EX-10.5 Corn Protein Concentrate MARKETING AGREEMENTMarketing Agreement |
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EXHIBIT 10.5
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Material has been omitted pursuant to request for confidential treatment and
such material has been filed separately with the Securities and Exchange
Commission.
Corn Protein Concentrate MARKETING AGREEMENT
THIS CORN PROTEIN CONCENTRATE (“CPC”) MARKETING AGREEMENT (the “Agreement”) is made and entered into as of the 23rd day of June, 2005, by and between QUALITY TECHNOLOGY INTERNATIONAL, INC. (“QTI”) and Badger State Ethanol, LLC (“BSE”), collectively referred to hereinafter as “Parties” or individually as a “Party”.
R E C I T A L S
WHEREAS, QTI markets CPC under its brand name Solarisä, produced by suppliers including but not limited to
BSE;
WHEREAS, BSE produces CPC in Monroe, Wisconsin; and
WHEREAS, BSE and QTI desire to have the terms of this
agreement conform to the National Grain and Feed Association
(“NGFA”) Feed Trade Rules that are currently in effect and as
amended from time to time, and
WHEREAS, QTI desires to market BSE’s CPC along with CPC from other third Parties (“QTI CPC Marketing Program”) to improve the efficiencies of marketing and distribution of CPC as more fully detailed in this agreement; and
WHEREAS, QTI may choose to market CPC produced by third parties in the future as more fully set forth in this and like agreements.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged, QTI and BSE agree as follows:
A G R E E M E N T
1.
PURCHASE AND MARKETING. BSE hereby engages QTI to purchase, market, and
QTI hereby agrees to purchase and market, 100% of BSE’s production and
output of CPC from its initial 50,000,000 gallon per year ethanol nameplate
capacity plant located in Monroe, Wisconsin subject to the terms of this
agreement. BSE agrees that QTI will be the exclusive purchaser and marketer of
that CPC output.
2.
TERM OF THIS AGREEMENT. This Agreement will be effective upon the date
set forth above and have an initial term ending 5 years after the date of first
commercial production, estimated to be January 2006.
3. TERMINATION. This Agreement may be terminated under the circumstances set out below.
1
3.1 Termination for Intentional Misconduct. If either party engages in intentional misconduct reasonably likely to result in significant adverse consequences to the other Party, the Party harmed or likely to be harmed by the intentional misconduct may terminate this Agreement immediately, upon written notice to the Party engaging in such intentional misconduct.
3.2 Termination for an Uncured Breach. If one of the parties breaches the terms of this Agreement, the other party may give the breaching party notice in writing which specifically sets out the nature and extent of the breach, and the steps that must be taken to cure the breach. After receiving the written notice, the breaching party will then have five (5) days to cure the breach, if the breach does not involve a failure to make any payments which are required by this Agreement.
3.3 Termination by Mutual Written Agreement. This Agreement may also be terminated upon any terms and under any conditions, which are mutually agreed upon in writing by the parties.
4.
PAYMENT. 1) QTI shall pay BSE for its CPC in accordance
with the formula set forth in Exhibit A; 2) BSE shall pay QTI for
sales, marketing and logistical expenses in accordance with the scale set forth
in Exhibit B. All schedules are attached hereto and incorporated
herein by reference.
5.
PAYMENT DATES. QTI shall pay BSE for CPC in accordance with
the formula set forth in Exhibit A. QTI shall pay BSE for the CPC invoiced
by BSE from the first day on the month to the 15th day of the month (an
“Invoice Period”) on the 20th day of the month or in the event such
day is not a business day, the next immediate business day thereafter. QTI
shall pay BSE for the CPC invoiced by BSE from the 16th day of the month to the
last day of the month (an “Invoice Period”) on the 5th day of the
following month or in the event such day is not a business day, the next
immediate business day thereafter. This Invoice Period Payment shall be made
through Automatic Check-Clearing House, commonly known as the ACH system (or
other payment method acceptable to each party), for immediately available
funds.
BSE shall pay QTI in a similar fashion (or other
payment method acceptable to each party) in accordance with the formula set
forth in Exhibit B, Sales, Marketing & Logistical Expenses, by
ACH (or other payment method acceptable to each party) on the 5th day
of each month for the preceding months activity or, in the event such day is
not a business day, the next immediate business day thereafter.
6.
COSTS. BSE’s CPC will be loaded FOB, sellers place of
business, Monroe, Wisconsin, and shipped per QTI’s instructions. All
costs, after loading and sealing, that are associated with shipping and other
charges shall be for the account of QTI, as further described in Exhibit A
(See also Exhibit E).
7.
TRANSPORTATION; LOGISTICS. QTI and BSE shall perform the logistics
functions in Exhibit E. QTI shall determine the method of transporting the
CPC to its customers in a manner that will insure that BSE’s inventory
level of CPC does not
2
exceed
[********] at any time. Title and risk of loss shall transfer from BSE to
QTI as stated in Exhibit E.
8.
QUALITY
8.1
CPC Specifications. In accordance with Wisconsin State Regulations, BSE
shall attach the Bill of Lading to the CPC feed label. The feed label contains
the guarantee of minimum protein, minimum fat, and maximum fiber. At no time
will BSE be held to any standard that will conflict with Section 13 of
this agreement.
BSE shall produce CPC and warrant that it meets the specifications (“Specifications”) set forth in Exhibit C, which is attached hereto and incorporated herein by reference (the “Specification Warranty”). This warranty is transferable to QTI’s customers. Final quality specifications will be consistent with those agreed upon between BSE and Corn Value Products, LLC.
8.2
Samples, Preservation, and Claims. BSE shall take original, sealed, and numbered
samples of the CPC prior to loading at the Delivery Point per unit of loading
(to be discussed in Exhibit E). QTI shall be entitled to witness the
taking of samples at QTI’s expense. BSE will label these samples to indicate
date of delivery and the container, truck, or rail car number. BSE will retain
these samples for 90 days and shall send one sample to QTI or a testing
laboratory named by QTI immediately upon QTI’s request. QTI shall have
the right to test each shipment of CPC at its own cost to ascertain that the
Specifications are being met under the testing procedures set forth in
Exhibit D. BSE may request that the QTI test results be provided to it at
any time after the tests are completed, using the delivery mechanisms described
in Section 20.
8.3
Quality Disputes. If QTI’s customer’s own analysis
indicates quality deficiencies, then that customer will submit the analysis and
claim in writing to QTI who will in turn forward to BSE. Within fifteen
(15) business days after the receipt of the claim, BSE will accept claim or
forward an eight (8) ounce portion of the retained sample to a mutually
agreeable Official Referee Laboratory and notify QTI of such action who in turn
will notify their buyer. The results of this Official Referee Analysis
will be binding upon both parties for final claim settlement and the expense of
the analysis will be borne by BSE if a claim is due and by the customer if no
claim is due. In no event shall BSE be liable for duplicate claim
liabilities under the Specifications Warranty.
8.4
No Further Representation and
Warranty. Except for the
Specifications Warranty, BSE makes no representation and warranty hereunder and
disclaims any warranty of merchantability or fitness for any particular
purpose.
9.
QUANTITY. Subject to the provisions herein, BSE will use
commercially reasonable efforts to ensure that the BSE production facility
shall produce
