ETHANOL
MARKETING AGREEMENT
This Ethanol Marketing
Agreement (“Agreement”) is made and entered into as of
the 9th day of October, 2006, by and between E ENERGY ADAMS, LLC, a
Nebraska limited liability company (“E ENERGY”), and
AVENTINE RENEWABLE ENERGY, INC., a Delaware corporation
(“ARE”) (each a “Party”, and
collectively the “Parties”).
In consideration of the
mutual terms and conditions contained herein, the Parties agree as
follows:
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1.
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Term and Termination:
The term of this
Agreement shall commence on the date hereof and shall continue for
a primary term of three (3) years, from the first day of the
first month commencing after the date of the first Bill of Lading
delivered hereunder and thereafter; automatically renewing for
successive one (1) year terms, unless terminated on the
expiration date of the initial three (3) year primary term, or
on the expiration date of any subsequent one (1) year renewal
term, in each case by either Party with at least one (1) year
written notice prior to such expiration date. 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 market and
distribute the ethanol as required by this Agreement. If the breach
does involve a failure to market and distribute the ethanol as
required by this Agreement, then the breaching party will have five
(5) calendar days after receiving the written notice to cure
the breach. If the breaching party does not cure any breach within
the applicable cure period, then the non-breaching party will have
the right to terminate this Agreement immediately.
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2.
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Quantity and Quality
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E
ENERGY shall sell exclusively to ARE its total output of
“Ethanol” (as hereinafter defined), currently
anticipated to be fifty million (50,000,000) gallons per year.
Ethanol shall be delivered FOB the Plant, and title shall pass on
the date of the Bill of Lading.
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A.
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For
purposes of this Agreement, the “Ethanol” of E ENERGY
shall include all fuel-grade ethanol produced at E ENERGY’s
Adams, Nebraska, facility (the “Plant”), except that E
ENERGY shall retain the right to ratably market up to ten percent
(10%) of E ENERGY’s total annual production. E ENERGY shall
give sufficient advance written notice of such gallons to ARE as
the parties may agree. Upon receipt of such notice from E ENERGY,
ARE shall grant written permission to E ENERGY to make such gallons
available for marketing by E ENERGY as soon as possible, and such
permission shall not be unreasonably withheld. Under no
circumstance shall any gallons committed to customers of
ARE
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be available
for marketing by E ENERGY. Once permission is granted to E ENERGY
by ARE, the requested gallons shall become the sole responsibility
of E ENERGY.
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B.
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Such Ethanol shall meet or exceed
all industry standards or any specifications so required by the
customer. ARE shall have the right to reject any Ethanol which does
not meet such standards and such standards are subject to change by
ARE.
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A.
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Be
solely responsible for the marketing, sale and delivery of all of
the Ethanol produced by E ENERGY at the Plant, at the price
outlined in Section 5.
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B.
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Remit payment to E ENERGY for the
Ethanol as provided in Section 5; and
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C.
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Be
solely responsible for scheduling all shipments of Ethanol with E
ENERGY, which shall include obtaining sufficient railcar, tank
trucks and other transport as may be needed to handle said
production, negotiating rates and tariffs to be charged for
delivery of said production to the customer, ascertaining that said
production is delivered where contracted as intended, handling all
purchase agreements with customers and any complaints in connection
therewith and collecting all accounts and undertaking any legal
collection procedures as may be necessary.
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D.
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Commit all of ARE’s Midwest
equity gallons to the pool.
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A.
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Provide to ARE on a timely basis a
fifteen month production forecasts, monthly updates to the fifteen
month production forecasts, daily plant inventory balances and
shipment information, and other information reasonably requested by
ARE. E ENERGY shall use its reasonable best efforts to meet the
monthly production targets reflected in the fifteen month
production forecast;
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B.
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Notify ARE promptly of any material
unscheduled shut-down, suspension, or significant decrease in
production at the Plant that was not reported in the rolling
fifteen month production forecasts or monthly updates provided
under Section 4.A. above;
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C.
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Provide to ARE specifications and
certificates of analysis of the Ethanol sold to ARE that are
consistent with the specifications referred to in Section 2.B.
above. E ENERGY shall, at its expense, provide or cause to be
provided all testing and related test equipment at or in the
vicinity of
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the
Plant to determine compliance with such specifications. ARE or its
representative may, at ARE’s expense, have the right to
perform periodic tests to determine compliance with such
specifications.
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D.
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Be
responsible for compliance with all federal, state, and local
rules, regulations, and requirements regarding the shipment of
Ethanol from the Plant, including but not limited to, all U.S.
Department of Transportation (“DOT”) requirements
relating to shipment of hazardous materials (e.g. proper paperwork,
railcars meeting DOT requirements, etc.).
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E.
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Provide for a minimum of eight
(8) calendar days storage of the Ethanol on E ENERGY’s
premises at E ENERGY’s cost;
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F.
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For
all gallons sold to ARE, use certified meters or weight-scales that
provide both gross and net 60º Fahrenheit temperature
compensated gallons; and
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G.
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Provide any of the information to be
provided by E ENERGY pursuant to this Section 4 to ARE
electronically in data form, if such information is available in
such form.
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5.
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Pricing and
Commission
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A.
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Sales Price. The per gallon sale price E ENERGY
shall receive for the Ethanol sold to ARE under this Agreement
shall be based on the “Alliance Net Pool Price” (as
defined below) which shall be adjusted to reflect the “Pooled
Volume Adjustment” and/or “Pooled Volume True-Up”
(as those terms are defined below), as applicable. An illustrative
example of the calculation of Alliance Net Pool Price is attached
as Exhibit A hereto.
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a.
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“Alliance Net Pool
Price” shall mean, with respect to any month, (i) the
weighted average gross price per gallon received by ARE for all
fuel grade Ethanol that was (A) supplied by an alliance
partner or produced by ARE and (B) sold during such month by
ARE, minus (ii) all actual costs (on a per gallon
basis) incurred by ARE in conjunction with the handling, movement
and sale of such Ethanol, including but not limited to terminal
lease charges, throughput charges, terminal shrinkage costs,
freight charges, tariffs, costs of leasing railcars, trucks, river
barges and ocean going vessels, government taxes and assessments,
insurance, inspection fees, administrative costs, working capital
carrying costs, bad debt expense, and costs of purchasing and
delivering replacement ethanol due to lost or interrupted Ethanol
production and other costs, but excluding direct marketing costs
incurred in marketing such Ethanol. ARE shall use commercially
reasonable efforts to contain the costs described in clause
(ii) above so as to maximize the Alliance Net Pool
Price.
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b.
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If
ARE’s pooled volume of fuel grade Ethanol at the end of a
month is higher than its pooled volume at the end of the
immediately preceding month because pooled sales volumes were less
than the aggregate volume supplied by the alliance partners or
produced by ARE during such month, the Alliance Net Pool Price for
such month shall be calculated as if the amount of such increase
was included as gallons supplied by the alliance partners and/or
produced by ARE and sold by ARE during such month at a price per
gallon equal to the estimated Alliance Net Pool Price for the
immediately following month (as determined in good faith by ARE).
The amount by which the Alliance Net Pool Price for any month is
increased or decreased as a result of the foregoing sentence is the
“Pooled Volume Adjustment” for such month.
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c.
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In
the event that the actual Alliance Net Pool Price for a month is
different from the estimated Alliance Net Pool Price used in
calculating the Pooled Volume Adjustment for the immediately
preceding month, an adjustment to the Alliance Net Pool Price in
the current month shall be made by an offset which is equal to the
amount of such difference. Such adjustment is the “Pooled
Volume True-Up.” Payment shall be made in accordance with
paragraph C below. A Pooled Volume True-Up shall occur at the time
of payment for the last delivery of Ethanol under this Agreement to
reflect the actual Alliance Net Pool Price for the final month of
the term of this Agreement.
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B.
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Commission. For each gallon of Ethanol sold by E
ENERGY to ARE under this Agreement, ARE shall deduct from the
Alliance Net Pool Price a commission equal to three quarters of one
percent (0.75%) of the Alliance Net Pool Price.
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C.
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Payment. For all quantities of Ethanol
purchased by ARE from E ENERGY and shipped from the Plant during a
one-week period beginning on Monday and ending on the following
Sunday, ARE shall pay the estimated Alliance Net Pool Price
referred to in Section 5.A. less commissions referred to in
Section 5.B., to E ENERGY 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 Alliance Net Pool
Price exceeds the estimated Alliance Net Pool
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