Document:

exv10w2

 

EXHIBIT
10.2

[Christianson & Associates, PLLP Logo]

May 23, 2005

Red River Energy, LLC

1600 Mapleton Ave

Bismark ND 58503

Attn: Randy Schneider

	 	 	 	 	 
	Cell:

	 	701-223-6142
	 	 
	Phone:

	 	701-222-4100	 	 
	Email:

	 	randy@sengercpa.com	 	 

Re: Forecasted Financial Statements

Dear Mr. Schneider:

You are pursuing an exciting project. I enjoyed learning more about your project from our
discussions and reviewing your project with your fellow board members.

Our firm would be pleased to provide consulting services and to help you plan through your
development stage. We are confident that our firm has the ability and experience in the ethanol
industry to provide top quality efficient accounting and consulting services to your company. Our
firm works with more ethanol plants that any other accounting firm. Our goal is to be a value
added resource for your company.

I will summarize some of the accounting and consulting services available to your organization as
you choose. Services available to Red Rive Energy, LLC would include the following:

	 	1.	 	Entity analysis and organization consulting.
	 
	 	2.	 	Preparation of financial statement forecasts.
	 
	 	3.	 	Entity governess planning.
	 
	 	4.	 	Strategic planning with board of directors.
	 
	 	5.	 	Financing proposal documentation.
	 
	 	6.	 	Preparation of audited financial statements for:

	 	a.	 	Development stage
	 
	 	b.	 	Construction stage

 

 

	 	c.	 	Operating years

	 	7.	 	Income tax planning
	 
	 	8.	 	Preparation of income tax returns federal and state.
	 
	 	9.	 	General ledger software implementation.

	 	a.	 	Development stage accounting
	 
	 	b.	 	Construction period accounting
	 
	 	c.	 	Operations accounting
	 
	 	d.	 	Grain accounting

	 	10.	 	Quarterly ethanol production audits for state producer
payments.
	 
	 	11.	 	Small producer ethanol tax credit analysis
	 
	 	12.	 	Provide consulting as a resource for industry comparisons of
operating efficiencies and cost analysis of plant.

My understanding is that Red River Energy, LLC is proposed to be organized as a Limited Liability
Company (LLC) in the State of Minnesota or North Dakota. The financial information requirements
for the confidential disclosure statement would include information from a complied forecasted
financial statement for the first five years of operations.

The fees for our services will be based upon hours of work performed at hourly rates plus
reimbursement of out of pocket expenditures. Hourly rates for accounting staff are dependent upon
experience and abilities of the staff. Non CPA accounting staff rates range from $35-$55 per hour.
CPA accounting staff rates range from $85-$120 per hour and fees for my services are at a rate of
$175 per hour. We are confident that we can provide accounting and consulting services very
efficiently based upon our experience in the ethanol industry. We understand ethanol production
facilities.

We could also set up a general ledger system that we would transfer onto your computer system to
allow you to continue to maintain the general ledger during the development stage. We can easily
update flies between systems via the internet.

I would estimate the fees for preparation of complied financial statement forecasts to be $20,000.
The financial forecasts have multiple functions and would be a component of the business plan, and
financing proposal documentation. Other services would be performed based upon hours of work
performed at hourly rates. We could make estimates of the cost of each project as we

 

 

define the
scope of these projects in the future. Our travel time in compensated for at our hourly rates and
we do anticipate that we would bill monthly for services rendered.

We are currently engaged to provide auditing or consulting services to over thirty five ethanol
production facilities in fourteen mid-western states. Ethanol plant client references are
available upon request. Our firm has experience working in the ethanol production industry and
would enjoy working with Red River Energy, LLC as well.

You have an exciting project and I look forward to working with you in the future. If you have any
questions or need additional information, please feel free to contact me.

	 	 	 
	Sincerely,
	 	 
	 
	 	 
	/s/ John O Christianson
	 	 
	 
	 	 
	John O Christianson, CPA
	 	 
	 
	 	 
	Acceptance of terms:
	 	 
	 
	 	 
	   /s/ Les Nesvig

	 	[Handwritten: 5/24/05]
	 	 	 
	Red River Energy, LLC

	 	Dateexv10w3

 

[Planscape
Partners Logo]

EXHIBIT 10.3

	 	 	 	 	 
	Date:

	 	May 25, 205
	 	 
	To:

	 	Red River Ethanol	 	 
	From:

	 	Kathy Showalter	 	 
	RE:

	 	Proposal for Services	 	 

It was good to spend time with your group in Granite Falls as you explore options for an
ethanol plant. Matt Sederstom has told me that you are interested in working with our firm
and we are pleased to be sending this proposal to you through Bill Hannigan of Brown
Winnick Law Firm.

As we discussed with your group, PlanScape Partners has extensive experience with ethanol
projects. We have demonstrated to Fagen our commitment to providing timely, cost effective
service and we enjoy our collaborative working relationship. PlanScape Partners staff
works in the public and private sector, allowing us to know both sides of the development
equation and facilitate a project that will be enhanced by our assistance. We have been
economic developers and know that each project and each municipality is unique.

PlanScape Partners would enjoy helping your group in a number of ways. Every ethanol
project is different, but various phases are usually involved with each initiative. Two
early phases are identified below:

Initial investigation

Before a project can go forward, an initial period of time and effort must be spent on
investigation and discovery of information regarding state and local programs, appropriate
personnel to contact, and local practices and process for development. Finding and
reviewing sources of information, such as information on legal statutes and economic
development practices for the locations you are exploring is a key step.

Local incentives

To enhance the return on investment, most projects can benefit by securing financial
incentives from the local municipality and the State. One goal is to secure a $5,000,000
to $10,000,000 loan that can be subordinated to senior debt. Different states have
identified ways to allow this to happen. Possibilities include tax abatements, tax
increment financing, state incentives and loans backed by a local taxing body. Rural
electric cooperatives may be able to provide Rural Economic Development Loan (REDL) funds.
Usually, state grants and loans will require sponsorship by a governmental entity.

 

 

Building on the relationship started in the initial public relations stages and throughout the
funding commitment process will be very important to the success of this project. It is very
important to engage the County Board and generate public support from area residents in this
initiative. Quantifying and “selling” the benefits from an ethanol plant locating in your area is
an important task. Preparation of materials to support this effort and attendance at negotiation
and approval meetings are part of the required tasks.

Tasks for this project would include:

	•	 	Investigation of resources

	•	 	Contacts and one-on-one visits with decision makers

	•	 	Attendance at two County Board meetings

Much of the initial work can be completed in our office but face to face meetings are of paramount
importance. The fee for providing these services includes time for two to three visits to the area
for two sites in different counties in addition to the County Board meetings. Each visit would be
of one to two days duration.

Range of $12,000 to $16,000

PlanScape Partners proposes to provide the services on a not-to-exceed, hourly rate basis. Our fees
for 2005 are $120 per hour for principal partners, $70 for administrative assistant’s time and $45
per hour for clerical support. Prints, copies, delivery fees, travel expenses, and other
reimbursable expenses will be billed at cost plus a 10% administrative fee and are in addition to
the above fees.

PlanScape Partners is a small firm, committed to quality work with creative thinking. Our values
statement is “Do Good Work — Add Value – Have Fun – Make a Difference.” We believe in building
long-term relationships and our marketing is through word of mouth from our satisfied clients.
Fagen is one of our many satisfied clients.

If any of you have questions, please call. We look forward to working with you.

Sincerely,

Planscape Partners

Kathy Showalter

AUTHORIZATION

I have reviewed the proposal and agree with its terms. I hereby authorize PlanScape Partners to
proceed with the work described herein.

	 	 	 
	/s/ Les Nesvig

	 	6/15/05
	 
	Authorized Signature

	 	Date

 

 

Terms of Payment

All amounts due PlanScape Partners for professional services hereunder shall be paid in full not
later than 30 days following completion of those services. Thereafter, interest at the rate of one
and one-half percent (1 1/2%) per month shall be charged against and paid on all amounts unpaid.
PlanScape Partners also retains the right to file liens on all accounts not paid within 90 days of
completion of work.exv10w4

 

EXHIBIT 10.4

CONSULTING AGREEMENT

     This Consulting Agreement (the “Agreement”) is made this  6  day of  July
, 2005 (the “Effective Date”), by and between BioEnergy Capital Consultants, LLC, a South
Dakota limited liability company, with an address of 44095 212th Street, Lake Preston, South Dakota
57249 (“BioEnergy”), and Gold Energy, LLC, a Minnesota limited liability company, with an address
of 1183 6th Street South, Wahpeton, North Dakota 58075 (“Client”).

R E C I T A L S:

     A. Client intends to develop, finance and construct an ethanol plant in North Dakota or
Minnesota with an expected capacity to produce 50 million gallons of ethanol per year (the
“Project”).

     B. BioEnergy has a background in the development of value-added agriculture projects 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 engages BioEnergy, and BioEnergy accepts engagement, upon the terms and conditions
hereinafter set forth.

     1. Term. BioEnergy’s engagement with Client shall commence as of the Effective Date
and shall continue at least through the first day after the Loan Closing Date (as defined in
section 3), unless properly terminated as provided herein. BioEnergy may terminate its services
upon fourteen (14) days prior written notice to Client. Client may only terminate BioEnergy’s
services for “Cause”. For purposes of this Agreement, “Cause” means BioEnergy’s gross negligence
or intentional misconduct in the performance of its duties under this Agreement, a known violation
of the law, or a material breach of this Agreement by BioEnergy.

     Upon termination, neither Client nor BioEnergy shall have any further rights or obligations
under the terms of this Agreement other than delivery of payments for services and/or bonus
payments to which BioEnergy may be entitled through the date of termination.

     2. Services. BioEnergy shall serve as Client’s Project consultant. BioEnergy’s
service providers (described in section 7 of this Agreement) 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 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 commencement of construction of the Project,
including without limitation, cooperating with the Client’s personnel similarly engaged.
Notwithstanding the forgoing, neither BioEnergy, its members, managers, officers, 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, BioEnergy shall determine the manner in which the services are
to be performed and the specific hours to be worked by BioEnergy. Client shall rely on BioEnergy
to work as many hours as may be reasonably necessary to fulfill BioEnergy’s commitments under this
Agreement.

3. Payment.

     a. Client shall transfer to BioEnergy a one time commitment fee of Fifty Thousand
Dollars ($50,000) on the Effective Date.

     b. Client shall pay a one-time conditional bonus of One Hundred Seventy-Five Thousand
Dollars ($175,000) (the Bonus”) on the date that client closes a loan transaction sufficient
to finance the construction of the Project (the “Loan Closing Date”). Client shall have
sole discretion in determining whether to accept a loan commitment or close a loan, and
Client shall not become liable to pay the Bonus, or any portion thereof if it elects in good
faith to refuse to accept a loan commitment or close a loan.

     c. In the event of an early termination of this Agreement, the following shall apply
with respect to the bonus

     (i) If Client terminates this Agreement for Cause prior to the Equity Drive
Closing Date, Client shall pay to BioEnergy a percentage of the Bonus equal to the
percentage of the equity goal that has been subscribed to as of the date of
termination. Such partial Bonus shall be payable on the Loan Closing Date.

     (ii) If Client terminates this Agreement for Cause after the Equity Drive
Closing Date, but prior to the Loan Closing Date, Client shall pay to BioEnergy 100%
of the Bonus on the Loan Closing Date.

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     (iii) If BioEnergy terminates this Agreement prior to the Equity Drive Closing
Date, Client shall not owe BioEnergy any portion of the Bonus.

     (iv) If, at any time, Client terminates this Agreement in bad faith or without
Cause, Client shall immediately pay BioEnergy 100% of the Bonus.

     4. Expenses. Client shall reimburse BioEnergy for all reasonable, ordinary and
necessary expenses incurred by BioEnergy in performance of its duties hereunder, including without
limitation, reimbursement for automobile mileage. The frequency and rate of reimbursement shall be
the same as that made to Client’s own officers and directors.

     5. Support Services. Client shall provide the following support services for the
benefit of BioEnergy, as approved by Client: office space, secretarial support, and office
supplies.

     6. Relationship of the Parties. The parties understand that BioEnergy 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 BioEnergy.

     7. Service Providers. Paul Casper and John T. Porter shall provide the majority of
BioEnergy’s services under this Agreement. John T. Porter’s duties shall include assisting in the
development of the Project and the organization of investor meetings. Paul Casper’s duties shall
include assisting in the organization of investor meetings. Notwithstanding the foregoing,
BioEnergy may substitute its other personnel to provide BioEnergy’s services under this Agreement
on a limited basis as needed, with Client’s consent. BioEnergy’s employees, members, or agents who
perform services for Client under this Agreement shall be bound by the terms of this Agreement.

     8. Insurance. BioEnergy and Client shall each obtain, maintain and keep in full force
and effect during the term of this Agreement the following insurance coverages:

     a. Commercial general liability insurance with policy limits that have a combined
single limit of One Million Dollars ($1,000,000.00); and

     b. Business automobile liability insurance, covering owned, non-owned and hired
vehicles with a combined single limit of One Million Dollars ($1,000,000.00).

     All insurance provided for in this section 8 shall be effective under valid and enforceable
policies issued by insurers of recognized responsibility, licensed to do business in states where
the respective parties currently conduct business. Each party shall name the other as an
additional insured with respect to each policy. Each party shall furnish the other with proof of
the payment of all premiums due on said policies of insurance and that the policies of insurance

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are in full force and effect. Each policy or certificate of insurance shall contain an agreement
by the insurer that coverages shall not be cancelled for any reason without at least 30 days prior
written notice to the other party.

     9. Indemnification. Client shall indemnify and defend BioEnergy and its employees,
members, managers, officers, and agents against expenses actually and reasonably incurred in
connection with the defense of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), in which
BioEnergy and/or its employees, members, managers, officers or agents are made a party by reason of
performing services for Client or acting in any manner pursuant to this Agreement, except that
Client shall have no obligation to indemnify and defend BioEnergy and/or its employees, members or
agents for its and/or their act or omission that involve gross negligence, intentional misconduct
or a known violation of the law. BioEnergy shall indemnify and defend Client and its employees,
members, directors, officers and agents against expenses actually and reasonably incurred in
connection with the defense of any Proceeding in which Client and/or its employees, members,
directors, officers or agents are made a party by reason of BioEnergy and/or its employees,
members, managers, officers or agents commit an act or omission that involves gross negligence,
intentional misconduct or a known violation of the law.

     10. Taxes. Client shall be solely responsible for payment of all taxes and charges,
now or hereafter imposed (whether by federal, state, municipal or other public authority), by
reason of this Agreement or its performance, including but not limited to, sales or use taxes, but
excluding any income tax imposed upon the net profits of BioEnergy.

     11. Copyright License. BioEnergy will author written and visual equity marketing
materials, Power Point presentations, advertisements, a “banker’s book”, training materials and
other literary works and audio visual works (the “Proprietary Information”) in fulfillment of its
duties hereunder. BioEnergy hereby grants Client a non-exclusive right and license to use the
Proprietary Information for its business and operations only. Client shall not have or acquire any
proprietary or other right whatsoever in the Proprietary Information, except as provided herein,
all of which rights belong exclusively to BioEnergy. Client shall not sell, assign, gift,
sublicense or otherwise transfer to any third party any rights in the Proprietary Information
without the prior written consent of BioEnergy, with the granting of said consent to be in
BioEnergy’s sole discretion.

     12. Successors and Assigns. This Agreement shall be binding upon Client and
BioEnergy, their respective heirs, executors, administrators, successors in interest or assigns,
including without limitation, any partnership, corporation or other entity into which 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 BioEnergy 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

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void, unless such assignment is made to Paul Casper or John T. Porter, or any entity in which
either Paul Casper, John T. Porter or BioEnergy own a majority ownership interest.

     13. Waiver. The waiver by either party of its rights under this Agreement or the
failure of a party to promptly 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.

     14. 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, or such substitute
street addresses as the parties may provide in writing:

	 	 	 	 	 
	 

	 	To BioEnergy:
	 	BioEnergy Capital Consultants, LLC
	 

	 	 	 	Attn: Paul Casper
	 

	 	 	 	44095 212th Street
	 

	 	 	 	Lake Preston, SD 57249
	 
	 	 	 	 
	 

	 	To Client:
	 	Gold Energy, LLC
	 

	 	 	 	1183 6th Street South
	 

	 	 	 	Wahpeton, North Dakota 58075

     15. Applicable Law. This Agreement and all obligations created hereunder or required
to be created hereby shall be governed by and construed and enforced in accordance with the laws of
the State of Minnesota, and the parties hereby consent that the District Court situated in Clay
County, Minnesota, shall be the exclusive jurisdiction and venue of any disputes relating to this
Agreement.

     16. Defaults. In the event of the failure of either of the parties to comply with any
of the terms and provisions of this Agreement, or in the event either party has violated any of the
warranties and representations made herein by that party, then such party shall be deemed to be in
default hereunder and the other party shall be given written notice of such noncompliance and shall
give the defaulting party seven (7) days from the date of such notice within which to correct such
noncompliance. If such default has not been corrected, or an arrangement satisfactory to the
complaining party has not been made by the end of the notice period, then the complaining party may
take whatever action is necessary, and exercise all remedies available in order to protect the
complaining party’s rights under the terms and conditions of this Agreement. The parties agree
that the remedies set forth in this section 16 shall not be exclusive, but they shall be cumulative
with all other rights and remedies available, at law or in equity, to the parties. In the event of
any dispute between the parties resulting from this Agreement or any provisions hereunder, the
prevailing party in any such dispute shall be entitled to recover reasonable attorneys’ fees and
such other costs incurred therewith.

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     17. Severability. In the event that any term, condition, or provision of this
Agreement is held to be invalid by any court of competent jurisdiction, such holding or holdings
shall not invalidate or make unenforceable any other term, condition or provision of this
Agreement. The remaining terms, conditions and provisions shall be fully severable, and shall be
construed and enforced as if such invalid term, condition or provision had never been inserted in
this Agreement initially.

     18. Entire Agreement. This Agreement constitutes the entire Agreement between the
parties hereto with regard to the subject matter hereof, and there are no agreements,
understandings, 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 enforced.

     19. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be considered an original document, but all of which shall be considered one and the
same agreement and shall become binding when one or more counterparts have been signed by each of
the parties.

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

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BIOENERGY CAPITAL	 	 	 	GOLD ENERGY, LLC	 	 
	 	 	CONSULTANTS, LLC	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	By
	 	  /s/ Paul Casper
	 	 	 	By	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 Paul Casper, Member	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	and	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By
	 	  /s/ John T. Porter	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	  John T. Porter, Member	 	 	 	 	 	 	 	 

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