INTEGRATED RISK MANAGEMENT AND GRAIN ORIGINATION AGREEMENT
EXHIBIT
10.4
THIS
RISK MANAGEMENT AND
GRAIN ORIGINATION AGREEMENT (the "Agreement"), is made and
entered into this 30th day of October, 2007, by and among Biofuel Advanced Research &
Development, (BARD)
("Client"), a
Pennsylvania limited liability company with its principal office located at
0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 191 I 1., FCSTONE,
LLC ("FCStone ), an Iowa limited liability company with its principal office
located at 0000 Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxx Xxxxxx, Xxxx 00000, and FGDI,
L.L.C. ("FGDI"). a Delaware limited liability
company having its principal office located at 00000 Xxxxx Xxxxx Xxxxxxx,
Xxxxx X, Xxxxxxx Xxxxx, Xxxx 00000.
WHEREAS, Client is developing
a soybean crushing
production facility to be located at Xxx Xxx Xxxxxxxx Xxxxx, Xxxxxxxx
Xxxxx, XX (the "Plant") that will produce
several products, including soybean oil, using soybeans as its
feedstock;
WHEREAS, FCStone is in the
business of providing risk management services pertaining to commodity
origination and marketing and related services; and
WHEREAS. FGDI is in the
business of purchasing and selling soybeans into commercial channels and can
originate the quantity and quality of soybeans required by Client for delivery
to the Plant.
NOW, THEREFORE, in consideration of
the premises and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Scope
of Services. FGDI and FCStone shall provide the
risk management, grain origination and related services as described in Exhibit
A and incorporated herein, under terms and conditions as hereinafter further
provided.
2. Risk Management Services by FCStone. FCStone shall, during the term hereof, provide
consulting services to Client in the implementation of a risk management program
for Client. The services to be provided by FCStone arc set forth in the portions
of Exhibit A attached hereto which refer to FCStone. In connection therewith (he
parties may agree to enter into certain hedging or other futures agreements and
transactions from time to time. In such event all costs of such hedging,
including margin calls and commissions, shall be the responsibility of
Client. All such futures or contracts shall be executed on behalf of, and
transacted in the name of, Client upon specific approval and direction by a
Client Representative. All such transactions shall be subject to, and governed
by. the applicable account agreements between Client and FCStone or other
applicable party. Transaction fees, commissions and other charges shall be paid
by Client as agreed from time to time and shall be in addition to the FCStone
Service Fee set forth in Section 4(a).
3. Soybeans
Origination by FGDI. FGDI agrees to supply to
Client and deliver to the Plant the soybeans required for it to maintain the
normal production schedule of the Plant, unless prevented from doing so by
circumstances of supply or logistics reasonably beyond its
control. FCStone and FGDI shall work together to seek to
obtain the lowest possible total soybeans cost for Client under prevailing market conditions consistent with prudent
risk management practices. Client shall purchase from FGDI and FGDI shall supply
to Client, all of the soybeans required for the operation of the Plant during
the term hereof. Such origination shall be on the terms herein
provided.
Except
as provided to the contrary in any cash forward contract or for sales out of
"FGDI" inventory in storage as herein provided, and unless otherwise agreed by
the parties in writing or by oral agreement confirmed in writing, soybeans shall
be sold by FGDI to Client, delivered at the Plant, at a price per bushel that
shall be equal to FGDl's actual cost of origination and delivery, plus the FGDI
Service Fee set forth in Section 4(b). FGDl's actual cost shall be
the amount actually paid by FGDI to its supplier for the soybeans plus (1)
actual freight, demurrage and other transportation cost is incurred by FGDI, (2)
soybeans taxes, excise, or other transaction taxes, if any, imposed on the
acquisition or sale of the soybeans, and (3) any other direct cost actually
incurred by FGDI and paid in obtaining and delivering the soybeans. Client sir
ill separately pay all rail car lease expenses, and such expenses shall not be
included in item (\) above to the extent paid by Client.
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4. Fees.
(a) FCStone. Client shall
pay FCStane a service fee for its services hereunder of $120,000 per year, which
is $0.002 per gallon of the anticipated annual Plant nameplaie capacity of
60,000,000 gallons per year (the "FCStom- Service Fee"). The FCStone Service
Fee shall be payable in advance in equal monthly installments of $10,000 per
month, payable on the first business day of each month after the Effective Date. In
addition to such fees, as noted in Section 2. Client shall also pay any
transaction commissions, fees, services charges or other charges arising from
options, futures or other risk management transactions executed through FCStone,
its affiliates, or others in accordance with their applicable schedule- of rates
except that the rate for exchange traded furores and options transactions shall
be $15.00 per round turn, plus applicable exchange fees and National Futures
Association ("NFA")
fees.
(b) FGDI. Client
shall pay FGDI a fee - if
$0,045 per bushel for
origination services
hereunder on each bushel of soybeans delivered by unit grain train or barge or
vessel to the Plant for tf •:• first tlr;.*e years after the Effective Xxxx as
defined in Sec.ion 17(a) ("Regular Service
Fee"). Soybeans originated by truck or in deliveries of less than a full unit
train snail be charged a special service fee of $0,065 per bushel ("Special
Service Fee'}, commensurate with the additional services to be provided.
Together these fee:- are referred to herein as the "FGDI Service Fee'*. Both the Regular Service Fee and the
Special Service Fee shall be increased prospectively as of the anniversary date of the Effective Date as deilncd in Section
17(a), for each renewal year after .he initial three year term, by adding $0,005
per bushel to the rates stale:! above f< • each year after the initial three
year term. Client will pay FGDI a minimum annual service fee adjustment (the
"FGDI
Minimum Annual Fee
Adjustment"), if Client purchases less than seventy five
percent (75%) of the projec;.-d
annual bushel requirements (the "Minimum Purchase Amount") of the Pluit,
which is agreed to be sixty six million (66,000,000) bushels per year, during
any year of the term hereof after the Effective Date. FGDI will adjust the
Minimum Purchase Amount after three (3).
FGDI,
L.L.C.
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