EXHIBIT 10.15
TRADING AGREEMENT*
THIS TRADING AGREEMENT (this "Agreement") is made and entered into
effective as of the 12th day of November, by and between East Kansas
Agri-Energy, LLC, a Kansas limited liability company ("EKAE"), and United Bio
Energy Trading, LLC, a Kansas limited liability company ("UBET").
W I T N E S S E T H :
WHEREAS, EKAE intends to construct and own an ethanol plant, located near
Garnett, Kansas (the "Plant");
WHEREAS, EKAE desires to receive and UBET desires to provide certain
consulting services with respect to commodity trading and hedging, including
market analysis, risk management, and transaction execution; and
WHEREAS, the parties desire to receive and provide such services, in
accordance with the fees and other terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the promises and the
mutual covenants and conditions herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by both parties, it is hereby agreed:
1. FEES. During the term of this Agreement, EKAE shall pay UBET a fee of
[*] Dollars ($[*]) per month (the "Monthly Fee"), which shall be due and payable
on the first day of each month during the term of this Agreement. Except for the
Monthly Fees, there shall be no fees, transaction commissions, service charges,
markups, exchange fees, or any other fees or expenses charged by UBET to EKAE.
2. TERM. The initial term of this Agreement shall be for five (5) years.
The parties shall execute a memorandum setting forth the actual date of
commencement of the term, which shall be approximately 6 months before
substantial completion of the Plant. Unless earlier terminated in accordance
with this Agreement, this Agreement shall be automatically renewed for
successive one (1) year terms thereafter unless either party gives written
notice to the other party of its election not to renew not later than ninety
(90) days prior to the expiration of the then current term.
3. CONSULTATION AND ADVICE.
A. CONSULTING SERVICES AND PROGRAM. UBET shall provide EKAE with the
following services:
1. Price risk management evaluation, review and advice with
respect to any grain and energy products as they relate to the day to day
operations of the Plant.
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2. Commodity market information and analysis on a daily,
weekly, or monthly basis as requested by EKAE.
3. Management of software to assist in the monitoring of EKAE's
exposure to commodity markets based on UBET's "margin management" approach.
4. Brokerage services for commodity futures, options and over
the counter transactions.
5. Data entry regarding cash and/or futures positions regarding
commodity inputs and outputs in the ethanol production process.
6. Preparation and submission to EKAE of reports reflecting the
purchases and/or sales of inputs or outputs in the ethanol production process.
Such reports will be furnished to EKAE electronically at an email address to be
provided to UBET by EKAE. Unless otherwise agreed by and between the parties,
such reports will be furnished to EKAE at least weekly, on the Monday morning
for the previous week's transactions, provided, however, that UBET will furnish
such reports to EKAE no later than the day following each day on which a sale or
purchase occurs.
B. INTERNAL RISK MANAGEMENT PROCEDURES. In addition to the services
provided for in paragraph 3.A. above, UBET shall:
1. Establish risk management recommendations regarding position
limits, strategies, credit exposure and volumes to be presented for EKAE's
management and board approval.
2. Assist EKAE in measuring price risk, defining hedge
objectives, and setting proper expectations.
C. LIMITATIONS AND COSTS.
1. Although UBET may give merchandising, purchasing and hedging
advice to EKAE, EKAE shall have the responsibility for making all decisions on
merchandising, purchasing and hedging strategy. All hedging positions will be
the responsibility of EKAE, for EKAE's account with X.X. X'Xxxxx, or other
relevant party.
2. UBET assumes no responsibility for the completion or
performance of any contracts between EKAE and EKAE's suppliers and customers,
and EKAE agrees that it shall not bring any action or make any claim against
UBET based on any act, omission or claim of any of EKAE's suppliers or
customers.
3. To the extent UBET provides services relating to the
accounting systems of EKAE, UBET does not attest to the accuracy of the books
and financial statements of EKAE, and EKAE is solely responsible for the
accuracy and completeness of such books and financial statements.
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4. EKAE shall pay any third party transaction commissions,
fees, service charges or xxxx-ups arising from options, futures or other risk
management transactions executed or brokered through UBET except that UBET
guarantees that the rate for exchanged-traded futures and options contracts
shall be not more than $10.00 per round turn, plus all applicable exchange fees,
during the initial one year term hereof. Any OTC (over-the-counter) transactions
will be $8.00 per round turn, which includes any applicable fees, during the
initial term hereof.
5. EKAE agrees to waive all claims against UBET for any
consequential damages that may arise out of or relate to the services provided
under this Agreement, including, but not limited to, loss of income, profit or
financing, loss of business, loss of financing, principal office overhead and
expenses, and loss of reputation.
6. Notwithstanding any provision to the contrary in this
Agreement, UBET shall not be liable to EKAE for damages under any claim arising
out of this Agreement, whether arising in contract, warranty, tort (including
negligence), strict liability or otherwise, in excess of the amount paid under
this Agreement by EKAE to UBET for the services resulting in or relating to such
damages.
4. TERMINATION.
Either party may terminate this Agreement with or without cause by
providing ninety (90) days prior written notice to the other party.
5. INDEMNIFICATION. Except as otherwise provided in this Agreement, each
party ("indemnifying party") shall indemnify, defend and hold the other party
and its officers, directors, employees and agents harmless, from any and all
losses, liabilities, damages, expenses (including reasonable attorneys' fees),
costs, claims, demands, that the other party or its officers, directors,
employees or agents may suffer, sustain or become subject to, or as a result of
(i) any misrepresentation or breach by the indemnifying party of a warranty,
covenant or agreement contained herein or (ii) the indemnifying party's
negligence or willful misconduct hereunder.
6. [*]. UBET hereby acknowledges that EKAE is entering into separate
service agreements with certain affiliates of UBET (i.e., United Bio Energy
Ingredients, LLC, United Bio Energy Management, LLC, and United Bio Energy
Fuels, LLC), and that the services provided by one or more of those affiliates
to EKAE under such agreements may include acting on behalf of EKAE and/or
performing certain duties or obligations of EKAE under the terms and provisions
of this Agreement. [*]
7. RELATIONSHIP OF PARTIES. This Agreement creates no relationship other
than those of adviser and advisee between the parties hereto. Specifically,
there is no agency, partnership, joint venture or other joint or mutual
enterprise or undertaking created hereby. Except as otherwise provided herein,
nothing contained in this Agreement authorizes one party to act for or on behalf
of the other and neither party is entitled to commissions from the other.
*Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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8. CONFIDENTIALITY. The parties acknowledge that they will have access to
certain confidential information of the other party and that such information
constitutes valuable, special and unique property to such party. The parties
agree that they will not at any time, whether during or subsequent to the term
of this Agreement, in any fashion, form or manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm or corporation
in any manner whatsoever any such information. For purposes of this Agreement,
the term "confidential information" shall mean all information, documentation or
financial data used by or belonging to or relating to either party which is
disclosed or made available to the other party, its agents, employees or
advisors, including but not limited to the prices charged for services hereunder
or any other information concerning the other party's business, manner of
operation, plans, processes or other data of any kind.
9. MISCELLANEOUS.
A. This writing is intended by the parties as a final expression of
their agreement and a complete and exclusive statement of the terms thereof.
B. No course of prior dealings between the parties and no usage of
trade, except where expressly incorporated by reference, shall be relevant or
admissible to supplement, explain, or vary any of the terms of this Agreement.
C. Acceptance of, or acquiescence in, a course of performance
rendered under this or any prior agreement shall not be relevant or admissible
to determine the meaning of this Agreement even though the accepting or
acquiescing party has knowledge of the nature or the performance and an
opportunity to make objection.
D. No representations, understandings or agreements have been made
or relied upon in the making of this Agreement other than as specifically set
forth herein.
E. This Agreement can only be modified by a writing signed by all of
the parties or their duly authorized agents.
F. The paragraph headings herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
G. This Agreement shall be construed and performed in accordance
with the laws of the State of Kansas.
H. The respective rights, obligations and liabilities of the parties
under this Agreement are not assignable or delegable without the prior written
consent of the other party.
I. Unless a different method of notice is provided herein, notice
shall be deemed to have been given to the party to whom it is addressed
forty-eight (48) hours after it is deposited in certified U. S. mail, postage
prepaid, return receipt requested, addressed as follows, or to such address as
EKAE or UBET shall provide notice of from time to time during the term of this
Agreement:
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EKAE: East Kansas Agri-Energy, LLC
000 0/0 Xxxx 0xx Xxxxxx, XX Xxx 000
Xxxxxxx, Xxxxxx 00000 Attn: Xxxx
Xxxxxx
UBET: United Bio Energy Trading, LLC 0000 Xxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxx 00000 Attn.: Xxxx Xxxxxx
Either party may change the address for notices hereunder by giving
notice of such change to the other party in the manner above provided.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the
day and year first above written.
East Kansas Agri-Energy, LLC
/s/ Xxxx Xxxxxx
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By: Xxxx Xxxxxx
Title: Chairman
United Bio Energy Trading, LLC
/S/ Xxxx Xxxxxx
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By: Xxxx Xxxxxx
--------------------------------
Title: President
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In consideration of EKAE entering into this Agreement and other valuable
consideration, the undersigned, being the sole owner of UBET, hereby
unconditionally guaranties the full and prompt performance by UBET of all of its
duties and obligations under the terms and provisions of this Agreement.
Dated this 12TH day of NOVEMBER, 2004.
United Bio Energy, LLC, a Kansas limited
liability company
By: /s/ Xxxx Xxxxxx
--------------------------------
Tile: President
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