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EXHIBIT 10.1
ETHANOL MARKETING AGREEMENT
This Ethanol Marketing Agreement ("Agreement") is made and entered
into as of
the 14th day of October 2002 by and between VeraSun Energy
Corporation, a South
Dakota corporation ("VERASUN") and Williams Ethanol Services, Inc.,
a Delaware
Corporation DBA Williams Bio-Energy ("WES").
In consideration of the mutual terms and conditions contained
herein, the
Parties agree as follows:
1. Terms and
Termination
A.
The term of this
Agreement shall commence on the first day of ethanol
sales and continue for a primary term of two (2) years and
thereafter,
renewing for consecutive two (2) year terms, unless terminated
by
either party with at least six (6) months prior written notice
without
cause.
B.
In addition,
this Agreement may be terminated under the circumstances
set out below.
(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.
(2) Termination for
Uncured Breach. If one of the parties breaches
the
terms of this Agreement, the other party may give the
breaching party a 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 thirty (30) days to cure the
breach, if the breach does not involve a failure to make any
payments which are required by this Agreement.
If breach involves lack of payment beyond the established
delinquency period, as specified in this Agreement, VERASUN may
terminate this Agreement immediately and without prior written
notice.
(3) Change of Control.
Based on a change of majority interest in WES,
VERASUN shall have six (6) months to terminate this agreement
following the receipt of written notice regarding such change
of
ownership. WES must notify VERASUN of said event in writing
within two (2) weeks of event. VERASUN may terminate agreement
with (30) days written notice within said six (6) month period.
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(4) Termination by
Mutual Written Agreement. This Agreement may also
be terminated upon any terms and under any condition, which are
mutually agreed upon in writing by WES and VERASUN.
(5) Termination by
Bankruptcy, Etc. This Agreement may also be
terminated immediately and without prior notice by a party as a
result of the other party's bankruptcy, assignment for the
benefit of creditors, admission in writing of its inability to
pay debts generally, or its liquidation, insolvency or
dissolution.
2. Quantity and
Quality
A.
VERASUN shall
sell to WES the total output of fuel grade ethanol
("Ethanol") produced at the VERASUN Aurora, South Dakota,
facility
("Plant"), currently anticipated to be one hundred (100)
million
gallons per year. Ethanol shall be delivered FOB the Plant, and
title
shall pass as the Ethanol is loaded into transport vessels.
B.
Such Ethanol
shall meet or exceed all industry standards, including
but not limited to ASTM D.4806 specifications and Williams
Pipeline
Company specifications for E-Grade Denatured Fuel Ethanol.
3. WES shall:
A.
Purchase all of
the Ethanol produced by VERASUN, at the price outlined
in Section 5;
B.
Remit payment to
VERASUN for the Ethanol as provided in Section 5; and
C.
Schedule all
loads with VERASUN.
D.
Extend any
alliance volume buying power of discounting to VERASUN.
E.
Extend railcar
freight rates negotiated by WES to VERASUN.
F.
Participate with
VERASUN in a monthly sales strategy call.
4. VERASUN
shall:
A.
Provide to WES
quarterly production forecasts, monthly updates, daily
plant inventory balances and shipment information;
B.
Provide to WES
specifications and certificates of analysis of the
Ethanol produced;
C.
Provide for a
minimum of eight days storage on the VERASUN premises;
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E.
Have meters that
provide both gross and net 60 degrees Fahrenheit
temperature compensated gallons; and
F.
Establish and
participate in monthly sales strategy meetings with WES.
5. Pricing and
Commission
A.
Sale Price. The
price VERASUN shall receive for its Ethanol shall be
based upon the actual market price received by WES for the sale of
the
Ethanol as set forth below.
B.
Costs. WES shall
deduct all direct costs incurred by WES relating
exclusively to marketing the Ethanol purchased from VERASUN,
including, but not limited to, terminal lease charges,
throughput
charges, terminal shrinkage costs (not to exceed .5%), freight
charges, tariffs, costs of leasing railcars and trucks,
government
taxes and assessments, inspection fees, and other similar costs.
These
costs shall be passed directly to VERASUN without WES markup.
WES
shall not deduct any general or administrative costs incurred
in
marketing the Ethanol. WES shall use commercially reasonable
efforts
to contain costs so as to maximize the net price payable to
VERASUN
for its Ethanol. In the event that VERASUN presents WES with
alternatives that will reduce such costs, WES shall implement
the
alternatives where commercially reasonable.
C.
Net Price. Net
price is defined as sales price referred in Section
5(A) less direct costs referred in Section 5(B) ("Net Price").
WES
shall use commercially reasonable efforts to maximize the Net
Price,
commensurate with prevailing market conditions.
D.
Establishing
Minimum Net Price. VERASUN and WES agree to participate
in monthly sales strategy meetings at which time VERASUN will
establish a monthly minimum net price target. WES agrees to make
best
effort to meet or exceed minimum net price targets. If net
price
targets are not attainable:
(1) WES must obtain
written authorization from VERASUN prior to
selling below net price target;
(2) At VERASUN's
request and expense, WES agrees to place VERASUN's
ethanol in storage until pricing condition can be met
E.
Commission. WES
shall be paid a commission equal to (**) percent (**)
of the Net Price, as defined in Section 5(C). The total
commission
shall not exceed (**) for the first (**) gallons produced on an
annual
basis. If annual production exceeds (**) gallons, VeraSun agrees
to
pay (**) percent (**) for all ethanol sold over (**) gallons per
year.
G.
Contract
Authorization. WES must obtain written authorization from
VERASUN for all contract sales:
1) This confidential information has been omitted pursuant to a
request for
confidential
treatment.
2) The material has been filed separately with the SEC.
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(1) Equal to or
greater than one (1) million gallons;
(2) Where contract
length is equal to or greater than six (6) months.
H.
Payment. For all
quantities of ethanol purchased by WES from VERASUN
during a one-week period beginning on Monday and ending on the
following Sunday, WES shall pay the Net Price referred to in
Section
5(C) less commissions referred to in Section 5(D), to VERASUN by
ACH
or wire no later than ten (10) business days following the end of
said
one-week period. WES shall pay interest on any delinquent payments
at
the rate of nine percent (9%) per annum, for the duration of
the
delinquency. In addition, WES shall reimburse VERASUN for any
attorney
fees or other costs incurred by VERASUN in collecting
delinquent
amounts owed by WES hereunder. WES is considered in breach of
this
Agreement if the delinquency period extends beyond thirty (30)
days.
I.
Supporting
Records. WES shall keep a permanent, accurate set of books
and records in accordance with generally accepting accounting
principals with respect to all sales of Ethanol hereunder and
all
costs and commissions associated therewith, and shall make such
books
and records available to VERASUN at WES's office at any time by
appointment during normal business hours upon at least three
(3)
business days prior written notice. In addition, WES shall
provide
VERASUN by e-mail or fax with supporting documentation regarding
the
calculation of the net sale price with each weekly payment for
Ethanol.
6. Indemnity:
WES shall indemnify, defend, and hold VERASUN and its
affiliates, subsidiaries, parents, directors, officers,
employees,
customers, contractors, subcontractors and agents harmless from and
against
any
and all claims, losses, awards, judgments, settlements, fines,
penalties, liabilities, damages, costs or expenses (including
reasonable
Attorney's fees) alleged or incurred on account of any injury to or
death
of
persons or damages to property or any other claim to the extent
caused
by
or arising out of the negligence or willful misconduct of WES,
its
officers, employees, customers, contractors, subcontractors or
agents.
VERASUN shall indemnify, defend, and hold WES and its
affiliates,
subsidiaries, parents, directors, officers, employees, and agents
harmless
from
and against any and all claims, losses, awards, judgments,
settlements, fines, penalties, liabilities, damages, costs or
expenses
(including reasonable Attorney's fees) alleged or incurred on
account of
any
injury to or death of persons or damages to property or any other
claim
to
the extent caused by or arising out of the negligence or
willful
misconduct of VERASUN, its officers, employees, customers, agents,
or
contractors. VERASUN shall indemnify and hold WES and its
affiliates,
subsidiaries, parents, directors, officers, employees, customers
and agents
harmless from and against any and all claims, losses, awards,
judgments,
settlements, fines, penalties, liabilities, damages, costs or
expenses
(including reasonable Attorney's fees) from any defects in the
Ethanol
caused by VERASUN.
7. Independent
Contractor: It is expressly understood that the relationship of
WES
to VERASUN is that of an independent contractor and nothing
contained
herein shall be construed to create any partnership, agency, or
employer/employee relationship. WES may freely choose the customers
from
whom
business shall be solicited and the time and place for
solicitation,
except as otherwise provided in this Agreement.
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8. Notices: Any
notices required to be given under this Agreement shall be in
writing and shall be deemed given upon personal delivery to the
party to be
notified; on the third day after deposit with the United States
Postal
Service, by registered or certified mail, postage prepaid; or
upon
confirmation if sent by telex, facsimile machine or other means
of
telecommunication that transmits or produces a written record of
the
message so sent. Notices shall be sent addressed as follows:
VERASUN: VERASUN
Energy Corporation
100 22nd Avenue
Suite # 103
Brookings, SD 57006
Attn: Donald Endres, CEO
Telephone: 605-696-7200
Fax: 605-696-7250
WES:
Williams Bio-Energy
P. O. Box 10
Pekin, IL 61555
Attn: Ronald Miller
Telephone: 309-347-9388
Fax: 309-347-8541
9. Insurance:
The Parties shall maintain, at all times while this Agreement
is
in
effect, and each at its own sole cost and expense, comprehensive
general
liability insurance with a combined single limit for bodily injury
and
property damage of not less than $1,000,000 for any one occurrence.
Each
party shall promptly after execution of this Agreement furnish the
other
party a Certificate of Insurance evidencing the foregoing
insurance
coverage, and containing a clause specifying that no reduction,
cancellation or expiration of the policies shall become effective
until
thirty (30) days from the date written notice is provided to the
other
Party. The insurance requirements set forth herein are minimum
coverage
requirements and are not to be constructed in any way as a
limitation on
liability under this Agreement.
10. Entire Agreement:
This Agreement contains the entire agreement between the
Parties and supersedes all previous agreements, either oral or
written,
between the Parties. No modifications hereof shall be valid unless
made in
writing and signed by both Parties.
11. Waiver: The
failure of either Party to enforce any of its rights hereunder
on
any particular occasion shall not constitute a waiver of such
rights on
any
subsequent occasion.
12. Assignment: This
Agreement may not be assigned by either party without the
prior written consent of the other party, which consent shall not
be
unreasonabl
