EXHIBIT 10.6
DDGS MARKETING AND SERVICES AGREEMENT
This Agreement is made and entered into this 8th day of March, 2002 by and
between Northern Lights Ethanol, LLC (hereinafter referred to as "Company"), and
Broin Enterprises, Inc. d/b/a Dakota Commodities having an address of 000
Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx Xxxxxx 00000 (hereinafter referred to as
"Marketer"),
RECITALS:
A) Company will produce Dry Distiller's Grain with Solubles, Modified Wet
Distiller's Grain, Wet Distiller's Grain and Solubles (syrup)
(collectively the "DDGS") at its plant in Grant County, South Dakota.
B) Company would like to utilize the services of a DDGS marketer to
market DDGS from its plant to be sited in Grant County, South Dakota.
C) Marketer is in the business of marketing DDGS in the United States.
D) The parties desire to enter into and execute this Agreement for the
purpose of setting forth agreed upon terms and conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the parties agree as follows:
1. MARKETING RIGHTS. Company gives Marketer exclusive rights to market all
DDGS produced from its DDGS plant in Grant County, South Dakota.
2. TERM OF AGREEMENT. The term of this agreement shall commence approximately
three hundred and sixty five (365) days following the date the plant begins
processing corn or sooner upon mutual consent of the parties. The term of
this agreement shall continue for a minimum of five (5) years from the time
the term begins or the plant begins operation, whichever is later. This
agreement renews automatically for additional five (5) year periods, at the
end of each five (5) year period, unless terminated by either party. At the
end of each five (5) year period, either party may terminate this agreement
by giving ninety (90) days notice of termination to the other party prior
to the end of the then current term. Within fifteen (15) days of written
notice of termination by the Company, Marketer will provide Company a
quantity per month of DDGS for up to one (1) year from termination that
will be needed to fulfill sales contracts in existence at the time of
termination. Company agrees that all existing contracts disclosed in the
fifteen (15) day period will be fulfilled, and that the terms of this
agreement will remain in effect for all such DDGS.
3. MARKETING SERVICES PROVIDED. Marketer will provide to Company the following
marketing services:
a. MARKETING. Marketer will affect the sale of Company's DDGS at
available market prices.
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b. SCHEDULING AND DISTRIBUTION. Marketer will be responsible for
scheduling all shipments of Company's DDGS. Marketer will provide to
Company a shipping order, and Company will provide a combined shipping
schedule as stated in Section 5 below.
c. FREIGHT. When necessary to market Company's DDGS, Marketer will
arrange freight for shipment of Company's DDGS. Company will pay all
freight costs.
d. CUSTOMER CREDITWORTHINESS. Marketer will make reasonable efforts to
review the creditworthiness of Company's DDGS customers. As deemed
necessary at Marketer's discretion, Marketer will obtain at its
expense credit bureau reports or Xxxx and Bradstreet reports for
customers of Company.
e. ACCOUNTS RECEIVABLE. All accounts receivable losses arising from the
sale of DDGS are the sole responsibility of the Marketer.
f. TITLE TO AND RISK OF LOSS. Title to and risk of loss shall pass from
Company directly to Company's customer according to the provision of
each sale transaction.
g. TRANSACTION PROCESSING. Marketer will be responsible for invoicing all
DDGS marketed, receiving payments from customers, and paying freight
and/or storage when necessary. Company will be responsible for
furnishing Marketer a report by 10:00 AM each workday of the previous
day's shipments. Marketer will send to the customers invoices the same
day as the report is received.
h. REMITTANCE OF PAYMENT. Each week a payment will be made to Company for
all DDGS invoiced thirteen to nineteen (13-19) days prior to said date
and that has been paid by Company's customers. This payment will be
adjusted for freight and storage costs as described above in this
Section and the Marketing Fee stated in Section 4 of this Agreement.
4. MARKETING FEE. The Marketing Fee will be three percent (3%) of gross
monthly DDGS sales, F.O.B. the plant site.
5. REPORTING. Marketer will provide Company with the following reports on a
schedule described below during the term of this Agreement:
Shipping Orders - Daily
Market Information - Weekly
Sales Summary - Monthly
Company will provide Marketer with the following reports on a schedule
described below during the term of this Agreement:
Daily Production - Daily
Combined Shipping Schedule - Daily
In addition to the aforementioned reports, Company will timely inform
Marketer of daily inventories, plant shutdowns, daily production
projections, and any other information requested by Marketer in order for
Marketer to perform under this Agreement. In the event of a planned
shutdown (such as for boiler inspections, major anticipated repairs,
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expansions) in excess of four hours, Company shall notify Marketer of the
date and length of the planned shutdown at least two weeks prior to the
planned shutdown.
6. DISCONTINUATION OF PRODUCTION. In the event that Company wishes to
discontinue or reduce the production of DDGS, Company will notify Marketer
one year in advance of Company's decision so that all contract commitments
made by Marketer for Company may be met. If less than one year notice of
discontinuance or reduction of production is provided to Marketer, or if
unforeseen circumstances cause Company to cease or reduce production at its
plant, Company grants Marketer the power to buy in DDGS shortfalls for the
account of the Company on any unfilled contacts, and any associates losses
will be reimbursed by Company to Marketer.
7. LIABILITY. Company recognizes that Marketer will be performing its duties
hereunder as an undisclosed agent for and on behalf of Company.
Nevertheless, and all liability related to the DDGS, including but not
limited to DDGS quality and condition, the timely delivery of DDGS, and the
handling, transportation, and storage, shall remain the sole responsibility
of Company, except to the extent provided in Section 7.
8. INDEMNIFICATION OF MARKETER. Company shall indemnify, hold harmless and
defend Marketer, and its officers, directors, employees and agents from and
against any and all claims, actions, damages, liabilities and expenses,
including but not limited to attorney's and other professional fees, in
connection with the loss of life, personal injury and/or damage to property
of third parties, arising from or out of Marketer's services provided under
the terms and conditions of this Agreement, for Company's breach of this
Agreement, the quality and condition of the DDGS, the breach of any
warranty or representation regarding the quality and condition of the DDGS,
the failure of the Company to timely deliver DDGS, and the handling,
transportation and storage, except that Company shall not indemnify, hold
harmless and defend Marketer from (i) the negligent or intentional acts of
Marketer and its officers, directors, employees and agents, (ii) any act
beyond the scope of the Marketer's services to be rendered under the terms
and conditions of this Agreement, and (iii) any violation of laws,
regulations, ordinances and/or court orders by Marketer.
9. INDEMNIFICATION OF COMPANY. Marketer shall indemnify, hold harmless and
defend Company, and its officers, employees and agents from and against any
and all claims, actions, damages, liabilities and expenses, including, but
not limited to, attorneys' and other professional fees, in connection with
Marketer's breach of this Agreement and, in connection with loss of life,
personal injury and/or damage to property of third parties arising from or
out of (i) the negligent or intentional acts of Marketer and its officers,
directors, employees and agents, (ii) any act beyond the scope of
Marketer's services to be rendered under the terms and conditions of this
Agreement, and (iii) any violation of laws, regulations, ordinances and/or
court orders by Marketer.
10. INSURANCE. Marketer will furnish Company with an insurance certificate
verifying that Marketer has commercial general liability insurance.
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11. ENTIRE AGREEMENT AND AMENDMENT. This Agreement contains the entire
Agreement between the parties. No oral statements, representations or prior
written matter not contained in this Agreement shall be binding upon the
parties. This Agreement shall not be amended or modified in any manner
except by a writing executed by both parties.
12. CONFIDENTIAL NATURE OF AGREEMENT. Marketer and Company agree to keep all
sales, prices, inventory positions, and the details of this Agreement
strictly confidential.
13. ASSIGNMENT. This Agreement shall not be assigned by either party, except to
an affiliate controlled by or in control of said party, without the written
consent of the other party.
14. GOVERNING LAW. This Agreement shall be governed, construed and enforced
under the laws of the State of South Dakota.
15. FORCE MAJEURE. Marketer shall not be liable to Company for its failure to
deliver services hereunder, and Company shall not be liable to Marketer for
its failure to produce DDGS, when such failure shall be due to the failure
of processing equipment, fires, floods, storms, weather conditions,
strikes, lock outs, other industrial disturbance, riots, legal
interference, governmental action or regulation, acts of terrorism, acts of
God or public enemy, or, without limitation by enumeration, any other cause
beyond Marketer's or Company's reasonable control; provided Marketer or
Company shall promptly and diligently take such action as may be necessary
and practicable under the then existing circumstances to remove the cause
of failure and resume delivery of services or DDGS. The party seeking to
invoke this provision shall provide notice within 48 hours or such other
time as is reasonable under the circumstances. The party shall further
notify the other party as to the time when the force majeure condition is
no longer in effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.
Northern Lights Ethanol, LLC
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Print: Xxxxxx Xxxxxxxx
Its: Chairman
Broin Enterprises, Inc., d/b/a Dakota
Commodities
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Its: C.E.O.
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FIRST AMENDMENT TO DDGS MARKETING
AND SERVICE AGREEMENT
This First Amendment to DDGS Marketing and Service Agreement (the
"First Amendment") is, for good and valuable consideration, entered into by and
between Northern Lights Ethanol, LLC (the "Company") and Broin Enterprises, Inc.
d/b/a/ Dakota Commodities (hereinafter referred to as "Marketer").
RECITALS
A. The parties entered into a DDGS Marketing and Service Agreement dated the 8th
of March, 2002 (hereinafter referred to as "Agreement"), relating to the
marketing of Dry Distiller's Grain with Solubles, Modified Wet Distiller's
Grain, Wet Distiller's Grain and Solubles (collectively the "DDGS") from the
ethanol plant located in Grant County, South Dakota.
B. The term of the Agreement, and all services related thereto, were to commence
either 365 days following the date the ethanol plant began processing corn, or
earlier, upon mutual consent of the parties.
C. The Company and Marketer have mutually agreed to commence the term of this
Agreement sooner than 365 days following the date the ethanol plant begins
processing corn, and agree to commence the term of the Agreement on the date
indicated below.
NOW, THEREFORE, the parties agree that such Agreement may be amended to
read as follows:
Section Two (2), first sentence, page 1, of the Agreement shall read as
follows:
The term of this agreement shall commence on May 10, 2002.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date written below.
NORTHERN LIGHTS ETHANOL, LLC
By: /s/ Xxxxxx Xxxxxxxx
Its: Chairman
BROIN ENTERPRISES, INC.
By: /s/ Xxxxxx Xxxx
Its: General Manager
