Document:

Exhibit 10.13

 

ENERGY
MANAGEMENT AGREEMENT

Site
Development and Operations

 

The purpose of this Agreement is to set forth
the understanding and agreement between U.S. Energy Services, Inc. (“U.S.
Energy”) and Ethanol Grain Processors, LLC (“Client”) related to the provision
of energy management services.

 

PROJECT DESCRIPTION: Client is developing a 100 million gallon per year
ethanol plant (“Plant”) to be located near Obion, Tennessee.  The Plant will have approximately a 10 MW
peak usage in electricity and will consume approximately 9200 MMBtu of natural
gas per day.

 

U.S. ENERGY RESPONSIBILITIES:  U.S. Energy will provide consulting and
energy 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 when the Plant begins producing ethanol.  These services will be provided to Client
upon request:

 

A.  Energy Infrastructure Advisory Services
During the Construction Period

 

1.                                       Provide an economic comparison of receiving
natural gas distribution service.  U.S.
Energy will provide preliminary engineering cost estimates, route drawings, and
project timeline related to constructing pipeline facilities.

 

In
the event that a direct connect pipeline option is selected, U.S. Energy will
submit a tap request to the pipeline.  In
addition, U.S. Energy will also attempt to negotiate an option for Client to
minimize interconnect costs through the purchase of firm transportation to the
Plant.  Engineering and construction
management services related to constructing a pipeline may 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 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.

 

3.                                       Provide advisory services to Client regarding
electric pricing and service agreements.

 

a.                                       Analyze the electric service proposals along
with primary, secondary and 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.

 

 

b.                                      Negotiate final electric service agreements
that meet the pricing and reliability requirements of Client, including options
for third party access to electric metering.

 

c.                                       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 Client.

 

4.                                       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.

 

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

 

B.  On-Going Energy Management Services Following
the Completion Period

 

U.S. Energy will provide the
following services at Client’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 Client the various supply index and
fixed prices.  U.S. Energy will not take
title to Client 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 Client’s performance criteria at the lowest possible cost.

 

3.                                       Develop and implement a price risk management
plan that is consistent with Client’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 Client of all
nominations and actual daily usage.  U.S.
Energy will utilize customer or utility supplied telemetering to obtain actual
usage data.

 

5.                                       Provide a consolidated monthly invoice to
Client 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.

 

6.                                   Provide a monthly usage report of electric
energy consumption and costs.  Also,
where applicable and available from the utility, obtain monthly interval electric
load data and provide monthly load profile graphs.

 

2

 

7.                                       On-going review and renegotiation of electric
service costs, as required.  This may
include:

 

a.                                       Completing and evaluating annual proposals to
identify the most reliable and economic third party electric energy supply.

 

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

 

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

 

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

 

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

 

TERM:  The
initial term of this Agreement shall commence on December 1, 2005 and continue
until two (2) years after the Plant’s 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.  Client shall
remain responsible for payment and performance associated with any and all
transportation, supply, and storage transactions entered into by U.S. Energy
and authorized by Client, prior to termination.

 

FEES:  U.S.
Energy’s fee for services described above during the term of this Agreement
shall be $3900 per month, plus
pre-approved travel expenses.  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.  Client
shall remain responsible for payment and performance associated with any and
all monthly fees due prior to termination of this Agreement for a non-securing of
plant financing event.  If Client experiences
significant delays in its project timeline and it is necessary for U.S. Energy
to delay work on Client’s energy management activities, U.S. Energy will
suspend its activities and suspend invoicing Client until U.S. Energy’s
activities resume.

 

U.S. Energy’s fee will increase 4% per year
on the annual anniversary date of the effective date of this Agreement.

 

BILLING AND PAYMENT:  On
the first of the month, U.S. Energy shall invoice Client for appropriate energy
costs from the previous month and for the U.S. Energy retainer for the current
month.  Client shall pay U.S. Energy
within ten (10) days of receipt of invoice.

 

TAXES: 
Client will be responsible for payment of all taxes including, but not
limited to, all sales, use, excise, BTU, heating value and other taxes
associated with the purchase and/or transport of natural gas or electricity and
the provision of services hereunder.

 

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

 

3

 

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 Client.  All such
information shall be and remain the property of Client 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 Client’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 Client.

 

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.

 

	
  Client:

  	
   

  	
  Ethanol Grain Processors,
  LLC

  
	
   

  	
   

  	
  Attn: Jim Patterson

  
	
   

  	
   

  	
  308 Windemere Woods Drive

  
	
   

  	
   

  	
  Nashville, TN 37215

  
	
   

  	
   

  	
   

  
	
  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: Contract
  Administration

  

 

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

 

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

 

4

 

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.

 

 

	
  Agreed to and Accepted by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ethanol Grain Processors, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ James
  K. Patterson

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  James K.
  Patterson

  	
   

  	
   

  
	
  (Print)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  November 29, 2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S. Energy Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Gail McMinn

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Gail McMinn

  	
   

  	
   

  
	
  (Print)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  11-30-05

  	
   

  	
   

  
										

 

5Exhibit 10.14

 

 

AGENCY
AUTHORIZATION AGREEMENT

 

Ethanol Grain Processors, LLC (“Client”), in
Obion, Tennessee, desires to engage the services of U.S. Energy Services, Inc.
(“U.S. Energy”) to manage its energy supplies for its facilities.

 

Client and U.S. Energy agree on the following
terms and conditions:

 

1.               APPOINTMENT OF U.S. ENERGY AS
CLIENT’S AGENT – Client
agrees to appoint U.S. Energy as its agent, for purposes of managing its energy
supplies for its facilities referred to above. 
U.S. Energy accepts its appointment as Client’s agent for these
purposes.

 

2.               LIMITATIONS ON THE AUTHORITY OF
U.S. ENERGY – U.S. Energy
has the authority to deal with third parties on behalf of Client, in connection
with energy-related matters, in its capacity as Client’s agent.

 

3.               COMMUNICATION AND INFORMATION
SHARING – U.S. Energy shall
keep Client fully informed on a regular basis with regard to U.S. Energy’s
activities as the manager of Client’s energy supplies.   At the request of Client, U.S. Energy shall
immediately provide Client with any and all or other information related to
U.S. Energy’s activities as the manager of Client’s energy supplies.

 

4.               RELEASE OF ENERGY
CONSUMPTION RECORDS AND BILLS – This Agency Agreement serves as authorization for the release of Client’s
energy consumption records and bills from utilities, pipelines and suppliers to
U.S. Energy.

 

5.               TERM – This Agreement shall begin upon execution of
the Agreement.  Either party shall have
the right to terminate this Agreement for any reason, with 30 days notice in
writing, without recourse to the other party. 
Client shall remain responsible for payment and performance associated
with any and all transportation, supply, and storage transactions entered into
by U.S. Energy and authorized by Client, prior to termination.

 

6.               SERVICES – U.S. Energy shall perform the following
services for Client:

 

(a)                                  Solicit bids for, negotiate, execute and
administer energy supply contracts. 
Administration of said contracts shall include:

•                  Placing
daily and monthly nominations

•                  Reviewing
invoices for accuracy and approving for payment

•                  Providing
timely notices

 

 

(b)                                 Negotiate, execute and administer interstate
transportation contracts.  Administration
of said contracts shall include:

•                  Providing
daily and monthly nominations

•                  Receiving
curtailment notifications

•                  Managing
daily and monthly imbalances

•                  Requesting
and negotiating pipeline taps

•                  Reviewing
invoices for accuracy and approving for payment

•                  Providing
timely notices

 

(c)                                  Negotiate, execute and administer LDC
transportation contracts.  
Administration of said contracts shall include:

•                  Providing
daily and monthly nominations

•                  Receiving
curtailment notifications

•                  Managing
daily and monthly imbalances

•                  Reviewing
invoices for accuracy and approving for payment

•                  Negotiating
and resolving all discrepancies including imbalances

•                  Providing
timely notices

 

(d)                                 Perform other related services requested by
Client.

 

7.               CONFIDENTIALITY –

 

(a)                                Nondisclosure - 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 Client.  All such
information shall be and remain the property of Client 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 Client’s
request.

 

(b)                                 Protection of Information about
Client - U.S. Energy agrees
to inform its employees who work with Client of the requirements of this
Section.  U.S. Energy also agrees to
protect information

 

2

 

about Client with the same
degree of diligence that U.S. Energy uses to protect its own confidential
information.

 

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.

 

 

	
  Agreed to and Accepted by:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ethanol Grain Processors, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ James
  K. Patterson

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  James K.
  Patterson

  	
   

  
	
  (Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  November 29, 2005

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  U.S. Energy Services, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Gail McMinn 

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Gail McMinn 

  	
   

  
	
  (Print)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice President 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  11-30-05

  	
   

  
								

 

3

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