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EXHIBIT 10.2
ETHANOL MARKETING AGREEMENT
This Ethanol Marketing Agreement ("Agreement") is made and entered
into as the
22nd day of February 2005 by and between Aventine Renewable Energy,
Inc., a
Delaware corporation ("AREI) and VeraSun Fort Dodge, LLC, a
Delaware corporation
("VeraSun Fort Dodge").
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 ending March 31, 2007 and
thereafter, renewing for consecutive two (2) year terms, unless
terminated
by either party at the end of the primary term or any or
any subsequent two (2) year anniversary thereof with at least six
(6)
months prior written notice.
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
party will than have thirty (30) days to cure the breach, if
the
breaching 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
Fort
Dodge may terminate this Agreement immediately and without
prior
written notice.
(3). Change of Control. Based on a change of majority interest
in
AREI, VeraSun Fort Dodge shall have six (6) months to terminate
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this Agreement following the receipt of written notice
regarding
such change of ownership. AREI must notify VeraSun Fort Dodge
of
said event in writing within two (2) weeks of event. VeraSun
Fort
Dodge may terminate Agreement with (30) days written notice
within said six (6) month period.
(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 AREI and VeraSun Fort Dodge.
(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 Fort
Dodge shall sell to AREI the total output of fuel grade
ethanol ("Ethanol") produced at the VeraSun Fort Dodge, Iowa,
facility
("Plant"), currently anticipated to be one hundred (110)
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 Magellan Pipeline
Company specifications for E-Grade Denatured Fuel Ethanol
C.
Ethanol produced
at the Plant and marketed by VeraSun Fort Dodge,
directly or indirectly, to the E-85 fuel market is excluded from
this
Agreement.
3. AREI
shall:
A.
Purchase all of
the Ethanol produced by VeraSun Fort Dodge, at the
price outlined in Section 5;
B.
Remit payment to
VeraSun Fort Dodge for the Ethanol as provided in
Section 5: and
C.
Schedule all
loads with VeraSun Fort Dodge.
D.
Extend any
alliance volume buying power of discounting to VeraSun Fort
Dodge.
E.
Extend railcar
freight rates negotiated by AREI to VeraSun Fort Dodge.
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F.
Participate with
VeraSun Fort Dodge in a monthly sales strategy call.
4. VeraSun Fort
Dodge shall:
A.
Provide to AREI
quarterly production forecasts, monthly updates, daily
plant inventory balances and shipment information;
B.
Provide to AREI
specifications and certificates of analysis of the
Ethanol produced;
C.
Provide for a
minimum of eight days storage on the VeraSun Fort Dodge
premises;
D.
Have meters that
provide both gross and net 60 degrees Fahrenheit
temperature compensated gallons; and
E.
Establish and
participate in monthly sales strategy meetings with
AREI.
5. Pricing and
Commission
B.
Sales Price. The
sale price VeraSun Fort Dodge shall receive for its
Ethanol shall be the Pooled Net Price, as defined below.
"Pooled Net Price" shall mean the net sales per gallon
calculated
by subtracting
the Pooled Costs on a per gallon basis from the
Alliance Ethanol Average Market Price.
"Alliance Ethanol Average Market Price" shall mean the monthly
average price received by AREI for Pooled Market Alliance
Volumes
sold during such month on a per gallon basis.
"Pooled Market Alliance Volumes" shall mean, with respect to
any
given period, aggregate fuel grade ethanol volumes purchased by
AREI from
all sellers who have agreed to receive the Pooled Net
Price and aggregate fuel grade ethanol volumes produced by AREI
during such period.
"Pooled Costs" shall mean, with respect to any given period,
all
direct costs incurred by AREI in handling Pooled Market
Alliance
Volumes during such period, including by not limited to
terminal
lease charges, throughput charges, terminal shrinkage costs,
freight charges,
tariffs, costs of leasing railcar and trucks,
government taxes and assessments, insurance, inspection fees,
inventory carrying costs, purchased ethanol cost incurred due
to
lost production and other such costs, but excluding direct
costs
incurred in marketing such ethanol. AREI shall use commercially
reasonable efforts to contain Pooled Costs so as to maximize
the
ultimate net price payable to VeraSun Fort Dodge for its
Ethanol.
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D.
Commission. AREI
shall deduct from the Pooled Net Price a commission
equal to (**) percent (**) of the Pooled Net Price. The total
commission shall not exceed (**) for the first (**) gallons of
ethanol
produced and sold to AREI during each twelve (12) calendar
month
period commencing on December 1st of each calendar year (the "12
Month
Period") under this Agreement and under that certain Ethanol
Marketing
Agreement between AREI and VeraSun Energy Corporation, dated
February
21, 2005 (the "Other Agreement"). If the total gallons of
ethanol
produced and sold to AREI during any 12 Month Period under this
Agreement and the Other Agreement exceeds (**) gallons, the
commission
of (**) percent (**) shall be reduced to (**) percent (**) for
all
gallons of ethanol in excess of (**) gallons produced and sold to
AREI
during
such 12 Month Period under this Agreement and the Other
Agreement."
C.
Payment. For all
quantities of ethanol purchased by AREI from VeraSun
Fort Dodge during a one-week period beginning on Monday and ending
on
the
following Sunday, AREI shall pay the estimated Pooled Net Price
referred to in Section 5.A. less commissions referred to in
Section
5.B., to VeraSun Fort Dodge by ACH or wire no later than ten
(10)
business days following the end of said one-week period. If at
calendar month's end, the actual Pooled Net Price exceeds the
estimated Pooled Net Price, AREI shall pay VeraSun Fort Dodge on
or
before the 15th day of the following calendar month an amount equal
to
the product of (x) the difference between the actual and
estimated
Pooled Net Price less commissions and (y) the aggregate quantity
of
Ethanol purchased during such month. AREI shall pay interest on
any
delinquent payments at the rate of nine percent (9%) per annum,
for
the duration of the delinquency. In addition, AREI shall
reimburse
VeraSun Fort Dodge for any attorney fees or other cost incurred
by
VeraSun Fort Dodge collecting delinquent amounts owed by AREI
hereunder. AREI is considered in breath of this Agreement if
the
delinquency period extends beyond thirty (30) days.
D.
Quarterly
Meetings. VERASUN and AREI agree to hold quarterly meetings
(by telephone or in person) to formulate a market outlook and
perspective for the purpose of establishing pricing parameters
and
sales strategy for a given period (the "Guidelines"). For any
period
to which such Guidelines are agreed upon and apply, AREI agrees to
use
its commercially reasonable efforts to execute deals consistent
with
these guidelines and when possible AREI will solicit feedback
from
VERASUN before executing deals outside such Guidelines. AREI will,
to
the extent it deems it necessary or appropriate, utilize VERASUN
to
participate on customers calls.
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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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E.
Supporting
Records. AREI shall keep a set of accurate and co
