooperative may record a memorandum of this Agreement that does not
disclose the rates.

 

10.9                           Execution
and Delivery.  The parties warrant
and represent that the undersigned have full power and authority to execute and
deliver this Agreement on behalf of their respective companies.

 

8

 

Executed and delivered as of the date stated on page one.

 

 

	
   

  	
  ADAMS-COLUMBIA ELECTRIC COOPERATIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ Martin A. Hillert, CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNITED WISCONSIN GRAIN PRODUCERS

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 
  

  	
  /s/ Kevin Roche, Board President

  	
   

  
					

 

9

 

Schedule 1

 

UWGP Friesland Ethanol Plant

Rate Proposal from Adams-Columbia Electric
Cooperative

Estimated Rates for 2004 (1)

 

	
  Customer (facility) charge

  	
   

  	
  $

  	
  700.00

  	
   

  	
  per month

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Demand (2)

  	
   

  	
  $

  	
  9.90

  	
   

  	
  per kW based on 15 min. readings

  
	
  on peak [8am to 8pm] (3)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Energy

  	
   

  	
  $

  	
  0.0237

  	
   

  	
  per kWhr,

  
	
  Regardless of time of day

  	
   

  	
   

  	
   

  	
  before any power cost adjustment

  (PCA)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reactive energy charge (4)

  	
   

  	
  $

  	
  —

  	
   

  	
  per rkVAh of billed reactive energy

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Estimated cost of sub and distribution facilities (5)

  	
   

  	
  $

  	
  725,000.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Required contribution in aid of construction (6)

  	
   

  	
  $

  	
  253,750.00

  	
   

  	
  one time non-refundable payment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Balance of substation & distribution costs

  	
   

  	
  $

  	
  471,250.00

  	
   

  	
  payable by facility surcharge

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facility surcharge for substation & dist. costs

  	
   

  	
  $

  	
  3,358.00

  	
   

  	
  per month in addition to facility

  charge

  

 

	
  (1)

  	
  ACEC’s power supply rates shown here are valid from July 7, 2003
  until December 31, 2004. 

  
	
  Rates beyond this time will be based on any changes from Alliant,
  ATCLLC, and MISO for power supply, transmission capacity, and transmission
  operations respectively.

  
	
   

  	
   

  
	
  (2)

  	
  This demand rate includes estimates of power supply and transmission
  supply charges.  Rates will be
  adjusted to reflect any changes from this estimate.

  
	
   

  	
   

  
	
  (3)

  	
  This peak period would correlate to the peak period that ACEC has
  with its power supplier.  We have no
  plans to change the peak period at this time.

  
	
   

  	
   

  
	
  (4)

  	
  This will be a pass-through from ACEC transmission supplier.  There is no change or credit with the rate
  proposal at this time.

  

 

	
  (5)

  	
  Cost estimate for substation and
  distribution facilities:

  	
   

  	
   

  	
   

  
	
   

  	
  Substation cost estimate

  	
   

  	
  $

  	
  624,000

  	
   

  
	
   

  	
  Distribution cost estimate (includes 5
  service transformers)

  	
   

  	
  $

  	
  101,000

  	
   

  
	
   

  	
  Total substation & distribution cost
  estimate

  	
   

  	
  $

  	
  725,000

  	
   

  

 

	
  (6)

  	
  Contribution required in aid of construction of 35% of the total
  construction costs = $253,750

  

 

10

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