DISTILLER’S GRAIN MARKETING
AGREEMENT
THIS
DISTILLER’S GRAIN MARKETING AGREEMENT (the
“Agreement”), is entered into effective as of
December 13 , 2006, by Cardinal Ethanol LLC., an
Indiana Limited Liability Company (“Seller”), and
Commodity Specialist Company, a Delaware Corporation
(“Buyer”).
WHEREAS, Seller
desires to sell and Buyer desires to purchase the Distiller’s
Dried Grains with Solubles (“DDGS”), Wet Distillers
Grains (“WDG”), and solubles (“Solubles”)
(hereinafter DDGS, WDG and Solubles), are referred to collectively
as the “Products”) output of the ethanol production
plant which Seller owns in Winchester, Indiana.
WHEREAS, Seller
and Buyer wish to agree in advance of such sale and purchase to the
price formula, payment, delivery and other terms thereof in
consideration of the mutually promised performance of the
other;
NOW, THEREFORE, in
consideration of the promises 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. BUYER
PERFORMANCE . Buyer agrees to perform the services that it
provides for Seller in a professional and competent
manner.
2. PURCHASE
AND SALE . Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller the entire bulk feed grade DDGS, WDG and
Solubles output from Seller’s plant at Winchester Indiana.
(hereinafter the “Plant”), subject to all terms and
conditions set forth in this Agreement. Buyer shall label all
Product that is sold by Buyer and shall register all labels with
the states where the Products are sold.
3. TRADE
RULES . All purchases and sales made hereunder shall be
governed by the Feed Trade Rules of the National Grain and Feed
Association unless otherwise specified. Said Trade Rules, a copy of
which is appended hereto as Exhibit A, shall, to the extent
applicable, be a part of this Agreement as if fully set forth
herein.
4. TERM
. Unless otherwise terminated as provided by this Agreement, the
term of this Agreement shall be for one year commencing as of
completion and start-up of production of the Plant. Start-up is
anticipated to be summer 2008. Thereafter this agreement shall
remain in effect until terminated by either party at its
unqualified option by providing the other party hereto not less
than 120 days written notice of its election to terminate this
Agreement.
A. The place of delivery
for all the Products sold pursuant to this Agreement shall be FOB
Plant. Buyer and Buyer’s agents shall be given access to
Seller’s Plant in a manner and at all times reasonably
necessary and convenient for Buyer to take delivery as provided
herein. Buyer shall schedule the loading and shipping of all
outbound Products purchased hereunder which is shipped by truck or
rail. All labor and equipment necessary to load trucks or rail cars
shall be supplied by Seller without charge to Buyer. Seller agrees
to handle the Products in a good and workmanlike manner in
accordance with Buyer’s reasonable requirements and in
accordance with normal industry practice. Seller shall maintain the
truck and rail loading facilities in safe operating condition in
accordance with normal industry standards.
B. Seller further
warrants that storage space for not less than five days production
of DDGS shall be reserved for Buyer’s use at the Plant and
shall be continuously available for storage of DDGS purchased by
Buyer hereunder at no charge to Buyer. Seller shall also make
available the necessary storage for WDG and Solubles which is
adequate for Buyer to market such products. Seller shall be
responsible at all times for the quantity, quality and condition of
any the Products in storage at the Plant. Seller shall not be
responsible for the quantity, quality and condition of any of the
Products stored by Buyer at locations other than the
Plant.
C. Buyer shall give to
Seller a schedule of quantities of the Products to be removed by
truck and rail with sufficient advance notice reasonably to allow
Seller to provide the required services. Seller shall provide the
labor, equipment and facilities necessary to meet Buyer’s
loading schedule and, except for any consequential or indirect
damages, shall be responsible for Buyer’s actual costs or
damages resulting from Seller’s failure to do so. Buyer shall
order and supply trucks and rail cars as scheduled for truck and
rail shipments. All freight charges shall be the responsibility of
Buyer and shall be billed directly to Buyer.
D. Buyer shall provide
loading orders as necessary to permit Seller to maintain
Seller’s usual production schedule, provided, however, that
Buyer shall not be responsible for failure to schedule removal of
the Products unless Seller shall have provided to Buyer production
schedules as follows: Five (5) days prior to the beginning of
each calendar month during the term hereof, Seller shall provide to
Buyer a tentative schedule for production in the next calendar
month. Seller shall inform Buyer daily of inventory and production
status. For purposes of this paragraph, notification will be
sufficient if made by e-mail or facsimile as follows:
If to Buyer, to
the attention of Steve Markham, Facsimile number 612-330-9894 or
email to smarkham@csc-world.com, and
If to Seller,
to the attention of General Manager , Facsimile number or
email to
Or to such
other representatives of Buyer and Seller as they may designate to
the other in writing.
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E. Title, risk of loss
and full shipping responsibility shall pass to Buyer upon loading
the Products into trucks or rail cars and delivering to Buyer of
the bill of lading for each such shipment.
A. Buyer agrees to pay
Seller as follows: for all DDGS removed by Buyer from the Plant a
price equal to ninety eight (98%) of the FOB Plant price (as
hereafter defined) actually received by Buyer from its customers;
for WDG removed by Buyer from the Plant a price equal to ninety six
(96%) of the FOB Plant price actually received by Buyer from its
customers, but in no event shall the fee to Buyer for DDGS and WDG
be less than $1.50 per ton. The calculation on the minimum fee
shall be made with respect to each weekly payment separately. The
results of the calculation for any given week will not impact the
calculation for any other week. Buyer shall receive a fee for
Solubles of $2.00 per ton. For purposes of this provision, the FOB
Plant price shall be the actual sale price received by Buyer from
its customers, less all freight costs incurred by Buyer in
delivering the Product to its customer. Buyer agrees that it shall
not sell Product for delivery more than 90 days from the date
of entering into a sale without the consent of Seller. Buyer agrees
to use commercially reasonable efforts to achieve the highest
resale price available under prevailing market conditions.
Seller’s sole and exclusive remedy for breach of
Buyer’s obligations hereunder shall be to terminate this
Agreement. Buyer shall collect all applicable state tonnage taxes
on Products sold by Buyer and shall remit to the appropriate
governmental agency.
B. In the event that
Buyer has to incur out-of-pocket costs in order to sell High
Moisture Product, and the fee to be paid to Buyer is less than such
out-of-pocket costs, Seller shall pay Buyer an amount which is
sufficient, when added to the fee earned by Buyer, to repay Buyer
for all of its reasonable out-of-pocket costs. Such payment shall
be made with 30 days from receipt of documentation evidencing
the expenses.
C. Within ten
(10) days following receipt of certified weight certificates,
which certificates shall be presented to Buyer each Thursday for
all shipments during the preceding week, Buyer shall pay Seller the
full price, determined pursuant to paragraph 6A above, for all
properly documented shipments. Buyer agrees to maintain accurate
sales records and to provide such records to Seller upon request.
Seller shall have the option to audit Buyer’s sales invoices
at any time during normal business hours and during the term of
this Agreement. If any such audit reveals a deficiency in payment
due from Buyer to Seller, Buyer shall immediately pay Seller the
amount of deficiency plus interest calculated from the date such
payment should have been made at the prime rate then in effect as
published in the Wall Street Journal.
D. Within five
(5) business days following the 15 th and last day of each month,
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Buyer shall pay
Seller the full price, determined as provided for above, for all
WDG and Solubles shipments made in the first 15 days of the
month and the balance of the month, as the case may be. Weights
shall be determined by on-site certified scales. Buyer agrees to
maintain accurate sales records and to provide such records to
Seller upon request. Seller shall have the option to audit
Buyer’s sales invoices at any time during normal business
hours and during the term of this Agreement. If any such audit
reveals a deficiency in payment due from Buyer to Seller, Buyer
shall immediately pay Seller the amount of deficiency plus interest
calculated from the date such payment should have been made at the
prime rate then in effect as published in the Wall Street
Journal.
7. QUANTITY
AND WEIGHTS .
A. It is understood that
the output of the Products shall be determined by Seller’s
production schedule and that no warranty or representation has been
made by Seller as to the exact quantities of Products to be sold
pursuant to this Agreement.
B. The quantity of
Products delivered to Buyer from Seller’s Plant shall be
established by weight certificates obtained from scale at the Plant
which is certified as of the time of weighing and which complies
with all applicable laws, rules and regulations or in the event
that the scale at the Plant is inoperable then at other scales
which are certified as of the time of weighing and which comply
with all applicable laws, rules and regulations. The outbound
weight certificates shall be determinative of the quantity of the
Products for which Buyer is obligated to pay pursuant to
Section 6.
A. Seller understands
that Buyer intends to sell the Products purchased from Seller as a
primary animal feed ingredient and that said Products are subject
to minimum quality standards for such use. Seller agrees and
warrants that the Products produced at its plant a
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