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EX-10.5 Corn Protein Concentrate MARKETING AGREEMENT

Marketing Agreement

EX-10.5 Corn Protein Concentrate MARKETING AGREEMENT

 

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BADGER STATE ETHANOL LLC | QUALITY TECHNOLOGY INTERNATIONAL, INC

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Title: EX-10.5 Corn Protein Concentrate MARKETING AGREEMENT
Governing Law: Illinois     Date: 8/12/2005

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EXHIBIT 10

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 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.

 

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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 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

 

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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

 


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