EXHIBIT 10.1
ETHANOL PURCHASE AND MARKETING AGREEMENT
This Agreement is entered into as of this 4th day of March 2005, by and between
Phoenix Bio-Industries, LLC, a California limited liability company and Kinergy
Marketing, LLC, a California limited liability company.
SELLER: Phoenix Bio-Industries ("PBI")
P. O. Box 1029
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
BUYER: Kinergy Marketing ("KINERGY")
0000 Xxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxxxxxxx 00000
WITNESSETH:
A. PBI is a manufacturer of ethanol and KINERGY intends to purchase the
ethanol from PBI for the purposes of reselling the ethanol on the open market
and under the terms and conditions of this Agreement.
B. Concurrently herewith, PBI, Pacific Ethanol, Inc., a California
corporation ("Pacific Ethanol") and Western Milling, LLC, a California limited
liability company ("Western") are entering into a WDG Marketing and Services
Agreement ("WDG Agreement") whereby Western will have the exclusive right to
market the wet distillers grain ("WDGs") produced by Pacific Ethanol's plant to
be constructed near Madera, California.
C. In consideration of the mutual covenants contained herein and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto agree as follows:
PRODUCT: Fuel grade ethanol
QUALITY: Meets ASTM - D4806 specifications for denatured fuel
ethanol. During the term of this agreement, PBI
agrees to collect samples for each shipment and
retain them for a three-month period. Each product
sample will be labeled to include the customer order
number, production date and any other applicable
information.
TERM: The agreement will begin with the commencement of
ethanol production at PBI's Goshen plant. The initial
term of this Agreement shall be for 2 consecutive
years commencing on the date that ethanol is first
available for marketing from the Goshen
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Plant (the "Initial TERM") and from year to year
thereafter until terminated as provided herein. All
parties agree that at the end of the Initial Term,
assuming the agreement is not terminated as provided
herein, then the next renewal term will BE for the
balance of the then calendar year. Thereafter, this
agreement will automatically RENEW FOR an additional
one year term unless either party terminates the
agreement 60 days before the end of the renewal term.
It is the intent of the parties that after the
Initial term of this Agreement and after the Initial
term of the WDG Agreement, the renewal term for both
Agreements will be one YEAR, on a calendar year basis
VOLUME: KINERGY will market the entire production of ethanol
from PBI's Goshen plant, estimated to be
approximately 2,000,000 to 2,500,000 gallons per
month at start up with expansions at a later date. PM
will provide KINERGY with a forecast of production on
or before the 15111 of each month for the future
month. KINERGY acknowledges that P.8I has only
limited storage capacity and KINERGY will use
commercially reasonable efforts to remove the ethanol
in a timely manner. In the event that stored ethanol
exceeds capacity more than 2 times in a 60 day period
or for longer than 24 hours at any given time, PBI
shall have the right, in addition to any other claims
available to PBI under applicable law, to terminate
this Agreement. A default under this paragraph shall
be communicated to KINERGY's designated
representative by facsimile or e-mail.
MEASUREMENT: Net gallons temperature compensated to 60 degrees
Fahrenheit or Net liters at 15 degrees C.
TITLE: Title transfers from seller to buyer at inlet flange
of receiving tank
PRICE: KINERGY will pay PBI the gross sales price to the
customer less transportation expenses and a 1.0%
marketing fee, after transportation expenses.
Transportation expenses include, truck, rail and
terminal fees. PISS and KINERGY will mutually agree
upon the company or companies providing
transportation services during the term of this
Agreement. PBI has the right to elect to participate
in a pool receiving the average price of ethanol
marketed by Kinergy in the respective period of the
Pacific Ethanol Madera facility and the PBI Goshen
facility or PBI has the right to elect to receive the
specific price that resulted from its
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individual ethanol sales. If the individual sales
method is elected, KINERGY shall advise PBI by
facsimile or e-mail of the price and obtain PBI's
approval thereof.
PAYMENT TERMS: KINERGY will provide PBI with payment 10 days from
shipment of product. If KINERGY is delayed in paying
PBI then the finance charge will be 12% per year. If
Kinergy or its affiliate or parent company become
insolvent or are late in payment by more than five
calendar days, then PBI has the right to request that
KINERGY provide acceptable security for the account
payable and any potential increase therein due to
PBI, or PBI has the right to modify the terms herein.
Furthermore, should KINERGY become insolvent, PBI has
the right to offset any balance owed by PBI or
Western Milling to KINERGY, its parent or affiliates,
and Pacific Ethanol, including any balance due on the
WDG Agreement.
AUDIT OF RECORDS: During the term of this agreement, PBI may request a
spot invoice audit or a complete audit. PBI will be
responsible for any hired auditor fees incurred
during such audits. The scope of the audit includes
the ability for PBI to audit all sales that KINERGY
engages in within California.
TERMINATION FOR AS A RESULT OF DEFAULT In addition to the termination provisions
provided above, this Agreement may be terminated, without payment of
any penalty, as follows:
(1) if a party defaults in the payment of any amount when
due under this Agreement, and such default continues
for a period of ten (10) days after written notice of
such default has been given to the defaulting party
by the other party; or
(2) by either party, immediately upon notice to the other
party, if such other party shall have become bankrupt
or insolvent, or entered into a composition or
assignment for the benefit of its creditors, or had a
receiver appointed for its assets, or become the
subject of any winding up of its business or any
judicial proceeding relating to or arising out of its
financial condition; or
(3) by either party if the other party shall be in
material breach of any of its obligations under this
Agreement and shall have failed to cure such breach
within twenty (20) days after receiving written
notice from the other party of the existence of such
breach; or
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(4) by PBI should KINERGY not remove the ethanol in a
timely manner such that it materially affects PBI's
ability to produce and store ethanol.
INDEMNITY:
A. PBI agrees to defend, hold harmless and indemnify
KINERGY from any and all loss or damage, costs and
expenses, including legal fees, incurred by PBI from
any claim or action asserted against, made or filed
against KINERGY claiming loss or injury of any nature
whatsoever, resulting from the performance (or
failure to perform) by PBI of this Agreement. The
foregoing indemnification obligation shall survive
any termination of this Agreement.
B. KINERGY agrees to defend, hold harmless and indemnify
PBI from any and all loss or damage, costs and
expenses, including legal fees, incurred by PBI from
any claim or action asserted against, made or filed
against PBI claiming loss or injury of any nature
whatsoever, resulting from the performance (or
failure to perform) by KINERGY of this Agreement. The
foregoing indemnification obligation shall survive
any termination of this Agreement.
AMENDMENT/WAIVER:
This Agreement may not be modified, amended or waived
in any manner except by an instrument in writing
signed by both parties hereto. The waiver by either
party of compliance with any provision of this
Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party
of a provision of this Agreement.
SUPERSEDES PREVIOUS AGREEMENTS
This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements
(written or oral) and writings between the parties
with respect to the subject matter hereof. All such
other negotiations, commitments, agreements and
writings will have no further force or effect, and
the parties to any such other negotiation,
commitment, agreement or writing will
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have no further rights or obligations thereunder.
This Agreement and the WDG Agreement constitute the
sole and only agreements between the parties
regarding the subject matter hereof
GOVERNING LAW/COMPLIANCE:
All matters affecting this Agreement, including the
validity thereof, are to be governed by, interpreted
and construed in accordance with the laws of the
United States and the State of California.
DISPUTES: Any disputes that arise between the parties with
respect to the performance of this Agreement shall be
submitted to arbitration to the American Arbitration
Association, conducted in Tulare County, to be
determined and resolved by said Association under its
rules and procedures in effect at the time of
submission and the parties hereby agree to share
equally in the costs of said arbitration.
NOTICES: Any notice hereunder by either party to the other
shall be given in writing by personal delivery, by
telecopy (with confirmation of transmission) or by
certified mail, return receipt requested. A notice
shall be deemed given, if by personal delivery or by
telecopy, on the date of such delivery or, if by
certified mail, on the date shown on the applicable
return receipt.
HEADINGS: The headings of Sections and paragraphs herein are
included solely for convenience of reference and
shall not control the meaning or interpretation of
any of the provisions of this Agreement.
OTHER: Notwithstanding any other provision of the agreement,
where not in conflict with the foregoing, all other
terms and conditions shall be in accordance with
standard industry practice.
CONNECTED AGREEMENTS: All parties agree that this Ethanol Purchase and
Marketing Agreement is being executed in conjunction
with the WDG Agreement. Should Pacific Ethanol
terminate or not execute the WDG Agreement then PBI
has the right to terminate this Agreement.
LEASE: Pacific Ethanol, and it affiliates and subsidiaries,
hereby grant to Western Milling the first right of
negotiation and last right of refusal to enter into a
lease on the Madera facility on terms mutually agreed
upon if Pacific Ethanol decides to lease the
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facility to a 3rd party. If such a lease were
executed it would reserve the right to retain 3 silos
for Pacific Ethanol's corn storage if Pacific Ethanol
decided to not have Western Milling procure and
inventory corn.
FORCE MAJEURE: KINERGY shall not be liable to PBI for its failure to
deliver services hereunder, and PBI shall not be
liable to KINERGY for its failure to produce ethanol
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 KINERGY's or
PBI's reasonable control; provided KINERGY or PBI
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 ethanol. 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.
SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and will inure
to the benefit of the parties hereto and their
respective successor and assigns and wherever a
reference in this Agreement is made to either of the
parties hereto such reference will be deemed to
include, if applicable, also a reference to the
successors and assigns of such party, as if in every
case so expressed. Notwithstanding the foregoing,
KINERGY shall not assign this Agreement without the
express written consent of PBI which consent shall
not be unreasonably withheld.
In witness whereof, the parties hereto have EXECUTED THIS Agreement on
the date indicated below.
Phoenix Bio-Industries Inc. Kinergy Marketing, LLC.
By /s/ Xxxxxxx Xxxxxxx By /s/ Xxxx Xxxxxxx
----------------------- --------------------
Xxxxxxx Xxxxxxx, President Xxxx Xxxxxxx, President
Date: March 10, 2005 Date: March 10, 2005
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Western Milling LLC. Pacific Ethanol, Inc.
By /s/ Xxxxx Xxxxx By /s/ Xxxx Xxxxxx
------------------- --------------------
Xxxxx Xxxxx, President Xxxx Xxxxxx, COO
Date: March 4, 2005 Date: March 10, 2005
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