Exhibit 10.11
[U.S. Energy Services, Inc. Letterhead]
February 6, 2001
Xxxxx Xxxxxx
Great Plains Ethanol, LLC
P.O. Box 217
Lennox, SD 57039
Dear Mr. Xxxxxx:
The purpose of this letter is to set forth the understanding and agreement
between U.S. Energy Services, Inc. (U.S. Energy) and Great Plains Ethanol, LLC
(Great Plains Ethanol).
TERM: The initial term of this Agreement shall be from February 1, 2001 through
January 31, 2002, and 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),
intrastate pipeline or an interstate pipeline for facility sites under
consideration. U.S. Energy will provide GREAT PLAINS ETHANOL with
preliminary engineering cost estimates, route drawings, and project
timeline related to constructing pipeline facilities directly
connecting GREAT PLAINS ETHANOL with an intrastate or interstate
pipeline.
In the event that the direct connect pipeline option is selected, U.S.
Energy will submit the tap request to the pipeline or utility.
Engineering and construction management services related to
constructing to NNG can 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 with NNG will provide the lowest burnertip cost for GREAT
PLAINS ETHANOL. 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. Analysis of the costs
and benefits will require U.S. Energy to negotiate as GREAT PLAINS
ETHANOL'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 GREAT PLAINS ETHANOL. This will include acquiring
multiple supply quotes and reporting to GREAT PLAINS ETHANOL the
various supply index and fixed prices. U.S. Energy will not take title
to GREAT PLAINS ETHANOL gas supplies, but will communicate supply
prices and potential buying strategies.
4. Negotiate directly with pipelines, utilities, other shippers, and
suppliers to provide transportation, balancing, and supply agreements
that meet GREAT PLAINS ETHANOL's performance criteria at the lowest
possible cost.
GREAT PLAINS ETHANOL
February 6, 2001
Page 2
5. Provide daily nominations to the pipeline, utility, other applicable
shippers, and suppliers for GREAT PLAINS ETHANOL. This will include
daily written confirmations to GREAT PLAINS ETHANOL of all nominations
and actual daily usage. U.S. Energy will utilize customer or utility
supplied telemetering to obtain actual usage on a real time basis.
6. Provide advisory services to GREAT PLAINS ETHANOL 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 GREAT
PLAINS ETHANOL.
7. U.S. Energy will also evaluate other options that may reduce energy
costs. Such options include, but are not limited to joint projects with
other energy users in the area.
8. Provide a monthly projection of energy (natural gas and electricity)
and annual summaries.
9. 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 1-9 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. GREAT PLAINS ETHANOL 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: GREAT PLAINS ETHANOL 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 GREAT
PLAINS ETHANOL. GREAT PLAINS ETHANOL shall pay U.S. Energy within ten (10) days
of receipt of invoice.
GREAT PLAINS ETHANOL
February 6, 2001
Page 3
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 GREAT PLAINS
ETHANOL in any manner, unless specifically directed by GREAT PLAINS ETHANOL.
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 GREAT
PLAINS ETHANOL. All such information shall be and remain the property of GREAT
PLAINS 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 GREAT PLAINS ETHANOL' 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 GREAT PLAINS
ETHANOL, or enable U.S. Energy to benefit from its relationship with GREAT
PLAINS ETHANOL, except as provided in this Agreement or approved by GREAT PLAINS
ETHANOL.
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:
GREAT PLAINS ETHANOL: Great Plains Ethanol
C/O Xxxxx Xxxxxx
P.O. Box 217
Lennox, SD 57039
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 X. 000xx Xx, Xxx. D
Omaha, NE 68137
Attn: Xxxx Xxxx
GREAT PLAINS ETHANOL
February 6, 2001
Page 4
ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without
the written consent of U.S. Energy and GREAT PLAINS ETHANOL.
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 GREAT PLAINS ETHANOL's understanding of the
Agreement, please so indicate in the spaces below and return one copy to U.S.
Energy, Attention: Xxxx Xxxx.
Sincerely,
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
U.S. ENERGY SERVICES, INC.
BY: /s/ X. X. XXXXX
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TITLE: PRESIDENT
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ACCEPTED AND DATED TO THIS
DAY OF 2-16, 2001.
GREAT PLAINS ETHANOL
BY: /s/ XXXXXX XXXXX
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TITLE: PRES.
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