EXHIBIT 10.9
January 10, 2003
Mr. Xxxxx Xxxxx
President
United Wisconsin Grain Producers, LLC
XX Xxx 000
Xxxxxxxxx, XX 00000 - 0247
RE: LETTER OF INTENT FOR
CARBON DIOXIDE PURCHASE AGREEMENT FOR FRIESLAND, WISCONSIN
Dear Xx. Xxxxx:
This letter of intent, when signed by the parties hereto, expresses the present
intention of The BOC Group, Inc., through its BOC Gases division, ("Prospective
Buyer"), and United Wisconsin Grain Producers, LLC ("Prospective Seller"), to
negotiate in good faith a mutually acceptable contract (the "Contract") which
will incorporate the various matters outlined below, together with such other
terms and conditions as the parties may deem necessary in a final agreement with
respect to the purchase and sale of carbon dioxide ("CO2").
1. Prospective Seller will make available to Prospective Buyer all
of the gaseous CO2 that will be produced as a by-product of the
ethanol plant that Prospective Seller plans to construct in Friesland,
Wisconsin.
2. Prospective Buyer will construct a CO2 liquefaction plant (the
"Plant") of approximately 325 TPD capacity to coincide with the first
Contract Year as described in Section 4 hereto.
3. Prospective Seller will make available to Prospective Buyer, at a
nominal price, land suitable for erecting and operating the Plant.
Prospective Seller will provide access to such land for Prospective
Buyer's employees, its customers and its agents as well as for trucks
involved in construction of the Plant and delivery of CO2, as well as
access to rail for loading rail cars. Prospective Buyer may, at its
option, either build its own or enter into a contract with a qualified
third party to build a dry ice production facility on Prospective
Seller's property.
4. The first Contract Year shall commence on October 1, 2004,
provided that Prospective Seller is able to produce at least 325 TPD
of CO2 for thirty (30) consecutive days prior to October 1, 2004 and
expects to continue producing at, or in excess of this level for six
(6) months following October 1, 2004.
5. Prospective Buyer will pay Prospective Seller a monthly fee of
forty five thousand dollars ($45,000.00) for each month ("Facility
Fee") commencing with the first date of commercial operations,
provided however, that the Facility Fee shall be appropriately reduced
pro-rata in favor of Prospective Buyer to the extent that Prospective
Seller is unable for whatever reason to supply the CO2 as per
Paragraph 1. In addition, Prospective Buyer will pay a base price for
by-product gaseous CO2 provided by Prospective Seller to Prospective
Buyer during the first Contract Year of $3.00 per ton of liquid CO2
for product ("Base Price").
6. Prospective Seller will supply Prospective Buyer with its water
requirements. Prospective Seller and Prospective Buyer will cooperate
in obtaining the site's operating and environmental permits.
Prospective Buyer will return condensate and cooling tower blow down
and other water effluent streams to Prospective Seller. Prospective
Buyer will be responsible for all utility costs for the operation of
Prospective Buyer's Plant.
7. Prospective Seller will provide feedgas to Prospective Buyer that
conforms with the specifications in Exhibit A hereto ("Product").
8. Upon the first anniversary of the commencement of deliveries
hereunder, and annually thereafter, the Base Price per ton shall be
adjusted by 100% of the percentage change in Prospective Buyer's
selling price per ton for purified and liquefied CO2 to Prospective
Buyer's customers in the state of Wisconsin. Prospective Seller shall
have the right to have an independent public accountant, reasonably
acceptable to Prospective Buyer, audit the records of Prospective
Buyer to substantiate Prospective Buyer's calculations. Prospective
Buyer shall make its records pertaining to this computation available
for audit once each Contract Year during regular business hours.
9. Prospective Seller will invoice Prospective Buyer once each month
based on the scale weight of liquid CO2 shipped during the previous
month and Prospective Buyer will make payment for the amount invoiced
within thirty (30) days following the date of such invoice.
10. The term of the Contract shall be twenty (20) years. The Contract
shall automatically renew for five (5)-year periods thereafter, unless
either party provides twenty-four (24) months prior written notice of
its intent to terminate. Notwithstanding any language to the contrary
in this letter of intent,
Prospective Seller shall have the right to terminate the Contract in
the event that it permanently ceases production of CO2 at Prospective
Seller's plant.
11. In the event that Prospective Seller fails to supply Prospective
Buyer with a minimum of fifteen thousand (15,000) tons of CO2 during
any period of six (6) consecutive months during the term of the
Contract, Prospective Buyer will have the right to terminate the
Contract and remove the Plant.
12. The Contract shall become effective when it has been approved,
executed and delivered by both Prospective Seller and Prospective
Buyer.
13. Prospective Buyer agree's to pay Prospective Seller a down
payment of fifty thousand dollars ($50,000) ("Down Payment") upon
execution of the Contract. Fifty percent (50%) of the Down Payment
shall be applied as a credit against the Facility Fee for the first
two (2) months of operation of Prospective Buyer's Plant.
14. Prospective Buyer and Prospective Seller shall remain independent
contractors in all aspects of their activities under this letter of
intent with no party having the authority to act as an agent for the
other party for any purpose.
15. Prospective Buyer and Prospective Seller shall each bear its own
costs and expenses in connection with the negotiation, performance or
consummation of the Contract, unless otherwise provided therein.
All information which is not publicly available about the other party and gained
in the context of the parties' discussions or negotiations shall be keep
confidential. This information includes but is not limited to, data, designs,
documents, ideas, know-how financial, and other business information.
Prospective Buyer and Prospective Seller agree that they will not develop any
projects on their own based upon any data, facts or ideas obtained or shared
during the course of their discussions and neither party shall have any rights
to the other party's proprietary rights. Both parties shall use their best
efforts to inform appropriate personnel in their respective organizations
regarding the content of this Letter of Intent.
The term of this Letter of Intent shall commence upon the date it is signed by
both parties and it shall continue until the earlier of (i) execution of a
definitive Contract; or (ii) May 1, 2003, by which date, if a definitive
Contract has not been signed this Letter of Intent shall expire unless the
parties mutually agree in writing to extend the term. The foregoing reflects the
present intention of the parties to proceed with the transaction as described
herein and, except as otherwise provided, each party will be responsible for its
own expenses related thereto.
THIS LETTER OF INTENT DOES NOT CONTAIN ALL MATTERS UPON WHICH AGREEMENT MUST BE
REACHED IN ORDER FOR THE TRANSACTION
DESCRIBED HEREIN TO BE CONSUMMATED, AND OTHER THAN EACH PARTY'S RESPECTIVE
PROPRIETARY RIGHTS AND CONFIDENTIAL INFORMATION AS CONTAINED HEREIN, IT IS NOT
INTENDED TO BIND NOR SHALL IT BIND EITHER PARTY TO ENTER INTO AN AGREEMENT WITH
RESPECT TO ITS SUBJECT MATTER. A BINDING COMMITMENT WILL RESULT ONLY FROM THE
EXECUTION OF A DEFINITIVE CONTRACT BY THE PARTIES AND NEITHER PARTY WILL HAVE
ANY LIABILITY TO THE OTHER WITH RESPECT TO THE PROVISIONS HEREIN UNLESS AND
UNTIL A DEFINITIVE CONTRACT AND OTHER RELATED DOCUMENTS ARE EXECUTED BY THE
PARTIES HERETO REGARDING THE SUBJECT MATTER HEREIN.
Please sign in the space below to confirm your agreement to the foregoing.
Very truly yours,
BOC GASES
A Division of THE BOC GROUP, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
-------------
Title: VP Mktg
-------
Agreed and Accepted:
United Wisconsin Grain Producers, LLC
By: /s/ Xxxxx Xxxxx
---------------
Name: Xxxxx Xxxxx
-----------
Title: President
---------
Date: 1-21-02
EXHIBIT A
GAS SPECIFICATIONS
All gaseous Carbon Dioxide will meet the following minimum purity requirements
and be delivered to BOC at a minimum of 2 psig:
Assay by Orsat 99.0% (Volume basis)
Dew Point Saturated
Excluding water, the maximum contaminants will be as follows:
(Dry Basis by Volume)
---------------------
Volatile Hydrocarbons 0.5%
Ammonia 25 PPM
Non Volatile Hydrocarbons 5 PPM
(expressed as methane)
Inerts including Oxygen (O2), Carbon Monoxide (CO),
Hydrogen (H2), Nitrogen (N2) and Argon (Ar) 1%
Hydrogen Sulfide (H2S) .5 PPM
Oxides of Nitrogen (NOx) 2.5 PPM
Total Alcohols 90 PPM
Methanol 8.0 PPM
Sulfur Dioxide (SO2) 2.0 PPM
Carbonyl Sulfide (COS) .5 PPM
Ethyl Acetate 1.5 PPM
Acetaldehyde 2.0 PPM
Isobutanol 1.0 PPM
Mercaptans 2.0 PPM
Total Sulfur 5.0 PPM
Benzene .02 PPM (20 PPB)
Other Contaminants None
Odor or Taste None
The term of this Letter of Intent shall commence upon the date it is signed by
both parties and it shall continue until the earlier of (i) execution of a
definitive Contract: or (ii) May 1, 2003, by which date, if a definitive
Contract has not been signed this Letter of Intent shall expire unless the
parties mutually agree in writing to extend the term. The foregoing reflects the
present intention of the parties to proceed with the transaction as described
herein and, except as otherwise provided, each party will be responsible for its
own expenses related thereto.
THIS LETTER OF INTENT DOES NOT CONTAIN ALL MATTERS UPON WHICH AGREEMENT MUST BE
REACHED IN ORDER FOR THE TRANSACTION DESCRIBED HEREIN TO BE CONSUMMATED, AND
OTHER THAN EACH PARTY'S RESPECTIVE PROPRIETARY RIGHTS AND CONFIDENTIAL
INFORMATION AS CONTAINED HEREIN. IT IS NOT INTENDED TO BIND NOR SHALL IT BIND
EITHER PARTY TO ENTER INTO AN AGREEMENT WITH RESPECT TO ITS SUBJECT MATTER. A
BINDING COMMITMENT WILL RESULT ONLY FROM THE EXECUTION OF A DEFINITIVE CONTRACT
BY THE PARTIES AND NEITHER PARTY WILL HAVE ANY LIABILITY TO THE OTHER WITH
RESPECT TO THE PROVISIONS HEREIN UNLESS AND UNTIL A DEFINITIVE CONTRACT AND
OTHER RELATED DOCUMENTS ARE EXECUTED BY THE PARTIES HERETO REGARDING THE
SUBJECT MATTER HEREIN.
Please sign in the space below to confirm your agreement to the foregoing.
Very truly yours,
BOC GASES
A Division of THE BOC GROUP, INC.
By: /s/ Xxxx Xxxxxxxx
---------------------------------------
Name: Xxxx Xxxxxxxx
-------------------------------------
Title: VP Prov Mktg
------------------------------------
Agreed and Accepted:
United Wisconsin Grain Producers, LLC
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
---------------------------------
Title: President
--------------------------------
Date: 1-21-02
---------------------------------
