Exhibit 10.1
Confidential Treatment
Requested. Confidential portions of this document have been
redacted and have been separately filed with the
Commission.
BLACKHAWK BIOFUELS, LLC TOLL
PROCESSING AGREEMENT
This Blackhawk Biofuels, LLC Toll
Processing Agreement (the “Agreement”) is made and
entered into effective October 1, 2009, by and between
Blackhawk Biofuels, LLC a limited liability company organized and
existing under the laws of the state of Delaware, with offices at
22 South Chicago Avenue, Freeport, Illinois 61032 (“Blackhawk
Biofuels”). and REG Marketing & Logistics Group,
LLC, an Iowa limited liability company (“REG
Marketing”), of 416 S. Bell Avenue, PO Box 888, Ames, Iowa
50010 (each a “Party,” and collectively the
“Parties”).
Recitals
A.
Blackhawk Biofuels is in the
business of manufacturing and processing biodiesel from feedstock
at its biodiesel processing facility located at Danville, IL (the
“Facility”).
B.
REG Marketing desires to arrange for
the purchase and delivery of animal fats and other feedstocks (as
specified by the provisions of Section 7 hereafter, herein
“Feedstocks”) to Blackhawk Biofuels for processing into
biodiesel meeting the specifications set out in Section 8
hereafter (herein “Biodiesel”) and Crude Glycerin,
Fatty Acids and Soapstock (“Co-products”) pursuant to a
toll processing arrangement. Blackhawk Biofuels desires that
REG Marketing arrange for the delivery of Feedstocks for processing
at the Facility.
The Agreement
In consideration of the mutual
benefits and obligations herein provided and other good and
valuable consideration, Blackhawk Biofuels and REG Marketing agree
as follows:
1.
Offers to
Deliver Feedstocks for Processing . REG Marketing may
offer to deliver Feedstocks to Blackhawk Biofuels’s Facility
at Danville, IL, during the term of this Agreement.
(a)
Orders within
Facility Commitment . REG Marketing shall
order the processing of 11.0 million pounds of Feedstocks at the
Facility (“Facility Commitment”). Any such order shall
set out the type and quantity of Feedstocks, and the Production
Week for which such Feedstocks are intended for processing
(“Order”). If such Order is timely made, then
unless otherwise agreed by the Parties REG Marketing shall deliver
the Feedstocks to Blackhawk Biofuels in time for production of the
Biodiesel, Blackhawk Biofuels shall process the Feedstocks and test
and certify the Biodiesel as meeting the agreed upon specifications
under the applicable Order during such Production Week, and REG
Marketing shall arrange to pick up the resulting Biodiesel during
the two weeks immediately following such Production Week.
Blackhawk Biofuels agrees to provide written acknowledgment of all
Orders placed by REG Marketing. For purposes of this
Agreement, a “Production Week” shall mean a calendar
week beginning at 8:00 a.m. on Monday and ending at
7:59 a.m. on the following Monday, with weeks designated for
pick up of Biodiesel measured in similar fashion.
1
As an example,
for the Production Week commencing January 19, 2009, REG
Marketing would need to have delivered its Order for such
Production Week on or before 5:00 p.m. on Monday,
January 5, 2009. If such Order has been timely delivered
to Blackhawk Biofuels, REG Marketing would then deliver in the
Feedstocks required for such Production Week both before and during
the production week. Blackhawk Biofuels would then have the
Production Week of January 19 through January 26, 2009,
to complete production, test and certify the Biodiesel meets the
agreed upon specifications under the applicable Order. REG
Marketing would then have from January 26 through
7:59 a.m. on February 9, 2009, to pick up the Biodiesel
produced for such Production Week. REG Marketing shall
develop a sample “Order/Nomination” form to be used by
the Parties, which shall be attached as Exhibit A
hereto.
Any Feedstocks purchased by Bunge
North America, Inc. (“Bunge”) pursuant to the
terms of a Feedstock Purchase and Sale Agreement dated
June 30, 2009 (the “Feedstock Agreement”) by and
between Blackhawk Biofuels, REG Marketing and Bunge shall be
included in determining whether the Facility Commitment has been
met. Any purchase of Feedstocks by Bunge, however, shall be
governed exclusively by the terms of the Feedstock Agreement and
such purchases shall not be subject to the terms of this
Agreement.
(b)
Offers in
Excess of the Facility Commitment . REG Marketing may
offer to deliver additional Feedstocks beyond the Facility
Commitment, subject to Blackhawk Biofuels’s acceptance.
Any such offer (“Nomination”) shall set out the type
and quantity of Feedstocks, the Production Week for which such
Feedstocks are intended for production, and advise of the time
period during which Blackhawk Biofuels shall be required to
communicate Blackhawk Biofuels’s acceptance back to REG
Marketing (“Offer Period”). The parties agree
that such Offer Period will not expire prior to 12:00 o’clock
noon, local time at the Facility, on the business day following
that day during which the Nomination is delivered, and provided
further that (unless waived by Blackhawk Biofuels) a Nomination
shall not propose a Feedstocks delivery schedule with first
delivery date less than seven (7) calendar days after the end
of the Offer Period. If a Nomination is accepted by Blackhawk
Biofuels (as set out hereafter), then (unless otherwise agreed by
the Parties) REG Marketing agrees to deliver the Feedstocks to
Blackhawk Biofuels pursuant to the terms of the Nomination prior to
such Production Week to utilize in the production of the Biodiesel,
Blackhawk Biofuels shall during such Production Week process the
Feedstocks and test and certify the Biodiesel as meeting the agreed
upon specifications under the applicable Nomination, and REG
Marketing shall arrange to pick up the resulting Biodiesel during
the two weeks immediately following such Production Week. The
sample “Order/Nomination” form to be used by the
Parties is attached as Exhibit A hereto.
2
*** Confidential material redacted and filed
separately with the Commission.
2.
Agreement to
Process Orders; Consideration of Nominations
.
(a)
Orders within
Facility Commitment . Blackhawk Biofuels agrees
to process Feedstocks for all Orders received totaling up to 2.75
million pounds per Production Week, such processing to be within
the time frame as set out in Section 1(a) above (unless
otherwise agreed by the Parties). Blackhawk and REG Marketing
agree that any shortfall in biodiesel production or shipments due
in the previous Agreement dated July 1st, 2009 may be made up
under this Agreement without penalties.
(b)
Nominations in
Excess of Facility Commitment . In addition, should
REG Marketing offer to deliver Feedstocks in excess of such
Facility Commitment, Blackhawk Biofuels will consider any such
Nomination received, and shall have the right (but not any
obligation) to accept Nominations received from REG Marketing by
notice given during the Offer Period. If Blackhawk Biofuels
gives timely acceptance of a Nomination (pursuant to the provisions
set out in this Agreement, herein an “Acceptance”),
then Blackhawk Biofuels agrees to process Feedstocks received
pursuant to the terms of the Nomination (and such other applicable
provisions as set out herein).
3.
Manner of
Extending Order, Nominations, Acceptances . Notwithstanding any
provisions of Section 26(a) to the contrary, the Parties
may submit Orders, Nominations and Acceptances by telephone or
email, provided that any Order, Nomination or Acceptance submitted
by telephone must be followed by timely confirmation by
email.
4.
Toll Fees and
Payment . Blackhawk Biofuels
shall be paid a toll fee of $ *** for every gallon of Biodiesel at
standard temperature and pressure delivered to REG Marketing,
produced at the Facility from the Feedstocks delivered by REG
Marketing for all volumes shipped up to 2,500,000 gallons in a
calendar month. Blackhawk Biofuels shall be paid a toll fee of $
*** for every gallon of Biodiesel at standard temperature and
pressure delivered to REG Marketing, produced at the Facility from
the Feedstocks delivered by REG Marketing for all volumes shipped
in excess of 2,500,000 gallons in a calendar month. Payment shall
be made as follows:
(a)
The toll Fee
under the terms of such Orders or Nominations by wired funds to
Blackhawk Biofuels on the first business day following the
15 th for Biodiesel delivered
to REG Marketing from the 1 st to the 15
th
of the
month and on the first business day following the last day of each
month for Biodiesel delivered to REG Marketing on the 16
th
to the last
day of the month. Delivered to REG Marketing shall mean Biodiesel
meeting specifications loaded per shipping instructions FOB
Danville, IL.
5.
Co-Products
. REG
Marketing shall also be entitled to receive at no additional cost,
all glycerin and Fatty Acid produced as a result of the processing
of the Feedstocks.
3
*** Confidential material redacted and filed
separately with the Commission.
6.
Methanol and
Catalyst . REG Marketing shall
be responsible for the purchase and delivery of methanol and
catalyst to the Facility. The maximum allowed usage of methanol
shall be *** gal of methanol per gallon of biodiesel. The maximum
allowed usage of catalyst shall be *** lbs per gallon of biodiesel.
Blackhawk Biofuels will reimburse REG Marketing for usage of
methanol and catalyst above the maximums. The reimbursement will be
paid for overusage at the average price of the chemicals multiplied
by the overusage amount based on the biodiesel produced on a
monthly basis. REG Marketing will invoice Blackhawk Biofuels
within the first week of the following month. Payment terms
will be 7 days from receipt of invoice from REG Marketing. If
the actual positive or negative usage variance performance is
greater than 10% from the values given above, the parties will use
data gathered while producing under steady state conditions and
adjust the maximum allowed usages with approval to not be
unreasonably withheld, conditioned or delayed by either
party. Any changes will be contained in an addendum to this
Agreement.
7.
Maximum
Feedstock Usage and Overusage . In consideration of
the Toll Fee and handling of co-products agreed upon, Blackhawk
Biofuels agrees the Maximum Feedstock Usage(MFU) per Pound of
Delivered Biodiesel shall be as defined in Exhibit B for each
Feedstock Type.
For feedstocks
where a MFU value is clearly identified and not calculated, the
actual overuse, if any, will be calculated as follows:
Overusage based
on identified MCU = A – ( B x MFU)
Where A = Actual
pounds of Feedstock delivered from aggregate
BOL’s
B = Biodiesel
produced from Feedstock in gallons at standard
conditions
MCU = defined
value for feedstock type
For higher FFA
feedstocks or blends of feedstocks that do not have an identified
MFU and require the calculation, a daily flow proportioned
representative composite sample shall be tested and the resulting
%FFA will be used in the calculation. for MFU for the resulting
production volume. For feedstocks where a MFU value is
calculated and not clearly identified, the actual overuse, if any,
will be calculated as follows:
Overusage for
High FFA and Blends based on MCU calculation = C – (B x
MFU)
Where C = Actual
pounds of Feedstock delivered from aggregate
BOL’s
B = Biodiesel
produced from Feedstock in gallons at standard
conditions
MFU =
“Exhibit B calculation *1” using daily flow
proportioned representative composite sample
The reimbursement
will be paid for overusage at the average price of the feedstock
multiplied by the overusage amount based on the biodiesel produced
on a monthly basis. REG Marketing will invoice Blackhawk
Biofuels within the first week of the following month.
Payment terms will
4
be 7 days from
receipt of invoice from REG Marketing. If the actual positive
or negative usage variance performance is greater than 2% from the
values given or calculated in Exhibit B, the parties will use
data gathered while producing under steady state conditions and
adjust the defined MFU or formula “*1” with
approval to not be unreasonably withheld, conditioned or delayed by
either party. Any changes will be contained in an addendum to
this Agreement.
8.
Feedstocks
. The
Feedstocks to be delivered to the Facility pursuant to this
Agreement shall comply with the specifications set forth on
Exhibit B attached hereto or the specific purchase order,
whichever is the more restrictive specification. For Example,
if the tallow specification for FFA in Exhibit B was <4 and
the purchase order defined FFA as less than <2, then <2 shall
be the requirement. Prior to accepting deliveries of
Feedstocks, Blackhawk Biofuels shall have the right at its expense
to inspect and test the tendered Feedstocks to determine if it
meets the specifications required under this Agreement, and if any
such Feedstocks does not meet the required specifications then
Blackhawk Biofuels shall have the right to reject such Feedstocks
and require REG Marketing, at its cost, to replace the same with
Feedstocks that meets the required specifications. Should REG
Marketing propose any other type of Feedstocks other than
identified on Exhibit B, the Parties shall agree upon the
written specifications and MFU applicable to such additional
feedstock, and approve and attach such specifications and MFU as an
addendum to Exhibit B with approval to not be unreasonably
withheld, conditioned or delayed by either party.
9.
Biodiesel
. The
Biodiesel to be produced pursuant to this Agreement shall comply
with the specifications set forth on Exhibit C attached
hereto. At REG Marketing’s request, two (2) - one
(1) litre samples of the Biodiesel to be delivered to REG
Marketing by Blackhawk Biofuels shall be made available for testing
at REG Marketing’s cost, prior to REG Marketing picking up
such Biodiesel. Should inspection and testing determine that
any Biodiesel does not meet the required specifications (whether
determined before or after such Biodiesel has been picked up by REG
Marketing, and including after delivery to REG Marketing’s
customers), REG Marketing shall have the right to reject such
Biodiesel, and require Blackhawk Biofuels, at its cost, to replace
the same with Biodiesel that meets the required
specifications.
10.
Term . The term of this
Agreement shall be until September 30th, 2009 and commence
upon its signature by the Parties.
11.
Title . Except as otherwise
provided herein, title to the Feedstocks delivered by REG Marketing
pursuant to this Agreement and title to the contractual amount of
corresponding Biodiesel and Co-products produced from such
Feedstocks shall at all times be and remain with REG
Marketing. Any Feedstocks delivered by REG Marketing pursuant
to the terms and conditions of the Feedstock Agreement, however,
shall at all times be and remain with Bunge until such time as
title to such Feedstocks passes to REG Marketing pursuant to the
terms of the Feedstock Agreement.
12.
Risk of Loss;
Insurance . Risk of loss to the
Feedstocks and the Biodiesel and Co-Products produced therefrom
shall at all times be borne by REG Marketing, and REG Marketing
will maintain such property insurance on the Feedstocks and the
Biodiesel produced therefrom as REG Marketing shall
determine, in its sole discretion.
5
Blackhawk
Biofuels and REG Marketing shall each, at its own cost and expense,
obtain and maintain, during the term of this Agreement,
comprehensive general liability insurance, in minimum amounts of
Five Million Dollars ($5,000,000) per occurrence for damage, injury
and/or death to persons, and One Million Dollars ($1,000,000) per
occurrence for damage and/or injury to property and Worker’s
Compensation Insurance as required by law. Such coverage
shall be on a date of occurrence form, and be provided by an
insurance company reasonably satisfactory to the other Party.
Blackhawk Biofuels and REG Marketing shall each provide the other
with proof of such insurance coverage prior to any Feedstocks being
delivered, such insurance naming the other Party as an additional
insured, and providing that the coverage represented thereby shall
not be canceled nor modifi
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