Exhibit 10.3
DDGS MARKETING CONTRACT
TERMINATION
THIS DDGS MARKETING CONTRACT
TERMINATION (the “
DDGS Marketing Contract Termination ”) is made and
entered into this 4th day of November, 2005 by and between Broin
Enterprises, Inc., a South Dakota corporation, doing business as
Dakota Commodities (“ Dakota Commodities ”), and
Dakota Ethanol, L.L.C., a South Dakota limited liability company
(“ Dakota Ethanol ”).
RECITALS:
WHEREAS , Dakota Commodities and Dakota Ethanol are
parties to a certain DDGS Marketing Contract, dated as of June 7,
2001 (the “ DDGS Marketing Contract ”), relating
to Dakota Commodities’ marketing of dry distiller’s
grain with solubles, modified wet distiller’s grain, wet
distiller’s grain and solubles (syrup) (hereinafter
collectively referred to as “ DDGS ”) produced
by Dakota Ethanol at its facility located in Lake County, South
Dakota, (the “ Plant ”);
WHEREAS , pursuant to the DDGS Marketing Contract,
Dakota Commodities agreed to market all DDGS produced at the Plant,
and Dakota Ethanol agreed to pay Dakota Commodities a Marketing Fee
in the amount of three percent (3%) of gross monthly DDGS sales,
with a minimum annual marketing fee of Two Hundred Thousand Dollars
($200,000.00) per year;
WHEREAS , Dakota Commodities’ duties under the
DDGS Marketing Contract commenced upon the start of production of
ethanol at the Plant and under the terms of the DDGS Marketing
Contract expires on September 1, 2006, a date five (5) years from
the start of production of DDGS; and
WHEREAS , each of the parties desires to terminate the
DDGS Marketing Contract under the terms and conditions stated
herein.
NOW THEREFORE
, in consideration of the mutual
representations, warranties and covenants contained herein and of
other good and valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties agree as follows:
1.
Termination of DDGS Marketing
Contract . Effective as of the close of business on
November 30, 2005 (the “ Termination Date ”),
the DDGS Marketing Contract shall be terminated in accordance with
the provisions of this DDGS Marketing Contract
Termination.
A.
Notwithstanding the foregoing,
Dakota Ethanol shall be permitted to continue to access AgMotion
through December 5, 2005 in order to obtain shipment and related
information with respect to DDGS products shipped prior to the
Termination Date. On December 6, 2005, Dakota Commodities
shall disable Dakota Ethanol’s access to AgMotion.
B.
From and after the Termination Date,
Dakota Ethanol shall assume all responsibilities arising from the
services previously undertaken by DDGS under the
DDGS Marketing Contract and under
the outstanding contracts listed on Exhibit A attached
hereto and incorporated herein by this reference. Without
limiting the foregoing, Dakota Ethanol shall be responsible for
completing any outstanding futures, options, hedges or other
contracts outstanding as of the Termination Date as set forth on
Exhibit A hereto, which Dakota Commodities represents and warrants
is a complete list of all such contracts; provided that Dakota
Commodities shall not enter into any futures, options, hedges or
other contracts on behalf of Dakota Ethanol after the date hereof
without the express written consent of Dakota Ethanol. Dakota
Ethanol shall further be responsible for transferring any existing
risk management, hedging or other accounts established by Dakota
Commodities for the benefit of Dakota Ethanol to similar accounts
established by Dakota Ethanol at the sole cost and expense of
Dakota Ethanol.
C.
Dakota Commodities shall be
obligated to make reasonable efforts to collect accounts receivable
outstanding as of the Termination Date and to remit to Dakota
Ethanol payments received therefrom, less any amounts owed to
Dakota Commodities. The list of outstanding accounts
receivable as of the date of this DDGS Marketing Contract
Termination is attached hereto as Exhibit B , and on
December 1, 2005, Dakota Commodities shall provide an updated list
of accounts receivable outstanding as of the Termination
Date. If the accounts receivable are not collected after
reasonable attempts to do so, Dakota Commodities shall assign such
accounts receivable to Dakota Ethanol and Dakota Commodities’
obligations with respect to the collection of such accounts shall
be terminated.
D.
In connection with the termination
of the DDGS Marketing Contract, all leases or other rights of
Dakota Ethanol to use any trucks or rail cars of Dakota Commodities
shall cease on the Termination Date, and any agreements, leases,
memorandums of understanding or other letter agreements between the
parties with respect thereto shall automatically terminate and any
prior notice provisions therein are hereby mutually waived by the
parties hereto.
E.
Any and all outstanding invoices,
billing statements, and other amounts due and owing to Dakota
Ethanol pursuant to the DDGS Marketing Contract shall be paid in
full by Dakota Commodities as of the Termination Date, except for
the accounts receivable outstanding as of such date but not yet
collected.
2.
Payments to Dakota
Commodities .
A.
Dakota Ethanol shall pay Dakota
Commodities the sum of Two Hundred Fourteen Thousand Five Hundred
Thirty-Nine Dollars ($214,539.00) on or before November 30,
2005. Dakota Commodities agrees that the amounts
payable to Dakota Commodities hereunder represent fair and
sufficient consideration for termination of the DDGS Marketing
Contract as provided herein.
B.
Notwithstanding anything to the
contrary contained herein, subsequent to the Termination Date,
Dakota Commodities may receive payment on sales of DDGS made prior
to the Termination Date. Upon receipt of such funds, Dakota
Commodities
2
shall calculate the amounts payable
to Dakota Ethanol consistent with the terms of the DDGS Marketing
Contract and related purchase and sale agreements, and shall
promptly remit the amounts payable to Dakota Ethanol in accordance
with current practices existing among the parties.
C.
Dakota Ethanol agrees that it shall
not enter into any financing agreements, covenants, or restrictions
or other agreements or covenants that would pr
