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Exhibit
10.32
ETHANOL MARKETING
AGREEMENT
This Ethanol Marketing Agreement
(“Agreement”) is made and entered into as of the 3rd
day of December, 2007 by and between HUSKER AG, LLC, a Nebraska
limited liability company (“Husker”) 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:
| 1. |
Term and Termination : The term of this Agreement shall
commence on the date hereof and shall continue for a primary term
of one (1) year from the first day of the first month
commencing after the date of the first Bill of Lading delivered
hereunder for Ethanol produced at the Plant (as hereafter defined)
and thereafter; automatically renewing for successive one
(1) year terms, unless terminated on the expiration date of
the one (1) 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 six (6) months 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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A. |
Subject to the terms of Section 2.B. below, Husker shall
sell exclusively to ARE the total output of fuel grade ethanol
(“Ethanol”) produced at Husker’s Plainview,
Nebraska facility (“Plant”), currently anticipated to
be approximately seventy (70) million gallons per year.
Ethanol shall be delivered FOB the Plant, and title shall pass on
the date of the Bill of Lading. Ethanol produced for the intended
use as an alternative or racing fuel shall not be excluded from
this Agreement. |
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B. |
Notwithstanding the foregoing provision of this Agreement,
Husker shall retain the right to ratably market up to one hundred
twenty thousand (120,000) gallons per month of Husker’s
total production of Ethanol, provided that any and all such sales
shall be within one hundred (100) miles of the Plant. Husker
shall give sufficient advance written notice of such gallons to ARE
as the parties may agree. Upon receipt of such notice from Husker,
ARE shall grant written permission to Husker to make such gallons
available for marketing by Husker as soon as possible, and such
permission shall not be unreasonably withheld. Under no
circumstance shall any gallons committed to customers of ARE be
available for marketing by Husker. Once permission is granted to
Husker by ARE, the requested gallons shall become the sole
responsibility of Husker. |
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C. |
Such Ethanol shall meet or exceed all industry standards and
any specifications required by ARE’s customers. ARE shall
have the right to reject any Ethanol which does not meet such
standards and such standards are subject to change by ARE.
ARE’s current specifications are attached as Exhibit A
hereto. |
| 3. |
ARE shall, with respect to the Plant : |
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A. |
Market all of the Ethanol produced at the Plant, at the price
outlined in Section 5; |
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B. |
Remit payment to Husker for the Ethanol purchased by ARE
hereunder as provided in Section 5; and |
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C. |
Be responsible for scheduling all shipments of Ethanol to be
purchased by ARE hereunder with Husker. |
| 4. |
Husker shall, with respect to the Plant : |
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A. |
Provide to ARE on a timely basis annual production forecasts,
monthly updates to the rolling twelve month production forecasts,
monthly updates, daily plant inventory balances and shipment
information, and other information reasonably requested by ARE;
Husker shall use its reasonable best efforts to meet the monthly
production targets reflected in the then-current annual production
forecast. |
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B. |
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 twelve month production forecasts
or monthly updates provided under Section 4.A.
above; |
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C. |
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; Husker shall, at its
expense, provide or cause to be provided all testing and related
test equipment at or in the vicinity of the Plant to determine
compliance with such specifications and ARE or its representative
shall, at ARE’S expense, have the right to perform periodic
tests to determine compliance with such specifications. |
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D. |
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.). ARE reserves the right to
audit Husker’s records, procedures, and any other
documentation related to the proper loading of Ethanol. |
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E. |
Provide for a minimum of ten (10) days storage on the
Plant’s premises at Husker’s cost; |
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F. |
For all gallons sold to ARE, use certified meters or
weight-scales that provide both gross and net 60° Fahrenheit
temperature compensated gallons; and |
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G. |
Provide any of the information to be provided by Husker
pursuant to this Section 4 to ARE electronically in data form,
if such information is available in such form. |
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H. |
Provide the labor, equipment and facilities necessary to
facilitate ARE’s loading schedule provided. Husker shall be
responsible for actual demurrage, switching costs, and wait time
incurred resulting from this failure. |
| 5. |
Pricing and Commission |
A. Sales Price . The
per gallon sale price Husker 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
applicable. An illustrative example of the calculation of Alliance
Net Pool Price is attached as Exhibit B hereto.
“ 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 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, 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.
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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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.
B. Commission . For
each gallon of Ethanol sold to ARE under this Agreement, ARE shall
deduct from the Alliance Net Pool Price a commission equal to [***]
percent ([***]%) of the Alliance Net Pool Price. If Husker
meets the requirements outlined in Section 7.B. below (unit
train and barge facilities available for the transport of Ethanol),
an amount equal to [***] percent ([***]%) will be deducted from
Husker’s commission to ARE.
C. Payment . For all
quantities of Ethanol purchased by ARE from Husker 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 Husker by ACH or wire no later
than fifteen (15) 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
Price, ARE shall pay Husker on or before the 15 th business day of the following calendar
month an amount equal to the product of (x) the difference
between the actual and estimated Alliance Net Pool Price (in each
case less commissions) and (y) the aggregate quantity of
Ethanol purchased by ARE from Husker and shipped from the Plant
under this Agreement during the prior calendar month. If the actual
Alliance Net Pool Price is less than the estimated Alliance Net
Pool Price, Husker shall pay ARE and ARE shall have the right to
withhold and set off from future payments to Husker, an amount
equal to the product of (x) the difference between the actual
and estimated Alliance Net Pool Price (in each case less
commissions) and (y) the aggregate quantity of Ethanol
purchased by ARE from Husker and shipped from the Plant under this
Agreement during such month.
D. Supporting Records
. ARE shall keep a 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 reasonably
available to Husker’s indepe
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