EXHIBIT 10.5
[********] 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 23
rd 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 Solaris ä , 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.
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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 5 th 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) ounc
