Exhibit 10.11
[U.S. ENERGY SERVICES, INC. LETTERHEAD]
April 1, 1999
Board of Directors
Lake Area Corn Processors
C/O Broin & Associates
00000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Dear Board of Directors:
The purpose of this letter is to set forth the understanding and agreement
between U.S. Energy Services, Inc. (U.S. Energy) and Lake Area Corn Processors
(LACP).
TERM: The initial term of this Agreement shall be from April 1, 1999 through
March 31, 2000, cad thereafter for successive one year terms unless and until
terminated by either party with thirty (30) days notice.
U.S. ENERGY SHALL:
1. Provide a detailed economic comparison of receiving natural gas
transportation service from a Local Distribution Company (LDC), or
directly connecting with Northern Natural Gas (NNG). U.S. Energy will
provide LACP with engineering cost estimates, route drawings, and a
project timeline related to constructing pipeline facilities directly
connecting LACP with NNG.
In the event that the direct connect pipeline option is selected, U.S.
Energy will submit the tap request Engineering and construction
management services related to constructing to NNG can be provided by
U.S. Energy Services on a fee basis.
2. Determine whether firm, interruptible, or a blend of transportation
entitlement with NNG will provide the lowest burnertip cost for LACP.
Factors that will be considered include NNG credits for the new
interconnect, cost of an alternate fuel system, and availability of
specific receipt point capacity. Analysis of the costs and benefits
will require U.S. Energy to negotiate as LACP's agent with NNG and
other potential third party shippers.
3. Provide natural gas supply information to minimize the cost of natural
gas purchased by LACP. This will include acquiring multiple supply
quotes and reporting to LACP the various supply index and fixed prices.
U.S. Energy will not take title to LACP gas supplies, but will
communicate supply prices and potential buying strategies.
4. Negotiate directly with NNG, other shippers, and suppliers to provide
transportation, balancing, and supply agreements that meet LACP's
performance criteria at the lowest possible cost.
5. Provide daily nominations to NNG, other applicable shippers, and
suppliers for LACP. This will include daily written confirmations to
LACP of all nominations and actual daily usage. U.S. Energy will
utilize telemetering to obtain actual usage on a real time basis.
6. Provide advisory services to LACP regarding electric pricing and
service agreements. Such services will include, but are not limited to,
the following:
a. Evaluation of regulatory and legislative precedent
regarding electric supplier choice options.
b. Identification of qualified electric suppliers.
c. Evaluation of self-generation options.
d. Development and implementation of an electric
sourcing strategic plan. Such plan may include a
competitive bid process and/or installation of
on-site generation.
e. Negotiation of electric service agreements that meet
the pricing and reliability requirements of LACP.
7. Provide a monthly projection of energy (natural gas and electricity)
and annual summaries.
8. Provide a consolidated monthly invoice that reflects all applicable
costs. U.S. Energy will be responsible for reconciling and paying all
shipper and supplier invoices.
FEES: U.S. Energy's fee for services described in items 1 - 8 during the initial
term of this agreement shall be $1,950 per month, plus pre-approved travel
expenses not to exceed $2,500 during the initial term of this agreement. The
monthly retainer and out of pocket expenses will begin to accrue on the
commencement date of this Agreement. LACP will not be invoiced until financing
for the plant has been secured. 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.
TERMINATION: LACP shall have the unilateral right to terminate this Agreement,
with or without cause, at any time during the initial term and any subsequent
term of the Agreement with thirty (30) days written notification if not
satisfied with U.S. Energy's service.
BILLING AND PAYMENT: On the first of the month, U.S. Energy shall invoice LACP.
LACP shall pay U.S . Energy within ten (10) days of receipt of invoice.
INDEPENDENT CONTRACTOR: U.S. Energy shall be and remain an independent
contractor-consultant during the term of this Agreement, and U.S. Energy, its
directors, officers and employees, shall not act for, or bind LACP in any
manner, unless specifically directed by LACP.
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 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 LACP. All
such information shall be and remain, the property of LACP 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 LACP's request.
CONFLICT OF INTEREST: U.S. Energy will not, directly or indirectly, engage in
any activities which would result in any conflict of interest with LACP, or
enable U.S. Energy to benefit from its relationship with LACP, except as
provided in this Agreement or approved by LACP.
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 following addresses:
LACP: Lake Area Corn Processors
C/o Broin & Associates
00000 Xxxxxxxxxx Xxx
Xxxxx Xxxxx, XX 00000
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.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxx
ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without
the written consent of U. S. Energy and LACP.
APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of
the State of South Dakota.
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.
If the above correctly sets forth LACP's understanding of the Agreement, please
so indicate in the spaces below and return one copy to U.S. Energy, Attention:
Xxx Xxxxxxxxx.
Sincerely,
/s/ Xxxxxx X. Xxxxxxxxx
Xxx Xxxxxxxxx
U.S. ENERGY SERVICES, INC.
By: /s/ Xxxxx
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Title: Vice President
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ACCEPTED AND DATED TO THIS 6
DAY OF APRIL, 1999.
LAKE AREA CORN PROCESSORS
By: /s/ Xxxxx Xxxxx
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Title:
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[U.S. ENERGY SERVICES, INC. LETTERHEAD]
March 9, 2001
Xxxxx Xxxxxxx
Lake Area Corn Processors/Dakota Ethanol
P.O. Box 270
Xxxxxxx, SD 57016
Re: Letter Ageement Regarding Appointment of U.S. Energy Service; Inc. as
Agent
Dear Xx. Xxxxxxx:
Dakota Ethanol-LLC (Dakota Ethanol) desire to engage the services of U.S. Energy
Services, Inc. (U.S. Energy) to manage Dakota Ethanol's natural gas and electric
supply for its plant in South Dakota.
Dakota Ethanol and U.S. Energy agree on the following terms and conditions:
1. APPOINTMENT OF U.S. ENERGY AS DAKOTA ETHANOL's AGENT. Dakota Ethanol
agrees to appoint U.S. Energy as its agent, for purposes of managing Dakota
Ethanol's natural gas and electric supply for its facility referred to above.
U.S. Energy accepts its appointment as Dakota Ethanol'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 Dakota Ethanol, in connection
with natural gas matters, in its capacity as Dakota Ethanol's agent for natural
gas matters.
3. COMMUNICATION AND INFORMATION SHARING. U.S. Energy shall
keep Dakota Ethanol fully informed on a regular basis with regard to U.S.
Energy's activities as the manager of Dakota Ethanol's natural gas supply. At
the request of Dakota Ethanol, U.S. Energy shall immediately provide Dakota
Ethanol with any and all or other information related to U.S. Energy's
activities as the manager of Dakota Ethanol's natural gas supply.
4. TERM OF THE AGREEMENT, TERMINATION. This Agreement shall
begin as of the date this Agreement is executed 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 thirty-(30) day prior written notice to the other party.
5. SERVICES. U.S. Energy shall perform the following services for
Dakota Ethanol.
(a) Solicit bids for, negotiate, and administer natural
gas supply contracts. Administration of said
contracts shall include:
- Execute Natural Gas Supply Contracts
- Placing daily and monthly nominations
- Reviewing invoices for accuracy, approving
for payment, and making payment
- Providing timely notices
(b) Negotiate and administer distribution & 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
transportation contracts
- Reviewing invoices for accuracy, approving
for payment, and making payment.
- Providing timely notices
(c) Perform other related services requested by Dakota
Ethanol.
(d) Solicit bids for, negotiate, and administer electric
supply contracts.
6. 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 Dakota Ethanol. all
such information shall be and remain the property of
Dakota Ethanol 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 Dakota Ethanol's
request.
(b) Protection of Information About Dakota Ethanol. U.S.
Energy agrees to inform its employees who work with
Dakota Ethanol of the requirements of this Section 6.
U.S. Energy also agrees to protect information about
Dakota Ethanol with the same degree of diligence that
U.S. Energy uses to protect its own confidential
information.
If the above meets with your understanding of our agreement, please execute both
of the duplicate originals in the space below, keep one signed original for
Dakota Ethanol's files, and return the other signed original to U.S. Energy.
Sincerely,
U.S. ENERGY SERVICES, INC.
By:
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Title:
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Accepted and agreed to this 23rd day of March, 2001.
DAKOTA ETHANOL-LLC
By: /s/ Xxxx Xxx Xxxx
Title: CHAIRMAN
