Exhibit 10.11
ETHANOL MARKETING AGREEMENT
This Ethanol Marketing Agreement
(“Agreement”) is made and entered into as of the 31st
day of August, 2004 by and between Granite Falls Energy, LLC a
Minnesota limited liability company (“GFE”) 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 two (2) 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 two (2) 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.
|
|
2.
|
ARE
Investment in GFE: ARE has purchased an equity interest in GFE at a
cost of $500,000 (such initial equity interest in GFE and any
subsequent equity or other investment by ARE in GFE and/or any of
its direct or indirect subsidiaries (if any) is herein referred to
as the “Investment”). In the event this Agreement is
terminated for any reason, including without limitation by either
Party pursuant to Section 1. Term and
Termination , then ARE shall have the option, to be exercised
in ARE’s sole discretion concurrent with or at any time after
ARE receives or delivers written notice of such termination, or if
no such written notice is provided with or at any time after such
termination, to cause GFE to purchase the Investment. ARE shall
exercise such option by providing written notice to GFE specifying
(i) the date on which such purchase is to occur, which shall be no
sooner than ten (10) days after ARE provides such written
notice to GFE and (ii) the purchase price for the Investment,
which shall be the actual cost ARE originally paid for such
Investment (the “Cost”). On the date specified in such
written notice (i) GFE shall pay to ARE, in immediately
available funds, the Cost of the Investment and (ii) upon
receipt of such amount, ARE shall transfer and assign to GFE the
Investment. GFE shall be responsible for obtaining any member
approval and/or any other approvals which may be required, if any,
of such transfer of the Investment to GFE, and ARE shall cooperate
in obtaining such approvals. If GFE fails to purchase the
Investment on the specified date in accordance with the foregoing,
ARE shall have the right to set off any amounts owed by ARE to GFE
under this or any other agreement with GFE, against the amount owed
by GFE for the purchase of the Investment from ARE (i.e. the Cost).
Upon receipt of such Cost by ARE, whether through such set off of
otherwise, ARE shall, subject to receiving any necessary approvals,
transfer and assign the
|
1
|
|
Investment to GFE. The provisions of
this section shall survive termination of this
Agreement.
|
|
|
A.
|
GFE
shall sell exclusively to ARE the total output of fuel grade
ethanol (“Ethanol”) produced at GFE’s Granite
Falls, MN facility (“Plant”), currently anticipated to
be forty (40) 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.
|
|
|
|
|
B.
|
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
meet such standards and such standards are subject to change by
ARE.
|
|
|
|
|
A.
|
Market all of the Ethanol produced
by GFE at the Plant, at the price outlined in
Section 6;
|
|
|
|
|
B.
|
Remit payment to GFE for the Ethanol
as provided in Section 6; and
|
|
|
|
|
|
|
C.
|
Be
responsible for scheduling all shipments of Ethanol with
GFE.
|
|
|
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; GFE
shall use its reasonable best efforts to meet the monthly
production targets reflected in the then-current annual production
forecast;
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 5.A.
above;
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 3.B. above; GFE 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
2
ARE
or its representative shall, at ARE’S expense, have the right
to perform periodic tests to determine compliance with such
specifications.
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.).
|
|
E.
|
Provide for a minimum of eight days
storage on GFE’s premises at GFE’s cost;
|
|
|
|
|
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
|
|
|
|
|
|
|
G.
|
Provide any of the information to be
provided by GFE pursuant to this Section 5 to ARE
electronically in data form, if such information is available in
such form.
|
|
|
|
6.
|
Pricing and
Commission
|
A.
Sales Price . The per gallon sale price GFE 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 A 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
|
|
|
3
|
|
|
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.
|
|
|
|
|
|
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 *** of the Alliance Net Pool Price.
***
Material has been omitted pursuant to a request for confidential
treatment and such material has been filed separately with the
Securities and Exchange Commission .
C.
Payment . For all quantities of Ethanol purchased by ARE
from GFE and shipped from the Plant during a one-week period
beginning on Monday and ending on the following Sunday, ARE
shall
|
