EXHIBIT 10.6
[********] Material has been omitted pursuant to
request for confidential treatment and such material has been filed
separately with the Securities and Exchange
Commission.
CORN GERM MARKETING
AGREEMENT
THIS CORN GERM (“CG”)
MARKETING AGREEMENT (the “Agreement”) is made and
entered into as of the 7 th day of July, 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 CG under its
brand name Solaris ä , produced by suppliers including but not
limited to BSE;
WHEREAS, BSE produces CG 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 CG along with CG from other third Parties (“QTI
CG Marketing Program”) to improve the efficiencies of
marketing and distribution of CG as more fully detailed in this
agreement; and
WHEREAS, QTI may choose to market CG
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 and market, and QTI hereby agrees to
purchase and market, 100% of BSE’s production and output of
CG 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 to sell 100% of BSE’s production
to QTI and agrees that QTI will be the exclusive purchaser and
marketer of that CG 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.
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 the 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
. QTI shall pay BSE for
its CG in accordance with the formula set forth in
Exhibit A.
5. PAYMENT DATES
. QTI shall pay BSE for the CG
invoiced by QTI twenty (20) days after price is established. This
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.
6. COSTS.
BSE’s CG 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 and its customer. (See
Exhibit D)
7 . TRANSPORTATION; LOGISTICS .
QTI and BSE shall perform the logistics functions in
Exhibit D. QTI shall determine the method of transporting the
CG to its customers in a manner that will insure that BSE’s
inventory level of CG does not exceed [********] at any time.
Title and risk of loss shall transfer from BSE to QTI as stated in
Exhibit D.
8.
QUALITY
8.1 CG Specifications . In accordance with Wisconsin State
Regulations, BSE shall attach the Bill of Lading to the CG label.
The CG label contains the guarantee of maximum moisture and minimum
fat. At
[********] Material has been omitted pursuant to
request for confidential treatment and such material has been filed
separately with the Securities and Exchange Commission.
no time will BSE be held to any
standard that will conflict with Section 13 of this
agreement.
BSE shall produce CG and warrant
that it meets the specifications (“Specifications”) set
forth in Exhibit B, 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 and may be amended once a final customer is selected
based on the specifications of this customer.
8.2 Samples, Preservation, and Claims.
BSE shall take original,
sealed, and numbered samples of the CG prior to loading at the
Delivery Point per unit of loading (to be discussed in
Exhibit C). 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 CG 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 19.
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
