RISK MANAGEMENT AND ETHANOL
MARKETING CONTRACT
THIS AGREEMENT
is entered into by and among FCStone, LLC (“FCStone”),
an Iowa limited liability company with its main office at 2829
Westown Parkway, West Des Moines, Iowa 50266, and Eco-Energy, Inc.
(“Eco”) a Tennessee Corporation with its main office
located at 730 Cool Springs Blvd. Suite 130, Franklin, Tennessee
37067, and Husker AG, LLC. (HA) with its main office located at
54048 Hwy 20, Plainview, NE 68769.
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HA is a Limited
Liability Company, which is operating an ethanol plant facility
located at 54048 Hwy 20, Plainview, NE, (the “Plant”)
and which desires to establish an input origination and marketing
risk management plan and an output-marketing contract.
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FCStone, which
is experienced in commodity transactions and related risk
management, is willing to provide such assistance on the terms
hereby stated.
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Eco is a
reseller in ethanol and is experienced in the marketing and
transportation of such product, and is willing to agree to purchase
the ethanol output of the Plant.
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NOW,
THEREFORE, IT IS AGREED AS FOLLOWS BETWEEN THE
PARTIES:
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FCStone and Eco Services.
FCStone shall, during the term
hereof, provide services to HA in the implementation of a full
service price risk management program for HA (the “FCStone
Program”). HA will have a full time risk manager of FCStone
from an FCStone office to help in day-to-day grain marketing
decisions. The FCStone services to be provided are set forth in
Exhibit A attached hereto. Eco shall, during the term hereof,
purchase the entire output of ethanol specified herein and to
provide certain transportation services to HA (the “Eco
Program”). The Eco services to be provided are set forth in
Sections 2, 3 and 4 and the exhibits attached hereto which are
referred to therein.
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Eco
Ethanol Output Purchases. HA agrees to sell to Eco, and Eco agrees to
purchase from HA the entire output of ethanol of the Plant during
the term, in good faith and at fair market rates. The terms of such
transactions shall be fixed by agreement of HA and Eco established
in good faith from time to time consistent with the provisions of
Exhibit B attached hereto. The price on all ethanol shall be
determined on an FOB Plainview, NE basis.
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Eco
Denaturant Procurement. HA at HA’s option can purchase their
entire denaturant demand from Eco during the term or purchase the
denaturant on their own. The terms of such transactions shall be
fixed by agreement of HA and Eco established in good faith from
time to time.
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Eco
Transportation Services. Eco agrees to provide the transportation
services set forth in Exhibit C. HA agrees to pay freight and
assume railcar leases as provided in Exhibit C.
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(a)
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HA shall pay a
fee for services of Eco and FCStone and materials provided
hereunder of $ [***] per net gallon of ethanol
produced during the Term. Such fees shall be payable monthly on an
estimated basis on the first business day of each month during the
term hereof, in advance to FCStone. FCStone shall remit a share of
such fee to Eco as Eco and FCStone may agree. The initial estimated
monthly payment shall be $ [***] per month. The
actual fees payable based upon actual production and the above
quoted rate shall be computed every three (3) months and additional
payment to FCStone or credits to HA’s account shall be made,
and the monthly fee adjusted, so as to accurately reflect the
actual fees payable.
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(b)
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In addition to
such fees, HA shall also pay to FCStone any transaction
commissions, fees, services charges or mark-ups arising from
options, futures or other risk management or cash commodity
transactions executed or brokered through FCStone, its affiliates,
or others in accordance with their applicable schedules of rates,
except that FCStone guarantees that the rate for exchange-traded
futures and options contracts shall not be more than $10.00 per
round turn, plus all applicable exchange fees, during the initial
term hereof. Any OTC (over-the-counter) transactions will be $8.00
per round turn, plus any applicable fees, during the initial term
hereof.
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HA
Representative. HA shall designate one or more persons who shall
be authorized and directed to receive services hereunder and to
make all hedging and merchandising and purchasing and sales
decisions for HA. All directions, transactions and authorizations
given by such representative to FCStone or to Eco shall be binding
upon HA. FCStone and Eco shall each be entitled to rely on the
authorization of such persons until it receives written
notification from HA that such authorization has been
revoked.
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Transactions with FCStone and FCStone
Affiliates . HA
understands, approves, authorizes, and agrees that FCStone as an
advisor may recommend that HA enter into transactions where FCStone
will act as a broker or futures commission merchant or where HA may
enter into transactions with one or more companies which are under
common ownership or control with FCStone, including, but not
limited to, FCStone Trading, L.L.C. with respect to physical energy
products and over the counter swaps and options and FGDI, L.L.C.
with respect to cash grain. FCStone may also participate on
HA’s behalf in negotiations with one or more elevators, which
are members of FCStone’s parent company. All futures, swap or
cash commodity transactions involving HA, FCStone and its
affiliates shall be subject to, and shall be governed by, the
applicable customer agreements, master agreements, confirmations,
and other documentation thereof.
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(a)
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To the extent
and if any brokerage services are provided by FCStone it will be to
find suppliers or purchasers for HA. FCStone will not purchase or
sell grain, nor will it be directly involved in the purchase of the
grain involving HA. FCStone may give merchandising, purchasing and
hedging advice to HA, but all decisions on purchasing,
merchandising and hedging strategy will be made by HA. All hedging
positions will be the responsibility of HA, in HA’s account
with FCStone or other relevant party. All positions shall be for
the purpose of hedging against price risks associated with the
HA’s operations.
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[***] -- Material has been omitted pursuant to a
request for confidential treatment and such material has been filed
separately with the Securities and Exchange Commission.
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(b)
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FCStone assumes
no responsibility for the completion or performance of any
contracts between HA and HA’s customers and suppliers, and HA
agrees that it shall not bring any action or make any claim against
FCStone based on any act, omission or claim of any of HA’s
customers or suppliers.
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(c)
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To the extent
FCStone provides services relating to accounting systems, sole
responsibility for the accuracy and completeness of HA’s
books and financial statements shall remain with HA. FCStone shall
not be deemed to attest in any way to the accuracy of such books
and financial statements.
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(d)
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FCStone assumes
no responsibility for tax advice, tax planning, or tax returns or
tax reporting.
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(a)
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Eco assumes no
responsibility for the completion or performance of any contracts
between HA and HA’s customers and suppliers, and HA agrees
that it shall not bring any action or make any claim against Eco
based on any act, omission or claim of any of HA’s customers
or suppliers.
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(b)
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HA is
responsible to cover all non-deliveries of any product that is
contracted between ECO and HA in a timely manner in order to stay
within the time parameters of the contract. ECO will assist in
procuring product from other suppliers to cover these
non-deliveries.
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(c)
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If any party
terminates this agreement for any reason, all parties will be
responsible to complete any existing contracts.
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Separability and
Non-liability .
The services, contracts and relationship between HA and FCStone and
between HA and Eco are independent and separable. FCStone shall
have no liability or responsibility to HA for the performance of
Eco hereunder. Eco shall have no responsibility or liability for
the performance of FCStone hereunder. Termination of this Agreement
as between Eco and HA shall not impair the continuing relationship
between FCStone and HA, and termination as between FCStone and Eco
shall not impair the continuing relationship between Eco and HA.
Termination of this Agreement as between FCStone and HA shall not
impair the continuing relationship between ECO and HA.
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Confidentiality Agreement
. The parties agree, to the extent
permitted by law, to preserve and protect the confidentiality of
the Agreement. Both parties recognize that federal or state
law
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