Marketing Agreement Form – Free Sample Legal Document

ETHANOL FUEL MARKETING AGREEMENT

THIS AGREEMENT , entered into this 19th day of July, 2006, by and between RENEWABLE PRODUCTS MARKETING GROUP, L.L.C., hereinafter referred to as “RENEWABLE PRODUCTS”; and ADVANCED BIOENERGY, LLC, a Delaware limited liability company, hereinafter referred to as “ADVANCED BIOENERGY.”

WITNESSETH:

WHEREAS, RENEWABLE PRODUCTS is a limited liability company formed for the purpose of marketing ethanol for its members and others, and,

WHEREAS, ADVANCED BIOENERGY, is intending to construct a plant in Fairmont, Nebraska for the production of fuel grade ethanol, and,

WHEREAS, the parties have agreed that, for the duration of this marketing agreement, the sale and marketing of all of the ethanol produced by ADVANCED BIOENERGY as described in Section 1 below should be undertaken by RENEWABLE PRODUCTS.

NOW, THEREFORE, In consideration of the mutual covenants and promises herein contained, the parties hereto agree as follows:

1.              Exclusive Marketing Representative .  That if ADVANCED BIOENERGY constructs a facility in Fairmont, Nebraska for the production of fuel grade ethanol, RENEWABLE PRODUCTS shall be the sole marketing representative for the entire production of said facility subject to all the terms and conditions of this agreement.  Notwithstanding the foregoing, and ethanol production resulting from ADVANCED BIOENERGY’s direct or indirect ownership or operation of other ethanol facilities shall not be subject to this Agreement.

2.              Plant Construction/Ethanol Specifications .  That ADVANCED BIOENERGY promises and agrees to proceed, with due diligence, toward the planning, financing and construction of a facility for the production of fuel grade ethanol with a capacity of approximately 100 million gallons per year, which fuel grade ethanol will be at least 200 proof (denatured), and conform to the specifications described in A.S.T.M. 4806 and such other specifications that may be, from time-to-time, promulgated by the industry for E-Grade denatured fuel ethanol.  ADVANCED BIOENERGY contemplates that said facility is anticipated to be in production by August, 2007, and will make every good faith effort to begin production by that time.

3.              Rail and Truck Loading Facilities .  That the facility to be constructed and operated by ADVANCED BIOENERGY, as aforesaid, shall include reasonable and convenient railcar and tank truck access at the facility of a size and design appropriate to handle production of approximately 100 million gallons of ethanol per year.  All such railcar and tank truck loading facilities shall meet all industry and governmental safety standards and shall be capable of delivering an average of 1,800 gallons of product per minute to railcars and/or tank trucks.  ADVANCED BIOENERGY will be solely responsible for all demurrage charges for railcars in service for its use.  ADVANCED BIOENERGY shall provide personnel reasonably needed to load trucks or rail cars at its facility in a timely manner.  Demurrage charged to trucks or railcars resulting from operations beyond the control of ADVANCED BIOENERGY and incurred off-site will not be charged directly to ADVANCED BIOENERGY.

4.              Storage Capacity .  That the facility to be constructed and operated by ADVANCED BIOENERGY as aforesaid shall have sufficient storage capacity for not less than 12 days ethanol production.

5.              Best Efforts to Market .  That since RENEWABLE PRODUCTS shall have the exclusive right to market all the fuel grade ethanol produced by ADVANCED BIOENERGY at this facility during the term of this agreement, RENEWABLE PRODUCTS promises and agrees to use its best good faith efforts to market all such fuel grade ethanol; provided, however, that RENEWABLE PRODUCTS’ obligation hereunder shall be excused in case of fire, flood, other natural calamity, labor dispute or any adverse governmental statute, regulations or decree (including any court order or decree) directly affecting RENEWABLE PRODUCTS ability to market products.

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6.              Risk of Loss .  RENEWABLE PRODUCTS will be responsible for the marketing (subject to the terms of this agreement) of all such fuel grade ethanol produced by ADVANCED BIOENERGY as described in Section 1, from the time the common carrier accepts responsibility for the product at ADVANCED BIOENERGY’ s facility in either a railcar and/or tank truck.  In addition, RENEWABLE PRODUCTS shall bear the risk of loss for all such product that has been accepted for shipment by the common carrier.

7.              Specific Marketing Tasks .  RENEWABLE PRODUCTS shall be totally responsible for the marketing, sale and delivery of all the production from ADVANCED BIOENERGY’ s facility during the term of this agreement, including, but not limited to:

·       Obtaining sufficient railcar, tank trucks and other transport as may be needed to handle said production;

·       Negotiating the rates and tariffs to be charged for delivery of such production to the customer;

·       Promoting and advertising the sale of fuel grade ethanol as appropriate;

·       Ascertaining that such production is delivered where contracted and intended;

·       Handling all purchase agreements with consumers and any complaints in connection therewith; and

·       Collecting all accounts and undertaking any legal collection procedures as may be necessary.

8.              Negotiation of Ethanol Price .  That RENEWABLE PRODUCTS will use its best efforts to obtain the best price for all fuel grade ethanol sold by it pursuant to the terms of this agreement.

9.              Compensation/Pooling .  Notwithstanding that ADVANCED BIOENERGY is not currently a member of RENEWABLE PRODUCTS, at the direction of ADVANCED BIOENERGY, RENEWABLE PRODUCTS will market the ethanol production of ADVANCED BIOENERGY under the pooling arrangement maintained by the members of RENEWABLE PRODUCTS.  Under such pooling arrangement, ADVANCED BIOENERGY will pay RENEWABLE PRODUCTS [*] .

a)              The Actual Pooled Netback Ethanol Selling Price for Ethanol Sold to RENEWABLE PRODUCTS by ADVANCED BIOENERGY.

(i)             The Actual Pooled Netback Ethanol Selling Price.  The Actual Pooled Netback Ethanol Selling Price cannot be determined before ADVANCED BIOENERGY sells ethanol to RENEWABLE PRODUCTS under this Agreement, because the Actual Pooled Netback Ethanol Selling Price is based upon the estimated delivery price and estimated distribution expense for the ethanol supplied by each pool participant.  Because of that, RENEWABLE PRODUCTS will establish an estimated delivered price and estimated distribution expense for ADVANCED BIOENERGY’S ethanol for each month during the term of this Agreement, in order to establish an estimated delivered price and estimated distribution expense for ADVANCED BIOENERGY’S ethanol which will be sold and marketed by RENEWABLE PRODUCTS.  RENEWABLE PRODUCTS shall reconcile the estimates with actual selling prices and distribution expenses as provided in subparagraph (iii) below.

(ii)            Invoices and Payments Between ADVANCED BIOENERGY and RENEWABLE PRODUCTS.  ADVANCED BIOENERGY will invoice RENEWABLE PRODUCTS, upon shipment, at the applicable Estimated Pooled Netback Ethanol Selling Price for all ethanol sold to RENEWABLE PRODUCTS by ADVANCED BIOENERGY under this Agreement.  RENEWABLE PRODUCTS will pay ADVANCED BIOENERGY for all such

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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ethanol within 10 business days from the date of delivery, with delivery occurring at the time the common carrier takes possession of the ethanol.

(ii)            Calculation of Actual Selling Prices At Month End.  At the end of each month, promptly after the information necessary to calculate the Actual Pooled Netback Ethanol Selling Price becomes available, RENEWABLE PRODUCTS will calculate the Actual Pooled Netback Ethanol Selling Price for the preceding month.  RENEWABLE PRODUCTS will provide that Actual Pooled Netback Ethanol Selling Price to ADVANCED BIOENERGY, along with a summary of the calculations used by RENEWABLE PRODUCTS to arrive at the Actual Pooled Netback Ethanol Selling Price.

(iii)           Reconciliation of Estimated Selling Prices and Actual Selling Prices After Each Month.  By the 10th day of the following month RENEWABLE PRODUCTS provides ADVANCED BIOENERGY with the Actual Pooled Netback Ethanol Selling Price for the preceding month, the parties will reconcile the difference between the Estimated Pooled Netback Ethanol Selling Price and the Actual Pooled Netback Ethanol Selling Price for the preceding month.  If the Estimated Pooled Netback Ethanol Selling Price exceeded the Actual Pooled Netback Ethanol Selling Price, then ADVANCED BIOENERGY will refund to RENEWABLE PRODUCTS the overpayments that it previously received from RENEWABLE PRODUCTS, within two (2) days after the completion of this actual and estimated selling price reconciliation.  In lieu of ADVANCED BIOENERGY directly refunding any amounts to RENEWABLE PRODUCTS by separate payment, and RENEWABLE PRODUCTS directly refunding any amounts to ADVANCED BIOENERGY by separate payment, under this Section 9, the parties may offset the required amounts on their next respective monthly payments.

On the other hand, if the Estimated Pooled Netback Ethanol Selling Price was less than the Actual Pooled Netback Ethanol Selling Price, then RENEWABLE PRODUCTS will pay ADVANCED BIOENERGY the additional amounts owed to ADVANCED BIOENERGY, within two (2) days after the completion of this actual and estimated selling price reconciliation.

(c)            Most Favorable Terms.  If RENEWABLE PRODUCTS enters into any ethanol marketing agreement with any current or future ethanol pool participant, RENEWABLE PRODUCTS shall provide to ADVANCED BIOENERGY a copy of such agreement and ADVANCED BIOENERGY shall have the opportunity to receive the same rights and benefits conferred under such other agreement.

10.           Accounts Receivable/Rail Car Leases/Termination of Contract .  It will be the responsibility of RENEWABLE PRODUCTS to do all billing in regard to the sale of ethanol, to collect all receivables and to be responsible for any bad accounts.  RENEWABLE PRODUCTS shall make payment to ADVANCED BIOENERGY within 10 days after taking delivery of product into common carrier truck or into railcar.  All risks associated with accounts receivables shall be borne by RENEWABLE PRODUCTS.  RENEWABLE PRODUCTS will lease approximately 225 railcars to be used by ADVANCED BIOENERGY.  A separate payment for leased railcars is not applicable as ADVANCED BIOENERGY’s production of fuel grade is part of the RENEWABLE PRODUCTS marketing pool.  If this contract is terminated, by non-renewal or otherwise, the lease for the rail cars leased by RENEWABLE PRODUCTS for the transport of ADVANCED BIOENERGY’s ethanol will be assigned to ADVANCED BIOENERGY, who will be obligated to the terms and conditions of said lease.  RENEWABLE PRODUCTS shall provide ADVANCED BIOENERGY the opportunity to review and approve of the terms and conditions of any such rail car lease before RENEWABLE PRODUCTS first executes the same.  The parties understand that the assignment of the lease is subject to the approval of the lessor of the rail cars.

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11.           No “Take or Pay .” The parties agree that this is not a “take or pay contract” and that RENEWABLE PRODUCTS’ liability is limited to ethanol passing custody at ADVANCED BIOENERGY’s facility.

12.           Term .  The term of this agreement shall commence on the first day of the month that ADVANCED BIOENERGY initially ships ethanol and shall continue for a period of at least 12 months, but will terminate at the end of the first traditional ethanol marketing contract period; end of March or end of September which ev