Exhibit 10(i).12
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June 15, 2006
Xxxx Xxxxxxxx
NEDAK, LLC
PO Box
00000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Re: Negotiated Rate Agreement for Distribution Transportation Service
Dear Mr. Xxxxxxxx:
Xxxxxx Xxxxxx Inc., Retail Distribution Division, ("KMI") has reviewed your
verbal request for natural gas distribution transportation service to be
provided at the date of startup of the new Ethanol Plant, to be located in or
near Atkinson, Nebraska. Pursuant to our conversation, KMI shall provide NEDAK
LLC ("Customer") with natural gas distribution transportation service under the
following terms:
Service Type: Distribution Transportation Service. KMI will receive gas at
the Receipt Point and deliver gas to the Delivery Point as
set forth in the Transportation Service Agreement on
Transporter's Nebraska Gas Distribution System entered into
between KMI and Customer ("Distribution Transportation
Agreement"). A Facility Agreement ("Facility Agreement")
will be entered into between KMI and Customer providing for
the payment to KMI by Customer of the required amount of the
Facility Payment for the cost of the facilities to be
constructed by KMI to serve Customer's Ethanol Plant near
Atkinson, Nebraska.
Minimum Quantity: A minimum daily delivery quantity of 5000 therms per day
during operation of the Ethanol Plant.
Maximum Quantity: A maximum daily delivery quantity (MDDQ) of 37,200 therms
per day, at reasonably uniform rates of flow, during the
Primary Term of this Agreement.
Primary Term: Period commencing as of the first day of the month in which
the initial delivery of gas is made by KMI to the Customer
Ethanol Plant near Atkinson, Nebraska and ending ten (10)
years thereafter. Notwithstanding anything in this Agreement
to the contrary, this
Agreement shall automatically terminate in the event: either
(a) Customer fails to pay KMI the required amount of the
Facility Payment as required by the Facility Agreement or
(b) the KMI Facilities to be constructed by KMI in
accordance with the Facility Agreement are completed, but
initial delivery of gas to Customer's Ethanol Plant has not
occurred on or before December 31, 2007. Further, KMI may
terminate this Agreement at any time upon sixty (60) days
written notice to Customer if Customer permanently
discontinues operation of its Ethanol Plant and related
facilities. Additionally, this Agreement may be terminated
by KMI or Customer as provided for in the Facility Agreement
or as otherwise provided for herein.
Transportation
Charge Per Therm: During the Primary Term the Transportation Charge per Therm
will be a fixed amount per therm for the first five (5)
years of the Primary Term equal to $0.014 per therm
delivered on behalf of Customer. Effective the first day of
the sixth year of the Primary Term and then effective the
first day of each of the seventh, eight, ninth and tenth
years of the Primary Term (and to the extent this Agreement
then continues on a year-to-year basis after the end of the
Primary Term, then effective the first day of each such year
beyond the Primary Term) the Transportation Charge per Therm
will automatically escalate annually for each of years six
through ten of the Primary Term (and for each year beyond
the end of the Primary Term) beginning on the first (1st)
day of each of those years based on the GDP Implicit Price
Deflator contained in the most recent Gross Domestic
Product, 4th quarter (final) report, published by the U.S.
Department of Commerce, Bureau of Economic analysis or, if
discontinued, a similar index as mutually agreed to by the
Parties.
Facility Payment: A payment in the required amount to be made by Customer to
KMI on or before close of business for KMI on October 1,
2006 ("Facility Payment") to reimburse KMI for the cost of
the KMI Facilities as set forth in the Facility Agreement.
As of the Effective date of the Facility Agreement, the
Facility Payment is $918,526, which amount will remain fixed
until close of business for KMI on August 1, 2006.
Thereafter KMI reserves the right to increase the amount of
the Facility Payment to adjust for KMI's anticipated
increased cost of the KMI Facilities. The payment by
Customer to KMI of the required amount of the Facility
Payment for the cost of the facilities to be constructed by
KMI to serve Customer's Ethanol Plant near Atkinson,
Nebraska is a condition precedent to KMI's obligations under
this Negotiated Rate Agreement.
Limitations/Other: The Transportation Charge per Therm set forth above is
exclusive of the Monthly Administrative Fee, Monthly
Customer Charge or Additional Charges assessed Customer
pursuant to the Distribution Transportation Agreement, and
also is exclusive of the Facility Payment required under the
Facility Agreement.
The Transportation Charge per Therm quoted above is only for
Distribution Transportation Service to the specific point(s)
listed above and only for Customer's usage at the proposed
Ethanol Plant near Atkinson, Nebraska.
Any Agent utilizing the Distribution Transportation Service,
as defined herein, to make deliveries at any point other
than the specified Delivery Point or to make deliveries to
any point for purposes other than Customer's usage will
incur the maximum charges established in KMI's Nebraska
tariff for Commercial Service, Rate Area 10.
If Customer's Ethanol Plant startup date has not occurred by
December 31, 2007, the terms of this Negotiated Rate
Agreement with respect to the rate per therm for the
distribution transportation service is void. Customer shall
remain liable for the payment to KMI of the Facility Payment
under the Facility Agreement.
A material consideration for KMI entering into this
Negotiated Rate Agreement and Distribution Transportation
Agreement and providing distribution transportation service
to Customer at the Ethanol Plant is the payment by Customer
to KMI of the Facility Payment in accordance with the
Facility Agreement.
This negotiated rate is being offered in response to unique
competitive and bypass circumstances related to the proposed
Customer Ethanol Plant facilities. Such discounted
Distribution Transportation Service is only offered with the
explicit agreement that Customer will not bypass the KMI
distribution system during the Primary Term or any extended
year-to-year term resulting from this Agreement.
This Negotiated Rate Agreement and Distribution
Transportation Agreement may not be assigned to any other
party without the express written consent of KMI, which may
not be unreasonably withheld by KMI, except that Customer
may assign this Agreement and the Distribution
Transportation Agreement to its lenders or their agent as
collateral for indebtedness to construct Customer's Ethanol
Plant and the lenders or their agent can further assign them
to any successor operator of the plant in a foreclosure or
agreement in lieu of foreclosure. Any modification to the
terms of this Negotiated Rate Agreement or Distribution
Transportation Agreement must be agreed to in writing by all
parties to this Agreement. This Negotiated Rate Agreement
and Distribution Transportation Agreement are subject to any
applicable laws and regulations and approvals thereunder.
If these terms are acceptable to you, please sign below and return by mail
to:
Xx. Xxxxx Xxxxx
Xxxxxx Xxxxxx, Inc.
PO Box 551
Albion, Nebraska 68620
In addition to the return of the original signed document, you may also fax
this document, once signed, to (000) 000-0000, attention, Xx. Xxxxx Xxxxx.
Whether mailed or faxed, this document must be received by the close of business
on July 1, 2006 or the above offered discount shall expire and will be
considered null and void.
Thank you for your request and we appreciate your business. Should you have
any questions, please feel free to call me at (000) 000-0000 or Xxxxx Xxxxx at
000-000-0000 xxx 0. We look forward to working with you in the future.
Sincerely,
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Director of Transportation Services
Xxxxxx Xxxxxx, Inc.
Accepted this 15th day of June, 2006
By: /s/ Xxxx Xxxxxxxx
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Title: Board Member
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Company: NEDAK, LLC
