ETHANOL SALES AND MARKETING AGREEMENT
Exhibit 10.16
ETHANOL SALES AND
MARKETING AGREEMENT
MARKETING AGREEMENT
THIS ETHANOL SALES AND MARKETING AGREEMENT (this “Agreement”) is made effective as of December 8,
2006 (the “Effective Date”) by and between Provista Renewable Fuels Marketing, LLC, with offices at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Provista”), and Amaizing Energy Denison, LLC,
with offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Customer”). Any reference herein to a
“Party” shall refer to Provista or Customer individually, and any reference herein to “Parties”
shall refer to both Provista and Customer.
RECITALS
WHEREAS, Customer has constructed or plans to construct an ethanol production facility in Denison,
IA (the “Facility”); and
WHEREAS, Customer desires to sell, and Provista desires to market on customer’s behalf, the entire
output of ethanol (which is a clear odorless liquid produced for use as a motor fuel made from
fermented grain being approximately 200 proof alcohol produced by Customer at the Facility, which
also includes any blends, including but limited to E85, made from ethanol, and is referred to
hereinafter as the “Ethanol”) produced at the Facility; and
WHEREAS, Customer and Provista each desire to agree in advance of such sale and purchase of the
Ethanol to the price formula, payment, delivery and other terms thereof in consideration of the
mutually agreed performance of the other pursuant to the terms of this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and all of the representations, warranties,
undertakings, covenants, promises and agreements set forth herein, which Customer and Provista each
acknowledge are adequate and sufficient, Customer and Provista do hereby agree as follows:
I. DEFINITIONS AND INTERPRETATION.
A. Applicability. The definitions in this Section I. apply to this Agreement. Any
word, phrase or expression that is not defined in this Agreement and that has a generally
accepted meaning in the custom and usage in the ethanol industry in the United States shall
have that meaning in this Agreement.
B. “ASTM” is defined as the American Society for Testing and Materials. “ASTM D-4806” is
the standard specification for denatured fuel ethanol to be blended with gasolines for use
as an automotive spark-ignition engine fuel.
C. “Buyer” is defined as the entity to whom Provista sells Ethanol.
D. “Commencement Date” is defined as the day that Customer notifies Provista that the
Facility is ready for operation. Or first day this contract is applicable, January 1, 2007.
Ethanol Marketing Template Version 2.0
| * | Portions omitted pursuant to a request for confidential treatment and filed separately with the SEC. |
E. “Execution Costs” are defined as: (i) the actual costs charged by a third party, or
otherwise incurred, for freight and/or transportation of the Ethanol from the Facility to
Buyer including, but not limited to, charges and fees for any and all rail car leases,
Ethanol losses incurred as a result of the loading and unloading of the product during
transportation process, interim storage and/or terminalling incurred prior to such delivery
to Buyer, (ii) insurance, and (iii) all other costs and charges charged by a third party in
connection with such transportation and delivery to Provista’s customer, without ▇▇▇▇-up by
Provista, and without charge for Provista’s administrative costs.
F. “Facility” means Ethanol Production Plant at Denison, IA.
G. “Gallon” means one U.S. gallon of Ethanol at 60 degrees Fahrenheit, in accordance with
customary industry weights and measures.
H. “Initial Term” is defined as a term of two (2) years from the Commencement Date.
I. “Renewal Terms” are defined as consecutive terms of one (1) year each after the Initial
Term unless this agreement is terminated as provided in Section II.A.
II. TERM OF AGREEMENT; TERMINATION.
A. Term. This Agreement shall be effective and binding as of the Effective Date;
provided, however, that the obligations of Provista under this Agreement, and the
obligations of Customer under this Agreement, shall commence on the Commencement Date and
shall continue for the Initial Term. After the expiration of the Initial Term, this
Agreement shall automatically renew for the Renewal Terms, unless terminated by Provista or
Customer effective as of the end of the Initial Term, or the then existing one (1) year
Renewal Term, upon at least ninety (90) days’ prior written notice.
B. Early Termination by Customer as a Result of Provista’s Breach. In the event
that Provista fails or refuses to comply with any material provision of this Agreement, then
Customer shall have the right to elect to terminate this Agreement by giving Provista at
least thirty (30) calendar days’ written notice prior to the effective date of termination,
setting forth the reason(s) for termination. Provista shall have the right to cure the
breach within such thirty (30) day period. If said breach is cured within such time period,
the notice of termination to Provista shall be void. However, if the breach is not cured
within such time period, the termination shall be effected. The exercise by Customer of any
rights reserved under this Section shall be without prejudice to any claim for damages or
for any other right under this Agreement or applicable law.
C. Early Termination by Provista as a Result of Customer’s Breach. In the event
that Customer fails or refuses to comply with any material provision of this Agreement, then
Provista shall have the right to elect to terminate this Agreement by giving Customer at
least thirty (30) calendar days’ written notice prior to the effective date of termination,
setting forth the reason(s) for termination. Customer shall have the right to cure the
breach within such thirty (30) day period. If said breach is cured within such time period,
the notice of termination to Customer shall be void. However, if the breach is not cured
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within such time period, the termination shall be effected. The exercise by Provista of any
rights reserved under this Section shall be without prejudice to any claim for damages or
any other right under this Agreement or applicable law.
D. Survival. All obligations, promises and agreements of both Customer and Provista
that expressly, or by their nature, survive the expiration or termination of this Agreement
including, but not limited to, each of the Party’s monetary obligations and indemnification
obligations herein, shall continue in full force and effect subsequent to, and
notwithstanding, expiration or termination of this Agreement until they are satisfied, or by
their nature expire.
III. SALE AND MARKETING OF THE ETHANOL.
A. Purchase and Sale. Customer agrees to sell to Provista, and Provista agrees to
purchase from Customer, at prices determined in accordance with this Agreement, all of the
Ethanol produced at the Facility, subject to all terms and conditions set forth in this
Agreement; provided however that Provista shall be relieved of its obligation to purchase
all of the Ethanol produced at the Facility when Provista presents a sales contract to
Customer, and Customer, for whatever reason, declines to accept such sales contract. In
such cases, Provista shall incur no liability for its failure to purchase all the Ethanol
produced at the Facility. Provista agrees to purchase all the Ethanol delivered in
accordance with this Agreement notwithstanding that the Facility may be operating at less
than full capacity. Customer estimates, but it does not represent or warrant, that on an
annual basis, it shall make available for delivery to Provista approximately 50 Million
Annual gallons of Ethanol provided that each party hereto agrees that Customer has no
obligation to produce such amount of Ethanol and shall incur no liability by reason of its
failure to make such amount of Ethanol available for delivery except for any and all
contractual commitments Provista may have entered into on behalf of Customer as of Effective
Date or as otherwise specifically provided for herein.
B. Delivery. For purposes of this Section III., “Delivery” of Ethanol is defined as
the actual transfer of Ethanol to the possession of Buyer at the Delivery Point. For
purposes of this Section III., “Delivery Point” is either: (1) the outlet flange
transferring Ethanol into Buyer’s rail cars or trucks at the Facility, or (2) if such rail
cars or trucks are not the Buyer’s, then when the Ethanol is delivered to Buyer’s specified
destination, and the title will remain with Provista until such delivery. Provista and/or
Provista’s agents shall be given access to the Facility as reasonably necessary for Provista
and/or Provista’s agents to arrange for Delivery of the Ethanol to Buyer. With Customer’s
consent, which consent shall not be unreasonably withheld or delayed, Provista shall
schedule the loading and shipping of all outbound Ethanol purchased hereunder, but all labor
and equipment necessary to load trucks and rail cars shall be supplied by Customer without
charge to Provista. Execution Costs associated with the transportation of the Ethanol to
Buyers will be reviewed by the “Marketing Committee” (as that term is defined in Section
III.I.) in an effort to help Customer maximize its net price for the Ethanol delivered
hereunder.
C. Handling and Title. Customer agrees to handle the Ethanol in a good and
workmanlike manner in accordance with Provista’s reasonable written requirements conforming
to normal industry practice. Customer shall maintain the truck and rail
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loading facilities
at the Facility in safe operating condition in accordance with normal industry standards and
will visually inspect all trucks and rail cars to assure cleanliness so as to avoid
contamination from contaminants apparent to the naked eye. Customer shall be responsible
for any loss, claim, damage and/or expense arising from, or out of: (i) Customer’s
negligence in handling the Ethanol, and/or (ii) Customer’s failure to handle the Ethanol in
accordance with Provista’s reasonable written requirements and normal industry practice
including, but not limited to, loss, claim, damage and/or expense arising or out of trucks
and/or rail cars that are overfilled at the Facility. Provista agrees that it will be
responsible for any damage or injury to persons or property at the Facility as a result of
Provista’s own negligence or willful misconduct and that Provista will follow all safety
rules and procedures reasonably promulgated by Customer and provided to Provista in writing.
In the event of a transfer to a Delivery Point as defined in Section III.B(1), title, risk
of loss and full shipping responsibility shall pass to Provista, and then to Buyer, at the
Delivery Point, subject to the terms and conditions of this Agreement. In the event of a
transfer to a Delivery Point as defined in Section III.B(2), title, risk of loss, and full
shipping responsibility shall pass to Provista upon the transfer of the Ethanol into the
rail cars or trucks and pass to Buyer at the Delivery Point, subject to the terms and
conditions of this Agreement.
D. Storage at the Facility. Customer shall provide, at its sole cost, storage space
at the Facility for the storage of up to 1.5 million gallons of Ethanol so as to provide
flexibility in marketing efforts. Customer shall be responsible at all times for the
quality and condition of the Ethanol in storage at the Facility.
E. Production Estimates. Commencing on or before the fifteenth (15th)
day of the month preceding the Commencement Date and continuing on the fifteenth
(15th) day of each month during the term of this Agreement, Customer shall
provide to Provista a 12-month rolling forecast of the volume of Ethanol to be produced and
delivered by Customer for such 12-month rolling period. Customer shall immediately notify
Provista of any changes to the Ethanol production estimate for such 12-month rolling period
as soon as Customer has knowledge of the same. At least five (5) days prior to the
beginning of the week during which it is to be removed by Provista, Customer may also
provide a weekly estimate (the “Weekly Estimate”) to Provista of the volume of the Ethanol
(each such amount, a “Ethanol Parcel”) to be produced and delivered by Customer together
with a notice of the amount of the Ethanol in inventory as of the date of the notice.
F. Transportation. Regardless of the amounts set forth in each Weekly Estimate, at
least five (5) days prior to the beginning of the week during which Ethanol produced by
Customer will be removed, Provista shall schedule for removal by truck or rail car the
actual quantity of the Ethanol produced by Customer in the relevant week less the sum of
such amount of the Ethanol that Provista and Customer agree shall be stored at the Facility.
In the event that Customer fails to provide the labor, equipment and facilities necessary
to meet Provista’s loading schedule, Customer shall be responsible for actual demurrage and
wait time incurred by Provista resulting from Customer’s failure to do so. Provista shall
order and supply trucks or rail cars as scheduled for truck or rail
shipments. All Execution Costs shall be billed directly to Provista and deducted by
Provista from the proceeds of Provista’s sales of the Ethanol to Buyer. Provista shall
diligently pursue, secure and maintain all necessary agreements to transport the Ethanol
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and
shall use commercially reasonable efforts to obtain the lowest charges in respect of
Execution Costs in an effort to help Customer maximize its net price for the Ethanol
delivered hereunder after deduction of Execution Costs in accordance with Section
III.J. of this Agreement. On a daily basis, Customer shall inform Provista of the
inventory and production status for the Facility by 8:30 a.m. CST. Customer agrees that it
shall utilize all commercially reasonable efforts to purchased and install equipment for the
electronic transfer of loading and inventory data to Provista on a continuous basis.
G. Rail Car Leases. Provista shall supply Customer with assumptions and information
required for Customer to determine the size of a rail car fleet for efficient disposition of
Customer’s Ethanol production. From time to time during the term of this Agreement, and in
order to help reduce Execution Costs and help Customer maximize its net price for the
Ethanol delivered hereunder, Provista may enter into rail car leases for the transportation
of the Ethanol in order to service Customer (“Rail Car Leases”). For any Rail Car Leases
entered into by Provista hereunder, Customer represents and warrants that it shall be
responsible for any and all costs associated with such Rail Car Leases and the use of the
rail cars. Provista shall communicate to Customer the terms and conditions of the Rail Car
Leases. Upon receipt of such information, an officer or authorized representative of
Customer, shall in writing acknowledge the terms of the Rail Car Leases. NOTWITHSTANDING
THE ABOVE, CUSTOMER’S FAILURE TO (1) ACKNOWLEDGE THE TERMS OF THE RAIL CAR LEASES OR (2)
HAVE AN OFFICER OR AUTHORIZED REPRESENTATIVE SIGN THE AFOREMENTIONED RAIL CAR LEASE TERM
LETTER, IN EITHER INSTANCE, SHALL IN NO WAY ABSOLVE CUSTOMER OF ITS OBLIGATIONS TO PROVISTA
REGARDING SUCH RAIL CAR LEASES AS PROVIDED HEREIN. Provista shall provide Customer with
notice of the schedule for all truck and railcar shipments no less than forty-eight (48)
hours prior to their scheduled arrival at the Facility, as well as an estimate of the
associated Execution Costs.
In order to maximize the efficiencies of the rail cars leased under the Rail Car Leases,
Customer agrees that Provista may, from time to time, utilize Customer’s rail cars for other
Provista customers if such rail care are not needed, or bring in additional rail cars from
other Provista customers for Customer when additional are required. Customer will receive
the benefit of any cost reduction when its rail cars are utilized elsewhere, and will
likewise, be responsible to pay for any increased costs associated with utilizing other
Provista customer’s rail cars.
Upon the expiration of the Agreement or in the event of Customer’s early termination of the
Agreement (other than as a direct result of Provista’s breach), Provista agrees that it
shall use commercially reasonable efforts to secure the Rail Car lessor’s consent to the
assignment or consent to the sublease of the Rail Car Leases from Provista to Customer for
the remaining term, and Customer will cooperate with Provista regarding the same. In the
event Provista is unable to secure the lessor’s consent to assign or sublease the Rail Car
Leases to Customer, Provista and Customer shall take all reasonable steps so that the
benefits and obligations arising under said Rail Car Leases post-termination of the
Agreement insure to the Customer; provided however, that IN ANY EVENT
CUSTOMER SHALL REMAIN FULLY RESPONSIBLE FOR ANY AND ALL COSTS UNDER THE RAIL CAR LEASES
THROUGH THE FULL TERM OF THE RAIL CAR LEASES.
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H. Certain Contracts. From time to time during the term of this Agreement and in
order to maximize the sales price of the Ethanol, Provista may enter sales contracts or
agreements in its reasonable discretion with Buyers of the Ethanol which contracts are
dependent on the availability of the Ethanol from Customer. In such instances, Provista
shall promptly communicate to Customer the terms and conditions of such contracts
specifically detailing price, volume and the length of such commitments (“Contract Offer”).
Notices of any such Contract Offers shall be given to a specific individual employee of
Customer, designated by Customer from time to time during the term of this Agreement (the
“Customer Contact”). Upon receipt of such information, the Customer Contact shall either
direct Provista to reject or accept such Contract Offer. Any Contract Offer not accepted by
the Customer Contact within two (2) business days of his or her receipt of the same shall be
deemed rejected by Customer. If Customer instructs Provista to enter into any forward
contract(s) on Customer’s behalf, any market loss incurred shall be solely at Customer’s
expense.
Notwithstanding the above, Customer acknowledges that certain market conditions may require
that Customer’s decision whether to reject or accept a Contract Offer be made in less than
two (2) business days. In such cases, and notwithstanding Section V.H., Provista’s
notice to Customer may be sent via facsimile or e-mail to the Customer Contact and shall:
(i) specifically state a deadline for the Customer Contact’s decision (the “Deadline”), (ii)
specifically state the manner in which the Customer Contact is to respond to Provista (via
facsimile, telephone and/or e-mail), and (iii) identify the terms and conditions of such
contract specifically detailing price, volume and the length of such commitments
(“Accelerated Contract Offer”). In the case of an Accelerated Contract Offer, and provided
that the Accelerated Contract Offer is consistent with Customer’s short term marketing
strategies as determined by the Marketing Committee from time to time pursuant to
Section III.I. below, any Accelerated Contract Offer not accepted by the Customer
Contact prior to the Deadline shall be deemed rejected by Customer.
| I. Marketing Committee. A marketing committee (the “Marketing Committee”) shall be established by the parties as soon as practicable following execution of this Agreement which shall include two (2) representatives of Customer (the “Customer Representatives”) and two (2) representatives of Provista (the “Provista Representatives” and, together with the Customer Representatives, the “Members”). The chairman of the Marketing Committee (the “Chairman”) shall be appointed by Customer. All decisions of the Marketing Committee shall be by resolution of the Members, provided that in the case of a deadlock that cannot be resolved by mutual agreement between the Members in a timely manner, the matter shall be referred by the Members for resolution to the Chairman. |
The quorum for any meeting of the Marketing Committee shall be at least one (1)
representative of Customer and at least one (1) representative of Provista. The Marketing
Committee shall meet as regularly as the Chairman shall determine, but not less than: (i)
once quarterly, upon not less than seven (7) days’ written notice to the Members (or such
shorter time period as the Members may agree), to review long term marketing strategies; and
(ii) once monthly on the first business day of each month or on such other date as the
Chairman may select on not less than two (2) days’ written notice to the Members (or such
shorter time period as the Members may agree), to review short term marketing
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strategies.
Meetings of the Marketing Committee may be held by video conference or telephone (followed
by the mutual confirmation by either facsimile or electronic mail); or facsimile or
electronic mail (with written confirmation of receipt by the recipient) if so agreed by the
Members.
The functions of the Marketing Committee shall be:
(i) In the case of meetings regarding long term marketing strategies: (a) to define
the marketing policy and agree to a marketing plan (each, a “Marketing Plan”) for
the next calendar quarter and (b) to review market conditions, prices and other
comparable sales of the Ethanol made by Provista;
(ii) In the case of meetings regarding short term marketing strategies, to review
market conditions, prices and comparable sales of the Ethanol made by Provista; and
(iii) To review actual performance against the previous Marketing Plan and any
modifications thereof.
On the first business day of each calendar month, Provista shall provide to the Members a
statement of all the Ethanol sales and purchases contracted for by Provista with Buyers
during the prior month. Each such statement shall specify with respect to all such sales
and purchases the relevant parties, the quantity contracted, the price, all Execution Costs
and any fees, offsets, rebates or other arrangements relating to any purchase or sale or
affecting the price.
J. Price and Payment. For all the Ethanol sold by Customer to Provista hereunder,
Provista shall pay to Customer the “F.O.B. Facility Price” (as such term is defined below)
For the purposes of this Agreement, the term “F.O.B. Facility Price” shall mean the actual
sale price Provista invoices its Buyers (the “Provista Buyer Actual Price”) minus a
marketing fee *** of the Provista Buyer Actual Price (the “Marketing Fee”) minus the
Execution Costs; ***
Provista will not instruct Customer to load any truck or rail car, and Customer shall not be
obligated to load any truck or rail car, with any Ethanol Parcel at the Facility unless such
Ethanol Parcel has been sold by Provista to Buyers, or to Provista for its own account, and
a copy of a valid written invoice stating the sale price and destination has been executed.
Provista agrees to use commercially reasonable efforts to achieve the highest resale price
available under prevailing market conditions and to obtain the lowest charges in respect of
Execution Costs in an effort to help Customer maximize its net price for the Ethanol
delivered hereunder.
Within five (5) business days following receipt of evidence by the Buyer of the volume of
the Ethanol shipped in each Ethanol Parcel from Customer to Buyer, Provista shall pay
Customer the F.O.B. Facility Price determined pursuant to this Agreement, by direct wire
transfer or electronic transfer to the bank account designated by Customer from time to
time. In the event that railcars of product do not arrive properly at the final destination
location of consignment per the contractual sale, Provista will pay Customer within 20 days
of the load date. Provista agrees to maintain accurate records including, but not
| * | Portions omitted pursuant to a request for confidential treatment and filed separately with the SEC. |
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limited to, sales, Execution Costs, insurance and inspection records and to provide such records to
Customer upon request for the period set forth in Section III.Q.
In addition to all other rights and remedies provided in this Agreement or by applicable law
or equity, if Provista fails to pay all or any portion of any undisputed amount owing by it
when due, such unpaid amount shall bear interest at a rate equal to one percent (1%) per
annum above the Prime Rate (as defined below) calculated daily from and including the date
such amount is due hereunder to but excluding the date it is actually paid. For purposes of
this Agreement, “Prime Rate” shall be the prime commercial lending rate being from time to
time published in the Money Rate Table of “The Wall Street Journal” as the prime rate of
annual interest for the date of determination (or if the Money Rate Table is not published
by “The Wall Street Journal” on such date because such day is not a business day, the last
preceding day on which such table was published by “The Wall Street Journal”). If the Money
Rate Table is no longer published by “The Wall Street Journal,” the Prime Rate shall be the
prime commercial lending rate being offered by Citibank, N.A.
K. Quantity. The quantity of Ethanol delivered to Provista from the Facility into
tank trucks and/or tank cars shall be measured, at no cost to Provista, by calibrated meters
or calibration tables which comply with all applicable laws, rules and regulations or in
such other manner as mutually acceptable to Provista and Customer.
L. Quality. Customer understands that Provista intends to sell the Ethanol
purchased from Customer as motor fuel quality ethanol and that said Ethanol is subject to
minimum quality standards for such use including, but not limited to, ASTM D-4806. Customer
agrees and warrants that the Ethanol produced at the Facility and delivered to Provista
shall be acceptable under industry standards in effect from time to time during the term of
this Agreement.
M. Compliance. Customer warrants that at the time of loading at the Facility the
Ethanol shall comply with all state and federal laws including those governing quality,
naming and labeling of product. The Ethanol requirements set forth in this Agreement shall
be collectively referred to as the (“Ethanol Specifications”). Customer further warrants
that at the time of loading at the Facility the Ethanol shall conform to the Ethanol
Specifications.
N. Rejection of Ethanol. Payment of invoice and acceptance of delivery do not waive
Provista’s rights if the Ethanol does not comply with the Ethanol Specifications at the time
of loading at the Facility. Unless otherwise agreed between the parties to this Agreement,
and in addition to other remedies permitted by law, Provista may, without obligation to pay,
reject, any of the Ethanol which is demonstrated by Provista to
Customer to have failed to conform in any material respect to the Ethanol Specifications at
the time of loading at the Facility; provided, however, that Provista shall report in
writing any non-conforming Ethanol promptly upon and in any event with twenty (20) days of
discovery of such non-conformity. Such written notice to Customer shall identify the
deficiency that resulted in the rejection. All such rejected, non-conforming Ethanol shall
be returned to the Facility and Customer shall be liable for all costs and expenses incurred
in connection with returning such non-conforming Ethanol to the Facility in accordance with
any and all applicable laws, rules and regulations.
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O. Retention of Samples. Customer will take a minimum of one (1) original
representative sample from such lot of the Ethanol before it leaves the Facility. Customer
will label these samples to indicate the Ethanol’s lot numbers and whether the Ethanol was
shipped by rail car or truck. Customer will retain the samples and labeling information for
no less than three (3) months from the date such sample was taken and make such samples
available to Provista at Provista’s request.
P. No Liens. Customer represents and warrants that the Ethanol sold to Provista
shall be free and clear of third-party liens and encumbrances of any nature whatsoever.
Q. Books and Records. Provista will establish and maintain at all times, true and
accurate books, records and accounts (the “Books”) in accordance with commercially
reasonable accounting principles and consistent with good industry practices,
distinguishable from all other books and records, in respect of all payments, statements,
charges and computations made under this Agreement and will preserve these books, records
and accounts for a period of at least one (1) year after the expiration of the term of this
Agreement. During normal business hours and upon reasonable prior notification and through
to the expiration of one (1) year following the expiration or termination of this Agreement,
Customer, at its sole cost and expense, has the right to inspect, examine and audit, or
cause its representatives (including without limitation a third-party auditor) to inspect,
examine and audit the Books of Provista to the extent necessary in order to verify the
accuracy of any statement, charge, computation or demand made under or pursuant to any of
the provisions of this Agreement. If any error is discovered in any statement rendered
hereunder and such error is on the part of Provista and results in an underpayment by
Provista, the amount of such underpayment shall be paid to Customer with interest at a rate
of one percent (1%) over the Prime Rate from the date such underpayment was due through (but
not including) the date such underpayment and interest thereon is paid and the amount of
such underpayment and interest thereon will be paid within seven (7) days from the date of
discovery. For the sake of clarity, if any error is discovered to have been made on the
part of Customer and such error results in an underpayment by Provista, Provista shall pay
only the principal amount outstanding and interest on this principal shall not be paid by
Provista to Customer if Provista pays within seven (7) days from the date of discovery.
Provista and its authorized representatives will be permitted during normal business hours
(at Provista’s expense) to inspect and audit the Facility and records from time to time to
determine Customer’s compliance with the terms of this Agreement.
R. Provista’s Damages. In the event (i) Customer fails to provide the Ethanol in
accordance with the terms and conditions of this Agreement and (ii) Provista has
previously committed to deliver such Ethanol to a Buyer pursuant to a sales contract or
agreement that has been otherwise agreed to by Customer, Provista may purchase the
quantities of the Ethanol not made available hereunder from other sources to the extent
necessary to perform Provista’s obligations under the approved sales contract after
providing Customer with not less than three (3) days’ advance notice of its intention to do
so. In such event, Provista shall be entitled to recover from Customer any reasonable
out-of-pocket costs Provista incurs above the agreed upon F.O.B. Facility Price, as
applicable, for the Ethanol resulting from its purchase.
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S.
Obligations on
Termination. Notwithstanding any termination of this Agreement,
Customer shall continue to be obligated to deliver all Ethanol to
Provista that is identified to an existing contract with a Buyer,
provided such Ethanol is to be delivered by Provista from the Facility
and provided that Provista may not renew, extend, increase or
otherwise modify such contract with any Buyer after notice of
termination of this Agreement pursuant to Article II unless Customer
consents in writing. Prior to the termination of the Agreement,
Provista shall provide Customer with a list of all such contracts and
the quantities of Ethanol to be delivered pursuant to the same.
Termination of this Agreement will not relieve or release either party
from its obligations to make any payment which may be owing to the
other party under the terms of this Agreement, including any payment
relating to Ethanol delivered after termination pursuant to this
Section, or from any other liability which either may have to the
other arising out of this Agreement or the breach of this Agreement.
IV. CUSTOMER REPRESENTATIONS.
With the knowledge that Provista is relying thereon in entering into this Agreement,
Customer hereby represents and warrants as follows:
| (1) | Customer is a Limited Liability Company duly organized, validly existing, and in good standing under the laws of the State of Iowa. | ||
| (2) | This Agreement constitutes the legal, valid, and binding obligation of Customer, enforceable against Customer in accordance with its terms except as enforcement may be limited by any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and except as enforcement may be limited by general principles of equity. Customer has the absolute and unrestricted right, power, authority and capacity to execute and deliver this Agreement and to perform its obligations under this Agreement. | ||
| (3) | Neither the execution and delivery of this Agreement nor the consummation or performance of any obligations hereunder shall, directly or indirectly, with or without notice or lapse of time), in any material respect, contravene, conflict with, or result in a violation or breach of any provision of or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify any relevant contract to which Customer is a party. | ||
| (4) | Customer is not and shall not be required to give any notice to or obtain any consent from any person in connection with the execution and delivery of this Agreement or the consummation or performance of any of its obligations. | ||
| (5) | It is, and will at all times during the term of this Agreement, remain in material compliance with all laws, rules and regulations. |
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| (6) | Customer is not currently in default under any contract that is material to this Agreement. |
V. GENERAL PROVISIONS.
A. Events of Default. The occurrence of any of the following shall be an event of
default (each an “Event of Default”) under this Agreement: (1) failure of either party to
make payment to the other when due; (2) default by either party in the performance of any
material covenant, obligation or agreement set forth in this Agreement; or (3) if either
party shall become insolvent, or make a general assignment for the benefit of creditors or
to an agent authorized to liquidate any substantial amount of its assets or properties with
or without consent, or should a voluntary or involuntary petition into bankruptcy or other
similar proceeding be filed by or against such party, or should an involuntary petition into
bankruptcy or other similar proceeding be filed by or against such party and the receiver,
bankruptcy or other similar proceeding shall not in the case of any involuntary petition or
other involuntary proceeding be discharged within sixty (60) days following appointment or
commencement thereof, as the case may be.
B. Remedies. Upon the occurrence of an Event of Default, the party not in default
shall have all remedies available under this Agreement and under applicable law and equity.
Without limiting the foregoing, the party not in default shall have the following remedies
whether in addition to, or as one of, the remedies otherwise available to it: (1) to
declare all amounts owed to it hereunder immediately due and payable and (2) to terminate
this Agreement; provided, however, the defaulting party shall be allowed thirty (30) days’
from the date of receipt of notice of default to cure any Event of Default.
C. Force Majeure. Neither party to this Agreement shall be liable to the other
party hereto for any loss or damage resulting from any delay or failure to make or accept
deliveries caused by or arising out of acts of God or the elements, storms, wars, acts of
terrorism, sabotage, strikes, labor difficulties, governmental proration or regulation, when
raw materials or supplies are interrupted, unavailable, or in short supply, and/or any other
cause beyond such party’s commercially reasonable control. In the event that a party to
this Agreement gives notice and an explanation of such force majeure event to the other
party hereto within a reasonable time after the occurrence of such force majeure event, the
obligations of the parties shall be suspended from the date of such force majeure event for
the length of time during which a party is unable to perform as a result of such force
majeure event. Nothing contained in this Section IV.C. shall ever be construed to relieve
either party of its obligations to promptly pay the other party amounts due and owing
hereunder. No curtailment or suspension of deliveries or acceptance of deliveries pursuant
to this Section IV.C. shall operate to extend the term of this Agreement.
D. Indemnification. Customer agrees that it shall defend, indemnify, and hold
harmless Provista, and Provista’s directors, officers, agents, employees, insurers,
successors and assigns, from and against any and all claims, demands, damages, losses,
liabilities, causes of action, judgments, fines, assessments (including penalties and/or
interest), costs and expenses of any kind or nature, including all attorneys’ fees and all
costs and expenses of litigation and court costs (including attorneys’ fees and costs and
expenses of litigation and court costs incurred in enforcing this provision), without regard
to amount, for damages to, or loss of, property, or injury to, or death of, any person or
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persons, including without limitation persons employed or engaged by Customer, caused by or
arising or resulting from, whether directly or indirectly: (i) the negligence and/or willful
misconduct of Customer, and/or (ii) Customer’s breach of any of its representations,
warranties, undertakings, covenants, promises and agreements as set forth in this Agreement;
and/or (iii) Customer’s failure to comply with any and all applicable federal, state or
local laws, ordinances, orders, permits, rules and regulations with regard to Customer’s
activities relating to the operation of its business and/or the Facility. Provista shall
have the right, but not the obligation, to participate in the defense of any such claim with
attorneys selected by Provista; provided, however, that once Customer assumes the defense of
Provista pursuant to provisions of this Section V.D., Provista’s participation in
the defense of any such claim shall be at its own expense.
Provista agrees that it shall defend, indemnify, and hold harmless Customer, and Customer’s
directors, officers, agents, employees, insurers, successors and assigns, from and against
any and all claims, demands, damages, losses, liabilities, causes of action, judgments,
fines, assessments (including penalties and/or interest), costs and expenses of any kind or
nature, including all attorneys’ fees and all costs and expenses of litigation and court
costs (including attorneys’ fees and costs and expenses of litigation and court costs
incurred in enforcing this provision), without regard to amount, for damages to, or loss of,
property, or injury to, or death of, any person or persons, including without limitation
persons employed or engaged by Customer, caused by or arising or resulting from, whether
directly or indirectly: (i) the negligence and/or willful misconduct of Provista; and/or
(ii) Provista’s breach of any of its representations, warranties, undertakings, covenants,
promises and agreements as set forth in this Agreement; and/or (iii) Provista’s failure to
comply with any and all applicable federal, state or local laws, ordinances, orders,
permits, rules and regulations with regard to Customer’s activities relating to the
operation of its business. Customer shall have the right, but not the obligation, to
participate in the defense of any such claim with attorneys selected by Customer; provided,
however, that once Provista assumes the defense of Customer pursuant to provisions of this
Section V.D., Customer’s participation in the defense of any such claim shall be at
its own expense.
E. Limitation of Liability. NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES UNDER THIS AGREEMENT
INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, HOWEVER ARISING, EVEN IF IT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
F. Insurance. Customer agrees to maintain at all times during the term of this
Agreement: (i) Workers’ Compensation Insurance as prescribed by applicable laws of the
state(s) with jurisdiction over each of Customer’s employees; and (ii) Commercial
General Liability Insurance with a per-occurrence limit of not less than One Million Dollars
($1,000,000) (or higher limits as may be required by applicable law) (which coverage can be
provided through a combination of primary and umbrella policies), which policy(ies) shall
identify Provista as an additional insured party with respect to the operation of the
Facility. As to all policies described in this Section V.F., Customer agrees that:
(i) it will provide Provista with at least thirty (30) days’ written notice prior to the
effective date of cancellation or any material change of any such policy(ies); and (ii) upon
any request from Provista, Customer will immediately instruct its insurer(s) to
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provide
Provista with certificates of insurance evidencing coverage that is required by this Section
IV.F. Customer agrees that the policy limits set forth herein are minimum limits and shall
not be construed to limit Customer’s liability.
G. Independent Contractors. Customer and Provista are separate legal entities, and
independent contractors in respect of the other party hereto. Nothing in this Agreement
shall constitute, or ever be construed to constitute, either party hereto as an agent, legal
representative, joint venturer, partner, employee, or servant of the other party hereto, for
any purpose whatsoever.
H. Notices. Any notice required pursuant to this Agreement shall be in writing,
and shall be deemed to be properly served on the date deposited in the U.S. Post Office if
sent by certified or registered mail, or three (3) days after the date deposited in the U.S.
Post Office if sent by regular mail. Such notice shall be properly addressed to the other
Party at its respective address set forth in the first paragraph of this Agreement, provided
that such addresses may be changed by proper notice delivered in accordance with the
provisions of this Section. For any notice sent by mail, the Party sending the notice shall
also send a facsimile of such notice on the same day that the notice is deposited in the
U.S. Post Office. Any notice made by a party under this Agreement by a method other than
through the U.S. Postal Service shall be in writing and shall be effective only upon actual
receipt of such notice.
I. Assignment. This Agreement may not be assigned or transferred by either party,
directly or indirectly, in full or in part, without the advance written consent of the other
party hereto, which consent shall not be unreasonably withheld, and no attempted assignment
or transfer of this Agreement by either party hereto shall be binding on the other party
hereto until it has consented in writing to such assignment. Assignments or transfers that
have not been consented to by the non-assigning party shall be void. Any change of control
of either party, whether by operation of law or otherwise, shall be deemed an assignment or
transfer for purposes of this Section V.I. The terms and conditions of this
Agreement shall inure to the benefit of, and shall be binding upon, all respective permitted
successors and assigns of the parties hereto.
J. Choice of Law. This Agreement, and all rights, obligations, and duties arising
hereunder, and all disputes which may arise hereunder, shall be construed in accordance
with, and governed by, laws of the state of Minnesota, without giving effect to the conflict
of laws provisions thereof.
K. Modification and Waiver. Any of the terms and conditions of this Agreement may
be waived in writing at any time by the party which is entitled to the benefit thereof;
provided, however, that the failure of any party to exercise any right, power or option
given it hereunder, or to insist on strict compliance with all of the terms and conditions
hereof, shall not constitute a waiver of any term, condition, or right under this Agreement,
unless and until that party shall have confirmed any such action or inaction to be a waiver
in writing. Any such waiver shall not act as a waiver of any other term, condition, or
right under this Agreement, or the same term, condition, or right on any other occasion not
specifically waived in writing by such party. This Agreement may be modified, altered, or
amended only by a writing signed by the party against whom the amendment is to be enforced.
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L. Enforceability. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but in the
event that a provision shall be determined by a court of competent jurisdiction to be
invalid and/or unenforceable, such provision shall be ineffective only to the extent that it
is explicitly deemed invalid, void or unenforceable, and the remaining provisions of this
Agreement shall be valid and enforced to the fullest extent permitted by law. Upon such a
determination that a provision is invalid, illegal, void, or unenforceable, the parties
agree to negotiate in good faith to modify this Agreement so as to effect their original
intent as closely as possible.
M. Entire Agreement. This Agreement contains the entire understanding between the
parties hereto and, as of the Effective Date, it shall supersede all prior negotiations,
representations, agreements and understandings, whether oral or written, between Provista
and Customer with respect to the sale and marketing of the Ethanol produced by Customer at
the Facility.
N. Headings. The headings of Sections in this Agreement are inserted for
convenience only, and shall not be deemed to constitute a part of this Agreement, or to
affect interpretation of provisions hereof.
O. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall, for all purposes, be deemed to be an original, but all of which shall
constitute one and the same Agreement.
P. Confidentiality. Provista and Customer, recognizing the work in which they will
be engaged under this Agreement is of a proprietary nature, recognize that each may disclose
to the other certain proprietary business plans, strategies, financial data, specifications,
production information, equipment details, process information, intellectual property and
other information relating to this Agreement. This information is secret and confidential
and will be disclosed by one party to the other party only on the following terms and
conditions:
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1. “Confidential Information” shall mean all proprietary or confidential information
received or generated during the course of the performance of this Agreement
including, without limitation, the information described above and in the books and
records of either party. Confidential Information shall not include that which (i)
is in the public domain prior to disclosure to another party, (ii) is lawfully in
the other party’s possession, as evidenced by written records, prior to the
disclosure by a party, or (iii) becomes part of the public domain by publication
or otherwise through no unauthorized act or omission on the part of the other party.
2. Neither party shall disclose any of the Confidential Information to any
unauthorized party, unless required by law or court order and then only after
providing advance notice and an opportunity to intervene to the other party. Proper
and appropriate steps shall be taken and maintained by each party to protect the
Confidential Information of the other party.
3. Confidential Information shall be used by the parties only in connection with
their performance under this Agreement; no other use will be made of it by either
party.
4. All documents containing Confidential Information of a party shall remain the
property of that party. They shall be returned to that party or destroyed upon
request.
5. No license or right is granted hereby to either party by implication or otherwise
with respect to or under any patent application, patent, claims of patent or
proprietary rights of either party with respect to the Confidential Information.
THIS AGREEMENT REGARDING ETHANOL SALES AND MARKETING SHALL NOT CONSTITUTE A BINDING CONTRACT
BETWEEN THE PARTIES UNTIL IT HAS BEEN EXECUTED BY AUTHORIZED REPRESENTATIVES OF BOTH PARTIES.
IN WITNESS WHEREOF, Customer and Provista have caused this Agreement to be executed to be effective
as of the Effective Date.
Provista Renewable Fuels Marketing, LLC
By:
|
/s/ ▇▇▇▇ Lutern
|
|||
Its:
|
Director
|
|||
| Customer: | ||||
| Amaizing Energy ▇▇▇▇▇▇▇, LLC | ||||
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
|
3/2/07 | ||
Its:
|
President
|
effective 1/1/07 | ||
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