DISTILLER’S GRAINS MARKETING AGREEMENT
THIS DISTILLER’S GRAINS
MARKETING AGREEMENT (the “Agreement”), made and entered
into this 3rd day of November, 2006, by and among One Earth Energy,
LLC, an Illinois limited liability company (“One Earth
Energy”), and United Bio Energy Ingredients, LLC, a Kansas
limited liability company (“UBE”).
WITNESSETH:
WHEREAS,
One Earth Energy desires to sell and UBE desires to buy all the
distiller’s grains (the “Distiller’s
Grains”) produced at One Earth Energy’s ethanol plant
located at Gibson City, Illinois (the “Plant”);
WHEREAS, the parties desire to
purchase and sell such assets, and receive and provide such
services, in accordance with the fees, price formula, payment,
delivery and other terms set forth in this Agreement.
NOW, THEREFORE, in consideration of
the foregoing premises and the mutual covenants and conditions
herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by
both parties, it is hereby agreed:
1. COMMITMENT AND TERM .
Subject to the terms of this Agreement, One Earth Energy hereby
agrees to sell, and UBE hereby agrees to purchase, all
Distiller’s Grains produced at the Plant. The initial term of
this Agreement shall be for thirty-six (36) months, commencing
on the date that the Plant begins operations to produce ethanol.
The parties shall execute a memorandum setting forth the actual
date of commencement of the term. This Agreement shall be
automatically renewed for successive one (1) year terms
thereafter unless either party gives written notice to the other
party of its election not to renew, not later than ninety
(90) days prior to the expiration of the initial term or the
then current renewal term, as the case may be.
2. PRICE AND PAYMENT
.
A.
PRICE . UBE will provide Comprehensive Coproducts Marketing
Services to One Earth Energy which shall include an onsite
merchandiser at the Plant. For the purposes of this Agreement, the
term “F.O.B. Facility Price” shall mean the actual net
sales price that UBE invoices buyers of Distiller’s Grains.
Fees begin with Plant startup and include all logistical shipment
coordination, administration of sales contracts and assumption of
accounts receivable and credit risk. Rail car lease costs will be
at an additional cost to One Earth Energy dependent upon
utilization of rail for shipments of coproducts. Freight costs and
insurance will be at an additional cost to One Earth Energy.
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UBE shall pay One Earth Energy for
all Distiller’s Grains removed by UBE from the Plant as
follows: for DDGS, a price equal to Ninety Seven Percent (97.0%) of
the F.O.B. Facility Price charged by UBE to its customers; for
WDGS, a price equal to Ninety Six Percent (96.0%) of the F.O.B.
Facility Price charged by UBE to its customers; for WMGS, a price
equal to Ninety Five Percent (95.0%) of the F.O.B. Facility Price
charged by UBE to its customers.
The percentages described above are
subject to a minimum and maximum per ton, as per the following
chart example:
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Commission |
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Commission |
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Sales Price |
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Min Cap |
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Sales Price |
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Max Cap |
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Coproduct |
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Per Ton |
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Per Ton |
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Per Ton |
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Per Ton |
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DDGS
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$ |
41.75 |
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1.25 |
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$ |
100.00 |
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3.00 |
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WDGS
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$ |
18.75 |
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0.75 |
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$ |
45.00 |
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1.80 |
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WMGS
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$ |
20.00 |
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1.00 |
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$ |
46.00 |
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2.30 |
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Using the example above, assuming
1,000 tons of DDGS are sold, if the Sales Price Per Ton falls below
$41.75 to $40.00, UBE’s commission will be capped at the 1.25
per ton minimum and UBE’s commission will remain the same as
if the sales price were $41.75, i.e., $1,250.00. Assuming 1,000
tons of DDGS are sold at the Sales Price Per Ton of $125.00,
UBE’s commission will be capped at the 3.00 per ton maximum
Sales Price Per Ton of $100.00, or $3,000.00.
B.
PAYMENT . On a daily basis, Weekends and Holidays excluded,
One Earth Energy shall provide UBE with certified weight
certificates for the previous day’s shipments of
Distiller’s Grains. UBE shall pay One Earth Energy the F.O.B.
Plant Price defined in paragraph 2.A. above, for all properly
documented shipments. Payment for such shipments shall occur so
that payment for all shipments in each one week shipment period
(Sunday through Saturday) is received on or before the second
following Friday of such one week shipment period. UBE agrees to
maintain accurate sales records and to provide such records to One
Earth Energy upon request. One Earth Energy shall have the right to
audit UBE’s sales invoices at any time during normal business
hours at the corporate office of UBE.
C.
SALES CONFIRMATION . Each week’s Distiller’s
Grains sales shall be evidenced by a separate sales confirmation
substantially in the form of Exhibit A attached hereto
(“Sales Confirmation”). Each Sales Confirmation shall
at a minimum specify the quantity and quality of the
Distiller’s Grains; the delivery date; the purchase price;
any applicable discount from the purchase price; and such other
information as the Parties may agree to include. Upon receipt of
the Sales Confirmation, the Plant must execute and return the Sales
Confirmation within three (3) business day(s) to UBE. If the Plant
fails to respond by execution and return of the Sales Confirmation
to UBE within three (3) business day(s) of its receipt of the
same, said non-response shall be deemed to be an acceptance of the
Sales Confirmation.
D.
BEST EFFORTS . UBE agrees to use its best efforts to achieve
the highest resale price of Distiller’s Grains available
under prevailing market conditions as judged by UBE.
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One
Earth Energy’s sole and exclusive remedy for breach of
UBE’s obligations hereunder shall be to terminate this
Agreement.
E.
COLLECTION . UBE shall be responsible for all customer
billing and account servicing, including, but not limited to, the
collection of amounts owed UBE by its customers, shall bear all
costs associated with such billing and collection activities, and
shall assume all losses due to failure of its customers to pay
their account.
F.
FUTURE SALES BY UBE . UBE shall not contract for the sale of
Distiller’s Grains, to its customers, more than one hundred
eighty (180) days in advance, unless One Earth Energy
explicitly approves the price and terms of any such contract and
provides notice of such approval to UBE. UBE will advise One Earth
Energy weekly and update One Earth Energy monthly on all
outstanding contractual obligations, and the terms thereof.
3. FEES AND EXPENSES .
Unless otherwise specifically provided for herein, and to the
extent not already included in the price of the Distiller’s
Grains, One Earth Energy shall be responsible for any and all fees
and reasonable and normal expenses, including but not limited to
fees assessed by any State or other regulatory agency, incurred or
assessed on any Distiller’s Grains, whether for licensing,
dues, branding, packaging, inspecting, or otherwise. One Earth
Energy shall, as a result of its responsibility for such expenses,
retain all rights to any name, branding, and packaging of the
Distiller’s Grains upon termination of this Agreement.
4. DELIVERY AND
TITLE.
A.
PLACE . The place of delivery for all Distiller’s
Grains purchased by UBE pursuant to this Agreement shall be F.O.B.
Plant. UBE and its agents shall be given access to the Plant in a
manner and at all times reasonably necessary and convenient for UBE
and One Earth Energy to make delivery as provided herein. UBE shall
schedule the loading and shipping of all Distiller’s Grains
purchased hereunder. All labor and equipment necessary to load or
unload trucks and rail cars shall be supplied by One Earth Energy
without charge to UBE. The parties agree to handle the
Distiller’s Grains in a good and workmanlike manner in
accordance with the other’s reasonable requirements and in
accordance with normal industry practice. One Earth Energy shall
maintain the truck loading and rail car loading facilities in safe
operating condition in accordance with normal industry
standards.
B.
STORAGE . One Earth Energy shall provide storage space for
not less than ten (10) full days production of Distiller’s
Grains, based on normal operating capacity.
C.
REMOVAL . UBE warrants and agrees to use its best efforts to
remove Distiller’s Grains before the aforementioned storage
limits are exceeded or, if later, three (3) days after notice
from One Earth Energy that the Plant’s operations are
adversely affected by such storage. One Earth Energy shall be
responsible at all times for the quantity, quality and condition of
any Distiller’s Grains in storage at the Plant.
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D.
LOADING AND UNLOADING SCHEDULE . UBE shall give to One Earth
Energy a schedule of quantities of Distiller’s Grains to be
removed by truck or rail with sufficient advance notice reasonably
to allow One Earth Energy to provide the required services. One
Earth Energy shall provide the labor, equipment and facilities
necessary to meet UBE’s loading schedule and One Earth Energy
shall be responsible for UBE’s actual costs or damages
resulting from One Earth Energy’s failure to do so. UBE shall
order and supply trucks or railcars as scheduled for truck or rail
shipments. All freight charges shall be the responsibility of UBE
and shall be billed directly to UBE.
E.
PRODUCTION SCHEDULE .
1. UBE
shall provide loading orders as necessary to permit One Earth
Energy to maintain its usual production schedule, provided,
however, that UBE shall not be responsible for failure to schedule
removal of Distiller’s Grains unless One Earth Energy shall
have provided to UBE production schedules as follows: At least five
(5) days prior to the beginning of each calendar month during
the term hereof, One Earth Energy shall provide to UBE a tentative
schedule for production in the next calendar month. On Wednesday of
each week during the term of this Agreement, One Earth Energy shall
provide to UBE a schedule for actual production for the following
production week (Monday through Sunday). One Earth Energy shall
inform UBE daily of inventory and production status by 8:30 a.m.
CDT.
2.
NOTICE . For purposes of this paragraph, notification will
be sufficient if made by facsimile as follows:
If to UBE for
Distiller’s Grain, to the attention of Randy Ives, Facsimile
number 316-616-3786, Email address: randy.ives@usbioenergy.net;
and
If to One Earth
Energy, to the attention of
, Facsimile number
, Email address:
; or
To such other
representatives of UBE and One Earth Energy as they may designate
to the other in writing.
F.
TITLE . Title and risk of loss shall pass to UBE at the
point in time when loading the Distiller’s Grains into trucks
or rail cars has been completed and delivery to UBE of the bill of
lading for each such shipment.
5. QUANTITY AND WEIGHTS
.
A.
PRODUCTION AMOUNT . It is understood that total production
amount of Distiller’s Grains shall be determined by One Earth
Energy’s production schedule and that no
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warranty
or representation has been made by One Earth Energy as to the exact
quantities or timing of Distiller’s Grains to be produced
pursuant to this Agreement.
B.
ESTIMATE . The estimated production of Distiller’s
Grains at the Plant by One Earth Energy, to be sold to UBE, is
approximately twenty six thousand (26,000) tons of
Distiller’s Grains per month on a dry matter basis, and One
Earth Energy shall use its best efforts to produce such amount of
Distiller’s Grains.
C.
METERS AND SCALES . The quantity of Distiller’s Grains
delivered to UBE from the Plant shall be established by meter or
weight certificates, obtained from meters or scales which are
certified as of the time of loading and which comply with all
applicable laws, rules and regulations. The outbound meter or
weight certificates shall be determinative of the quantity of the
Distiller’s Grains for which UBE is obligated to pay pursuant
to paragraph 2 above.
6. QUALITY .
A.
STANDARDS . One Earth Energy understands that UBE intends to
sell the Distiller’s Grains purchased from One Earth Energy
as a primary animal feed ingredient and that the same are subject
to minimum quality standards for such use and each shall be of
merchantable quality. One Earth Energy warrants that the
Distiller’s Grains produced by the Plant and delivered to UBE
shall be acceptable under current industry standards in the feed
trade industry and that at the time of delivery, the
Distiller’s Grains shall conform to the minimum quality
standards outlined in Exhibit B attached hereto, as may
be amended from time to time.
B.
COMPLIANCE . One Earth Energy represents and warrants that
at the time of loading, the Distiller’s Grains will not be
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act and that each shipment may lawfully be
introduced into interstate commerce under said Act. Payment of
invoices does not waive UBE’s rights if the Distiller’s
Grains do not comply with terms or specifications of this
Agreement. Unless otherwise agreed between the parties to this
Agreement, and in addition to other remedies permitted by law, UBE
may, without obligation to pay, reject either before or after
delivery, any of the Distiller’s Grains, which, when
inspected or used are found by UBE to fail in a material way to
conform to this Agreement. Should any of the Distiller’s
Grains be seized or condemned by any federal or state department or
agency for any reason, except noncompliance by UBE with applicable
federal or state requirements, such seizure or condemnation shall
operate as a rejection by UBE of the Distiller’s Grains
seized or condemned and UBE shall not be obligated to offer any
defense in connection with the seizure or condemnation. However,
UBE agrees to cooperate with One Earth Energy in connection with
the defense of any quality or other product claims, or any claims
involving governmental seizure or condemnation. When rejection
occurs before or after delivery, at its option, UBE may:
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(1) Dispose
of the rejected Distiller’s Grains after first offering One
Earth Energy a reasonable opportunity of examining and taking
possession thereof, if the condition of the Distiller’s
Grains reasonably appears to UBE to permit such delay in making
disposition;
(2) Dispose
of the rejected Distiller’s Grains in any manner directed by
One Earth Energy which UBE can accomplish without violation of
applicable laws, rules, regulations or property rights;
(3) If
any of the Distiller’s Grains are seized or condemned by any
federal or state department or agency or if UBE has no available
means of disposal of rejected Distiller’s Grains and One
Earth Energy fails to direct UBE to dispose of the same as provided
herein, UBE’s obligations with respect to said seized,
condemned or rejected Distiller’s Grains shall be deemed
fulfilled. Title and risk of loss shall pass to One Earth Energy
promptly upon such seizure or condemnation or rejection by
UBE.
(4) One
Earth Energy shall reimburse UBE for all costs reasonab
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