Document:

Exhibit 10.8

 

	
   

  	
   

  	
  1000 Superior Blvd., Suite 201

  	
   

  	
  914 North Golden Prairie

  
	
   

  	
  U.S. ENERGY

  	
   

  	
  Wayzata, MN 55394-1873

  	
   

  	
  Burton,
  Kansas

  
	
   

  	
  SERVICES, INC.

  	
   

  	
  Office 952 745-4300

  	
   

  	
  Office 316 835-2399

  
	
   

  	
   

  	
  Fax   952
  473-1224

  	
   

  	
  Fax      315 535-8507

  

 

March 9,
2004

 

Bill
Pracht, President

East
Kansas Agri-Energy, LLC

210
1/2 East 4

Garnett,
KS 66032

 

RE: Agency Authorization Agreement

 

Dear
Mr. Pracht:

 

East
Kansas Agri-Energy, LLC (EKAE) agrees to engage the services of U.S. Energy
Services, Inc. (U.S. Energy) to manage EKAE’s natural gas and
electric supply for its facilities.  The
EKAE facilities are in Garnett Kansas.

 

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

 

1.     APPOINTMENT OF U.S. ENERGY
AS EKAE AGENT::  EKAE agrees to appoint U.S.  Energy as its agent, for purposes of managing
EKAE’s natural gas and electric supply and usage for its facilities referred to
above. U.S. Energy accepts its appointment as EKAE’s agent for those
purposes.

 

2.     LIMITATIONS ON THE AUTHORITY
OF U.S. ENERGY;  U.S.
Energy has the authority to deal with third parties on behalf of EKAE in
connection with natural gas and electric matters in its capacity as EKAE’s
agent. Execution of contracts on behalf of EKAE is limited to those specified
in paragraph 6.

 

3.     COMMUNICATIONS AND INFORMATION
SHARING:  U.S. Energy shall
keep EKAE fully informed on a regular basis with regard to U.S. Energy’s
activities, as the manager of EKAE’s natural gas and electric supply and usage,
At the request of EKAE, U.S. Energy shall immediately provide EKAE with any and
all information related to U.S. Energy’s activities as the manager of EKAE’s
natural gas and electric supply and usage.

 

4.     RELEASE OF ENERGY
CONSUMPTION RECORDS AND BILLS:  This
Agency Agreement serves as authorization for the release of EKAE’s energy
consumption records and invoices from utilities to U.S. Energy Services.

 

5.     TERM OF THE AGREEMENT;
TERMINATION:  This
Agreement shall begin upon execution and shall continue month-to-month
thereafter until it is terminated. Either party may terminate this Agreement at
any time and for any reason, without recourse to the other party, by giving a
sixty-day (60) prior written notice to the other party.

 

 

	
  EKAE
  Agency Agreement

  	
   

  	
  EKAE’s Initials  /s/

  
	
   

  	
   

  	
  U.S. Energy’s Initials  /s/

  

 

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

 

a)             Solicit bids for, negotiate, execute, and
administer NAESB and ISDA natural gas contracts and electric supply
contracts.  Administration of said
contracts shall include:

•        Placing daily
and monthly nominations and transactions

•        Providing
timely notices

•        Review past and
future invoices

 

b)            Solicit bids for, negotiate, execute, and
administer Commodity Account Agreements for natural gas and electricity.
Administration of said contracts shall include:

•        Placing and executing orders for New York
Mercantile Exchange traded products.

•        Providing timely notices

•        Review past and future bills

 

c)             Negotiate, execute and
administer interstate natural gas and electric 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, approving
for payment, and making payment

•        Providing timely notices

 

d)            Negotiate, execute, and administer utility
natural gas and electric distribution contracts.  Administration of said contracts shall include:

•        Providing daily
and monthly nominations

•        Receiving
curtailment notifications

•        Managing daily
and monthly imbalances

•        Reviewing invoices for accuracy, approving
for payment, and making payment

•        Negotiating and resolving all discrepancies
including imbalances

•        Providing timely notices

 

e)      Perform other related services requested by EKAE

 

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

 

2

 

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 EKAE. All such information
shall be and remain the property of EKAE 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 EKAE request.

 

b) Protection of
Information About EKAE.  U.S.
Energy agrees to inform its employees who work with EKAE of the requirements of
this Section 7 U.S. Energy also agrees to protect information about EKAE
with the same degree of diligence that U.S. Energy uses to protect its own
confidential information.

 

 

	
   

  	
  Sincerely,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. ENERGY SERVICES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Todd D.
  Overgard

  	
  (signature)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  Todd D. Overgard

  	
  (print)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  Chief Operating
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Accepted and agreed to this 15th day

  	
   

  
	
   

  	
  of March, 2004.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EAST KANSAS AGRI-ENERGY, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ William R. Pracht

  	
  (signature)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  William R. Pracht

  	
  (print)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  Chairman

  	
   

  
							

 

3Exhibit
10.9

 

OPTION
TO PURCHASE

 

Agreement made this 15th day of March, 2004, by and between Clarence L.
White and Berniece E. White, husband and wife, hereinafter “Owner” and East
Kansas Agri-Energy, L.L.C., a Kansas Limited Liability Company, hereinafter
“Purchaser”.

 

In consideration of the sum of $5,000.00 cash in hand paid from
Purchaser to Owner, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

 

(1) Owner grants, bargains and conveys to Purchaser the option to
purchase a tract consisting of approximately ten (10) acres located in the
following described tract of real property situated in Anderson County, Kansas,
to-wit:

 

The Southwest Quarter (SW/4) of the Southeast Quarter (SE/4) of
Section Thirty (30), Township Twenty (20) South, Range Twenty (20) East of
the Sixth Principal Meridian.

 

(2) The purchase price shall be $9,000.00 per acre, based upon the size
of the tract as to be determined by survey, with Purchaser to receive credit
against the purchase price for the amount paid for this option as well as the
option dated March 14, 2002, and the one dated March 14, 2003.

 

(3) The term of this option shall run from March 15, 2004, to
July 1, 2004.

 

(4) Purchaser shall exercise this option to purchase by delivering a
written notice of intent to exercise the option to the Owner at his residence
in Garnett, Kansas, no later than five o’clock p.m. (5:00 p.m.) on July 1,
2004.  Owner and Purchaser shall
thereafter enter into a binding contract for the sale and purchase of the tract
of real estate describes herein, which contract shall provide for a closing
date and other essential terms to the contract.

 

(5)           The
contract for the sale of this real estate shall contain the following
provisions:

 

(A)        The
cost of surveying the tract to be purchased together with all title insurance
shall be paid by Purchaser.

 

(B)         The
purpose of this option to purchase is to provide Purchaser with a tract of
sufficient size to allow the placement of a railroad spur over and across the
tract to provide access from Purchaser’s anticipated Ethanol Plant to the
existing railroad track located in the city of Garnett, Kansas.  It is anticipated that this will require
approximately ten (10) acres of ground from Owner, however, after Purchaser
determines the amount of ground required, it will through its survey cause the
boundaries of the tract to be squared off, such that the Western boundary of
Owner’s remaining property will be
a straight line running due North and South.

 

(C)         Purchaser
will be responsible for replacing the Owner’s West boundary fence at
Purchaser’s expense with a fence approximately equal to the new fence
constructed by City of Garnett Sewer Project, which is also located on property
formerly owned by Owner.

 

(D)         Purchaser
will also pay to replace the current loafing barn and concrete pad, together
with a potable water hydrant and a dusk to dawn pole light. The barn will be
moved to the East of its present site and will be provided with water and
electric utilities.

 

(6) This Option to Purchase cannot be assigned by Purchaser without the
written consent of Owner.

 

 

(7) Time is of the essence in the performance of this agreement.

 

(8) This agreement shall be binding upon the heirs, successors and
assigns of Owner and Purchaser.

 

IN WITNESS WHEREOF, the parties hereto have set their hands on the day
and date above written.

 

	
  OWNER:

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
  EAST KANSAS AGRI-ENERGY, LLC

  
	
   

  	
   

  
	
  /s/ Clarence T. White

  	
   

  	
  By: 

  	
  /s/ William R. Pracht

  	
   

  
	
  Clarence T. White

  	
  William R. Pracht, Chairperson

  
	
   

  	
   

  
	
  /s/ Berniece F. White

  	
   

  	
   

  
	
  Berniece F. White

  	
   

  
						

 

	
  STATE OF KANSAS

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF ANDERSON

  	
  )

  

 

The foregoing instrument was acknowledged before me this 19th
day of March, 2004, by Clarence L. White and Berniece F. White, husband and
wife.

 

	
  Term Expires:

  	
  /s/ Carol Foltz

  	
   

  
	
  10-31-2007

  	
  Notary Public

  	
   

  
				

 

 

	
  STATE OF KANSAS

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF ANDERSON

  	
  )

  

 

The foregoing instrument was acknowledged before me this 2nd day of
March, 2004, by William R. Pracht, Chairperson of East Kansas Agri-Energy,
L.L.C., a Kansas Limited Liability Company, on behalf of the limited liability
company.

 

	
  Term Expires:

  	
  /s/ Carol Foltz

  	
   

  
	
  ###-##-####

  	
  Notary Public

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